Filed under: Earnings reports, Wal-Mart (WMT), Commodities, Agriculture

Back in my hedge fund days, we did a TON of work on U.S. egg prices. This was back in 2003-2004 in the throes of the Atkins craze. Pasta companies, companies with a lot of exposure to grain, and anything anti-Atkins was taking a hit. Even the great, Weight Watchers (NYSE: WTW), with just a great business model and brand, was getting whacked. It looked like Atkins, and its seemingly lethal blend of high fat and high protein, was going to stay.

We decided to play this trend by purchasing Cal-Maine Foods (NYSE: CALM), a huge distributor of eggs to the likes of Wal-Mart (NYSE: WMT) and other huge grocery outfits. Based in Jackson, Mississippi, and run by an effervescent CEO, Fred Adams, Cal-Maine rode record egg prices those couple of years. In 2003 alone, the stock was up almost 1000%.

What Mr. Adams told us then was that although Atkins was helping to increase demand for eggs, the egg itself was making a comeback. Once shunned as solely a cholesterol-delivery device, the egg is back in fashion and recognized for its overall health benefits.

Continue reading No egg on Cal-Maine’s face

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Filed under: Newsletters, Stocks to Buy, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

“My favorite more conservative idea for 2008 is Cynosure (NASDAQ: CYNO),” says Ian Wyatt, editor of The Growth Report. “The firm’s non-invasive systems are used worldwide by physicians and other practitioners for applications that include the treating of pigmented lesions, acne, wrinkles and the removal of unwanted hair.

“Currently, it has over 15 product lines catering to a market that is evolving from 60,000 dermatologists and plastic surgeons to over 800,000 physicians worldwide.

“A distinguishing characteristic of Cynosure in this dynamic and competitive market is that the firm offers multi-wavelength laser systems that can be used for multiple applications versus single applications associated with single-wavelength systems.

“Demand for non-invasive aesthetic treatment procedures can be seen quite clearly in the impressive financial results. For the nine months ended September 30, 2007, Cynosure reported revenues of $87.7 million, a 63% increase over the same period of 2006. Net income was $9.2 million versus a year-earlier loss of $2.2 million.

Continue reading Best Stocks for 2008: Plastic surgeons profit from Cynosure (CYNO)

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Filed under: Short stories

Although short selling — the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price — goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn’t, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and seek your comments and questions for story ideas. I don’t offer any investment advice and I don’t trade on any of the posts I write.

Alesco Financial (NYSE: AFN) looks like it will have trouble coming up with the money to repay its debts. This Real Estate Investment Trust (REIT) uses borrowed money to buy into the alphabet soup of securities — such as Collateralized Debt Obligations (CDOs) and Mortgage Backed Securities (MBSs) — that could cost Wall Street up to $400 billion in write-downs. With 22% of its float sold short, many investors have already figured out that Alesco, at $3.28, is on life support. But it pays a 31 cent a share dividend, for a 9% dividend yield, which those short sellers are willing to pay because they think the stock has further to decline.

The question about whether to sell short this stock revolves around whether Alesco can pay off its $11.2 billion in debt. Here are some factors to consider:

• Debt repayment. In its most recent annual report of March 2007, Alesco said it was on the hook to repay $3.6 billion It owed in less than a year and then nothing in the intervening years and in more than five years it would owe $6.8 billion. If it has already paid off the $3.6 billion it could be OK. But its most recent quarterly report said it had $91 million in cash so if it owes more than $91 million in the next few months, it could be in trouble. And it’s already dedicated $19 million of that cash to dividends.

Continue reading Short Stories: Is Alesco Financial headed for the dumpster?

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Filed under: Products and services, Television, Competitive strategy, Sony Corp ADR (SNE)

Indicating reduced profitability in the video display market, Fujitsu (OTC: FJTSY) has announced its departure from the production of high end plasma televisions. This news comes via ars technica and is indicative of a major trending pattern. Much is astir among Japanese electronics manufacturers as companies there take a turn for the lean and are engaged in forming manufacturing power alliances.

Much is being affected by the near total domination of liquid crystal display technology within a tightening, yet deepening image display sector. Take further evidence of change by considering Brian White’s post about the exit from rear projection television by Sony Corp. (NYSE: SNE). The LCD field is currently saturated and for it’s improvement it needs to thin out.

Strides are still being made in regard to making LCD displays thinner and engineers are working on reducing power consumption. Little can be done however, to improve LCD profitability with so many companies cranking out cheap displays. What’s needed now is for some of the remaining display manufacturers to aggressively address some considerable quality issues.

Gary Sattler does not knowingly hold financial interest in the companies he blogs about.

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Filed under: Newsletters, Stocks to Buy, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

“My top conservative idea for 2008 is A. Schulman (NASDAQ: SHLM), which makes high-performance plastic resins and compounds that are used by customers to produce everything from pens to artificial turf,” says quantitative analyst Vahan Janjigian, editor of The Forbes Growth Investor.

“Almost three-fourths of fiscal 2007 sales (ended August 31) were generated from outside of North America. The firm makes resins that give plastics a specific color or physical property, such as conductivity.

“Its polyolefins units makes products such as interior trims for automobiles, toys, and office supplies and its engineered compounds division helps products maintain specific characteristics such as heat resistance, electrical conductivity, and high strength-to-weight ratios.

“SHLM is recovering from a difficult fiscal year. Management started several strategic initiatives to put profitability back on track. Most of these efforts focused on improving profitability in North America. Business units were reorganized with the aim of cutting costs.

Continue reading Best Stocks for 2008: Forbes quant picks A. Schulman (SHLM)

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Filed under: International markets, China, Newsletters, Stocks to Buy, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

“My top speculative idea for 2008 is Alibaba.com (HK: 1688), which trades on the Hong Kong exchange,” says Yiannis Mostrous, editor of The Silk Road Investor. “Alibaba.com was one of the biggest IPOs of the year and although the initial excitement has subsided, the longer-term story remains intact.

“Alibaba’s business is simple. Companies can post products for sale or purchase from Alibaba’s web site for free. It charges suppliers from China and Hong Kong an annual fee of as much as US$8,027 to become premium members. A similar service is offered to suppliers from other regions for an annual fee of US$589.

“Alibaba.com is the flagship company of the Alibaba Group that includes Taobao, which operates an online shopping marketplace for consumers in China; Alipay, China’s leading online payment service; Yahoo! China and Alisoft, an internet-based business management software company targeting small and medium enterprises in China.

“According to the latest statistics, China was home to 162 million internet users at the end of June, second only to the US. The country is expected to surpass the US as the world’s largest web market by users next year.

“Given the company’s high valuations, viewing it as a speculative play should be the right approach for now. But don’t underestimate its potential if the markets and the economy remain reasonable strong entering 2008. Buy Alibaba up to HK$50.”

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Filed under: Getting started, Comfort Zone Investing

Ted Allrich is the founder of The Online Investor and author of Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he offers advice to investors who are just getting started.

A new year always holds great promise. Resolutions are made. Intentions are strong. Still each year, as the days pass, resolve wanes and soon we’re back to our old ways. This year be different. Here’s a chance to make some investing resolutions, act on them, and have a positive impact on your wealth.

First, pay off credit cards. This is the one of the strongest investments you can make because credit card debt can hit as hard as 18% or higher. Very few stocks make 18% or better. The average return for large stocks is 10% a year, for small stocks 12%. You do the math, and you’ll find a focus on paying off credit cards is best.

Second, fund your matching IRA program at work on January 1, if you can. This truly is free money. If your company matches your contributions to your retirement account, the sooner you get that money (and yours) working, the more money you’ll make. If you earn 7% interest from January 1st, by the end of the year, you’ll have more money than if you start on Feb 1 or April 15 or any other, later date. Get your IRA funded as a priority, even if you don’t have a matching program with your employer. You’ll earn more on the contribution the sooner it’s made.

Continue reading Comfort Zone Investing: The new year: Six simple steps to better returns

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Filed under: Cisco Systems (CSCO), New York Times’A’ (NYT), Gannett Co (GCI), Nortel Networks (NT), Alcatel-LucentADS (ALU), SanDisk Corp (SNDK)

Often taking a look at 52-week low gives a hint as to which sectors are in trouble. But, it also may provide investors a look at shares that could come back under the right circumstances. Bottom fishing sometimes pay dividends.

McClatchy Co. (NYSE: MNI): The Wall Street Journal did a major story on McClatchy last week. Its shares are down over 70%, but the company CEO insists that when weak parts of the economy in Florida and California make a comeback, newspapers will recover, too. There may be some wisdom to the observation, but probably not for McClatchy. Most of the company’s newspapers are in median-sized markets and that makes it harder for the firm to have a major presence in the internet ad business. Companies like The New York Times Co. (NYSE: NYT) and Gannett Inc. (NYSE: GCI) with their large internet operations like USAToday.com have a much better chance of offsetting falling print revenue with online sales.

Sandisk Corp. (NASDAQ: SNDK): This tech company finds itself in the wrong place at the wrong time. At just over $33, its shares are down by almost half this year. The company is one of the world’s largest producers of flash memory chips and the prices for the products are crashing. The turnaround at the company may come when prices for these chips become more stable because demand is moving up. Sandisk products are a big part of what goes into cell phones, digital cameras, and multimedia players. A bottom on flash prices should bring shares back.

Nortel Networks (NYSE: NT): Supplying infrastructure to the world’s big telecom and cable companies used to look like a sexy business. But, Nortel shares are off to $15.20 from a 52-week high of $31.79. Rival Alcatel-Lucent (NYSE: ALU) is doing no better. The build-out of systems like 3G and WiMax is going slower than planned and mergers of big telecom companies have taken some customers out of the picture. The market may begin to improve, but companies with more advanced tech, like Cisco Systems (NASDAQ: CSCO), are likely to benefit.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Newsletters, Mutual funds, Stocks to Buy, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

In his Forbes ETF Trader, Jim Lowell says, “My top conservative pick for 2008 is the iShares Lehman TIPs (NYSE: TIP). This exchange-traded fund enters the mix as a less-spirited way to play the recessionary hand that 2008 could deal.

“While the performance behavior of the underlying holdings will make the case for this being nothing more than a dolled up basket of long-term Treasuries, the market reality is that in times of duress, the momentum tends to favor these instruments over most others.

“But don’t buy it for yield or price. Instead, view it as a life raft on the deck of all the above picks. It’s good to know it’s there if you need it — and according to consensus estimates, in 2008 it’s not a case of if but when.”

As an alternative, conservative investors can buy the iShares S&P 100 Index Fund (ASE: OEF). The S&P 100 Index is comprised of the largest 100 stocks in the S&P 500 Index. As such, it’s an intermediate play between the Dow 30 and the S&P 500, and ought to continue to benefit from the current flight to quality in ‘08.

Continue reading Best Stocks for 2008: Defensive stance with iShares Lehman TIPs (TIP)

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Filed under: International markets, China, Newsletters, Stocks to Buy, Best Stocks for 2008

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

“Our top speculative idea for 2008 is China Direct (ASE: CDS),” says Jim Trippon, editor of The China Stock Digest. “China Direct is an aggressively expanding US-based firm that has grown exponentially over the course of the past year — from a start-up with meager profits to a thriving concern with a sharp revenue growth curve. Share prices are following suit.

“China Direct’s management division acquires controlling stakes in Chinese companies and then provides investment capital and active management. Its consulting division assists other companies in China and the US in establishing and maintaining a presence in the US capital markets.

“The company says that, as a direct link to China, it serves as a vehicle allowing investors to directly participate in the rapid growth of the Chinese economy in a diversified and balanced manner.

Continue reading Best Stocks for 2008: China stock guru speculates on China Direct (CDS)

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