My investment newsletter, The Cohan Letter, outperformed the S&P 500 in 2007. Specifically, the average stock mentioned in The Cohan Letter rose 28% in 2007. This compares favorably to the performance of the S&P 500 which rose 3.5% in 2007.

The three top performing stocks mentioned in The Cohan Letter were:

• New Oriental Education & Technology Group (NYSE: EDU) which rose 84% from $43.75 in April 2007 to $80.59 at year end;
• Companhia Vale Do Rio Doce (NYSE: RIO) which climbed 77% from $18.50 in March 2007 to $32.67 at year end; and
• Transocean Inc. (NYSE: RIG) increased 66% from $86.20 in April 2007 to $143.15 at year end.

Each month The Cohan Letter mentions three stocks. If a stock mentioned declines 2% after it’s mentioned, the stock is “sold” from the portfolio. This 2% stop loss rule contributes to the relatively high average return of The Cohan Letter.

Now in its sixth year of publication, The Cohan Letter’s average annual return since its inception is 22% — the average annual return of the S&P 500 during that period was 11.8%.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

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Filed under: Economic data, Housing

Housing sales jumped slightly in November, according to the National Association of Realtors. Is there light at the end of the housing slump tunnel?

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Filed under: Insiders

MC Hammer will probably always be remembered for his parachute pants, corny music videos (See below) and perhaps his most amazing accomplishment of all: turning a fortune of more than $30 million into a bankruptcy filing with his penchant for reckless spending.

But now Hammer is looking to remembered as something else: the co-founder and chief strategy officer (Whatever that is…) of DanceJam.com,

According to the Associated Press, “The Web site, scheduled to debut in mid-January, will try to upstage YouTube and become the Internet’s hub for sharing and watching dance videos. DanceJam then hopes to make money by grabbing a piece of the rapidly growing Internet advertising market, which is expected to rake in $27.5 billion in 2008, according to eMarketer.”

The site has already scored $1 million in start-up funds and, while any web start-up is a long-shot, I wouldn’t count Hammer out. He’s been rejected by hardcore hip-hop fans for being too commercial but that’s indicative of his greatest talent: Hammer knows how to create a product that’s enticing to the demographics “industry insiders” have already written off. In the early 90’s, that was suburban youth who few thought would be interested in buying anything resembling a rap album.

Luring web travelers away from YouTube will be tough but Hammer has overcome the odds before.

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Filed under: Oil, Stocks to Buy

Readers of this space know that the preferred sectors include oil services and infrastructure stocks, and when one can combine the two, it’s like a double header at Yankee Stadium (or two chamber concerts at Lincoln Center). Foster Wheeler fits the aforementioned bill.

Foster Wheeler (NASDAQ: FWLT) provides design, engineering, procurement, construction, and project management services for oil/natural gas processing facilities. The company also designs and builds steam generating and auxiliary equipment for electric power generating stations and industrial markets around the world.

Analysts expect 2007 revenue to increase a remarkable 35%-40%, with a 20%-25% gain seen for 2008 on continued, strong Asia-Pacific and Middle East capital spending. Further, increasing demand for FWLT’s preferred power generation system adds to the mix. The Reuters F2007/F2008 EPS consensus estimates FWLT for are $5.92/$7.00.

The risks: A slowdown in Europe (more than 50% of revenue) or emerging market demand with hurt FWLT’s results. Analysts also have their eye on the appearance of possible supply/labor shortages down the road.

The First Call mean rating for FLWT is: Buy. [5 firms.] Mean 2008 target: $176.00. [high: $190, low: $150.]

Stock Analysis: Foster Wheeler is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from FWLT’s shares. Sell / Stop Loss if you to purchase shares in this company: $95.

DISCLOSURE: Joseph Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

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Filed under: Google (GOOG)

I just read an interesting report from the Pew Internet & American Life Project. Part of the report stated the obvious: Americans are turning to the web more and more to get answers to all of life’s problems. After polling more than 2,790 adults, ages 18 and older, the report found that 58% of Americans that have dealt with issues surrounding things like health, taxes, school, etc. used the Internet to seek help. Pretty expected.

What I thought was actually pretty interesting was a description of Gen Y, those young Americans aged 18-30, and their habits.

It turns out that “Generation Y was most likely to use libraries to get problem-solving information and for general purposes. In their lives, libraries are not losing value. In fact, 40% of Generation Y respondents said they would use libraries in the future to seek information, compared with 20% of those age 30 and older.”

Continue reading Suprisingly, Gen Y’ers likely to use public libraries

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Filed under: Forecasts, Products and services, Google (GOOG), Money and Finance Today, Countrywide Financial (CFC)

I read a quote in an article recently which stated, “What Wall Street is about is smart guys thinking about ways to make money from dumb ones.” That quote is attributed to one John E. Fitzgibbon, the publisher of an online newsletter, in an article from Eric Dash via The New York Times. While Mr. Fitzgibbon’s remark might validate special investing skill on the part of some smart and timely investors, I take exception to the notion that all those investors who lost money in the markets over the past year are the dumb ones.

The question now is, where is the smart money headed?

Continue reading Investing in 2008: Where’s the smart money going?

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Filed under: Major movement, Forecasts, Other issues, Google (GOOG), Apple Inc (AAPL), Research in Motion (RIMM), Presidential elections, S and P 500, DJIA, Best Stocks for 2008

With Wall Street analysts forecasting where the market will be 12 months from now, I figured I would take a crack as well. As an overview, I expect market volatility to continue throughout the first quarter and mid-way through the second as well. Then it will be clear to all that the U.S. never was in a recession, we will start hearing companies talk about how well their businesses are doing, and analysts will re-work their estimates higher. The second half of the year should be very strong for markets with the potential caveat of some kind of unexpected result in the upcoming U.S. presidential elections.

I think that the Dow will end the year at 14,350. The S&P 500 will be at 1,630, a nice gain of over 11%. The Nasdaq is the interesting index to predict. In ‘07, the Nasdaq finished up a drop under 10%, but much of that gain came from just three stocks, Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), and Research in Motion (NASDAQ: RIMM). With the exception of RIMM, I have a hard time believing that Apple and Google will repeat their ‘07 performances. That being said, I do think that we will have more strength in the broader market so look for the Nasdaq to be at 3,025 in a year.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 1/1/08.

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Filed under: Short stories, Scandals

With shares of Movie Gallery (OTC: MOVIQ) having closed 2007 at just over 2 cents per share in the wake of the company’s bankruptcy, I thought it would be fun to take a look at what the company was saying back in 2006, when its shares were trading more than 100 times higher.

You might think the company’s CFO, Thomas Johnson, would have been busy looking for ways to stop the cash bleeding and return Movie Gallery’s operations to something other than miserable failure.

But you’d be wrong. No, Johnson was actually conducting an interview with Bloomberg, saying that he had asked the SEC to investigate allegations of naked short selling in the company’s stock:

“I’m throwing out the towel, saying ‘Help me.’ There are rules designed to deal with this, and people are still managing to do these naked short sales. It’s extremely frustrating. It’s like being on the front line and people are shooting you from every direction.”

“On the frontline… people shooting at you from every direction.” I wonder if that’s how Movie Gallery shareholders felt when the company recently filed a reorganization plan that canceled the stock of the company’s common shareholders.

The moral of the story is this: When the bad management of a lousy company starts complaining about naked short selling … go find a company where the management spends its time running the business.

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Filed under: Analyst reports, Forecasts, Economic data, S and P 500

Reuters writes, “Projections for S&P 500 companies’ fourth-quarter earnings swung to a 6.1 percent drop on Monday from an 11.5 percent rise on October 1, in the biggest quarterly move since Reuters Estimates started compiling analysts’ forecasts in 1999.” Tech company earnings are still expected to rise 25%, but that is the extent of the good news.

The impact on the stock markets could be significant. Investors are used to earnings surprises that run on the sunny side.

The S&P 500 is up only 18% since the beginning of 1999. This is due, to some extent, to the huge drop the index suffered in 2002. It points to a stock market that has not performed as well as earnings have. It is, is essence, more fragile than the corporate results which have driven it.

The index sits just below 1,500 and has taken a big run-up since mid-2006. It is not hard to believe that a contraction of earnings growth would take it down 20%, which is about where it was 18 months ago. If the economy has entered a recession, investors should be happy if it does not go lower.

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

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Filed under: Dow Chemical (DOW), Stocks to Buy

The market’s choppy / consolidating pattern continues as 2008 begins, so defensive stocks remain prudent plays, and among these, Dow Chemical is worth a review.

Dow Chemical (NYSE: DOW) is the No. 2 chemical company in the world and the largest in the United States. A leader in performance plastics, Dow’s other products include polyethylene resins, fibers, films, and performance chemicals such as acrylic acid.

In general, analysts see a kaleidoscope of pricing conditions for Dow, but favorable industry revenue fundamentals on solid global economic growth: international sales account for more than 60% of revenue. Moreover, that patchwork of pricing conditions has prompted Wall Street to take a more-cautious stance with DOW, which has driven its P/E to about 12, but view that as getting DOW for a bargain price.

The risks? The standout risk with Dow concerns volatile costs for raw material. A substantial cost increase in this category could squeeze Dow’s earnings results. The Reuters F2007/F2008 EPS consensus estimates for DOW are $3.71/$3.50.

The First Call mean rating for DOW is: Hold. [17 firms.] Mean 2008 target: $49.00 [high: $55, low: $43.]

Stock Analysis: Dow Chemical is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from DOW’s shares. Sell / Stop Loss if you were to purchase shares in this company: $27.

DISCLOSURE: Joseph Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

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