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Rocket Stocks for the Week - 15863 views
The time to be greedy in the capital markets is when everyone else is fearful. Fortunately, we loaded up on the highest beta momentum names we could find last week, and we enjoyed an almost 15% rally off the lows from Friday. Shares of Apple (APPL), Goldman Sachs (GS) and JPMorgan (JPM) were up anywhere from 20% to 45% in less than a week’s time!
That said, our general trading strategy for our Rocket Stocks portfolio is going to be substantially different and conservative this week, given the massive move the equity markets as of late
Two earnings plays I would keep on my radar are shares of Female Heath (FMW) and Del Monte Foods (DLM).
Female Health recently confirmed its year-end outlook, saying, “In August 2008, we confirmed our previous sales guidance of 20% to 25% growth in units over the fiscal year 2007 level of 25.9 million units. At that time, we increased the pretax income guidance to be an increase of 200% to 250% over the FY2007 pre-tax income of $868,913. We now reaffirm that guidance.”
Shares of Female Health are actually up 17% on the year, and they trade with a forward P/E of 16.3.
Sitting on its 52-week low, Del Monte makes various storable canned goods and items. Input costs related to various metals and commodity-related costs have fallen off a cliff, which should help Del Monte’s earnings this quarter.
On a slightly different note, I feel investors might want to avoid or short shares of Allegiant Travel (ALGT). Sitting on its 52-week high, Allegiant is a travel agency/airline whose revenue is derived from the sale of vacation packages, including hotels, rental cars, show tickets, night club packages and other attractions.
How this stock is sitting on a 52-week high, given the current economic environment is simply insane? A recession will lower volume growth for its tourist-based business, and as volume shrinks, the company’s high-end margin business will lead to negative volume and price.
So again, the theme in this week’s Rocket Stocks portfolio is defense.
Take what the market gives you, and do not force opportunities onto this market; invariably, they will come.
To find the snapbacks and potential breakouts on a regular basis, check out these Stockpickr portfolios, which I use in my own research each week:
The Daily Hot List: This must-view portfolio of what stocks are making moves and why is posted at midday each day.
Always check the Biggest Percentage Losers, a list of stocks that lost big the day before, because they can snap back hard.
When you check this list on Stockpickr, you can see which stocks are owned by the quality hedge funds and mutual funds. Pay attention to those. The funds will be buying at the lower prices and likely supporting the stock.
Ditto for the 52-week-low list. You must check the above two lists every day if you hope to find volatile stocks that can snap back
Stockpickr's System Trades of the Day: These are trades triggering that day in various back-tested trading systems we've developed.
Stocks With Unusual Options Activity: Perhaps someone knows something?
Latest Activist Situations: These are stocks that hedge funds are accumulating shares of and demanding change in. Believe me, these hedge funds piggyback each other. And once they start rocking the boat, things happen quickly. This should be on the must-view list.
One final place to frequent is the Answers section on Stockpickr, where ideas such as those presented in this article are thrown around daily. And you can further discuss your ideas and share opinions in Stockpickr's Member Forums section.
By James Altucher
Posted on Dec. 1, 2008