Filed under: China, Stocks to Buy

With weather forecasts predicting frigid conditions for this weekend’s NFC championship game at Lambeau Field, here are two stocks that are sure to warm up the shirtless Packer fans.

China Water and Drinks (NASDAQ: CWDK) is China’s leading supplier of bottled water. Obviously for football fans, this water will be used to make piping hot coffee to drink at the game. The company is growing very quickly, and while other high-flying Chinese stocks have gotten slam-dunked, CWDK is actually trading up 50% YTD.

Maybe the shirtless faithful should take a trip to the nearest mall and go shopping at American Eagle Outfitters (NYSE: AEO). American Eagle has gotten hit along with the rest of the retail sector, but the company sports a P/E of 10.4, a PEG of just 0.74, and a nice little dividend of 2.1%. With the expected economic pick-up in second half ‘08, retailers should benefit, and American Eagle is well poised to help investors profit as well.

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 1/18/08.

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Filed under: Good news, Housing

WCI Communities (NYSE: WCI), a Florida condo developer struggling to stay afloat, has managed to get through another round of negotiations with lenders without bankruptcy. The company reduced (subscription required) the amount of its credit line and agreed to “increase the pricing of the loans,” but few details are available for now.

Billionaire investor Carl Icahn, who owns about 14% of the company, certainly wasn’t predicting this mess when he began to acquire shares in the company more than a year ago. The WCI stake has given the legend’s hedge funds their first quarterly loss in history.

But WCI Communities impacts the entire industry, not just Mr. Icahn. Yesterday’s Wall Street Journal described (subscription required) the shock waves that a bankruptcy would have sent through the housing market: “If WCI is forced to seek bankruptcy protection, it would become the largest publicly traded builder to fail, sending shudders through an industry that has remained largely in the good graces of its lenders.”

But with the housing market in trouble, banks simply don’t want to take ownership of half-built condos and vacant land. They’d rather play nice rather than risk jolting a housing market that is already more fragile than it’s been at any time in recent memory.

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Filed under: Earnings reports, Consumer experience, Competitive strategy, Sprint Nextel Corp (S)

Sprint’s shares plunged more than 15% Friday morning after the company said it will cut about 4,000 jobs and close 125 stores to cut costs to improve its financial performance, the company announced Friday in a statement. Sprint’s shares sank $2.06 to $9.51 in early trading Friday.

Sprint (NYSE: S), the No. 3 wireless carrier, said the action would lower labor costs by about $700-$800 million annually. Sprint said the jobs cuts would occur nationally, and would include managers.

The action comes after the company announced that it lost an additional 683,000 customers last quarter, which brought 2007 customer losses to 1.2 million.

No 3. carrier Sprint has been stung by customer departures, as customers have been lured to competitors AT&T (NYSE: T) and Verizon Wireless (NYSE: VZ), which feature more-popular phones/PDAs and better service. Moreover, although Sprint’s call quality and network has improved in the past six months, Sprint has found it difficult to reverse the company’s earlier reputation as one of the worst call networks in the mobile sector. In addition to Sprint’s aforementioned attrition problem, analysts believe that reputation is holding down subscriber recruitment.

Continue reading Sprint shares plunge 15% — to cut 4,000 jobs, close 125 stores

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Filed under: Merrill Lynch (MER), Politics, Housing

If you can’t pay back the bank, the bank takes your house or your car. If a stock you own loses its value, there’s no collateral you can go after to cushion your loss. This is why Bush’s debt recession will be far far worse than Clinton’s equity one.

The stock market in the last year of George Bush’s term is following a pattern that reminds me of the last year of Bill Clinton’s. The Clinton market tumble — where the NASDAQ fell in March 2000, rose through September 2000, and then began a straight down plunge through January 2001 — preceded a brief recession in 2001. But I think that the Bush recession — following Dow and broader market quakes in March 2007, August 2007, and the 14% decline since the October peak — will be much much worse.

The reason? Clinton’s recession was driven largely by a collapse in equity prices, while Bush’s will be driven by an implosion in the value of debt. Before focusing on what Bush’s recession might look like, it’s worth remembering that Clinton’s was driven by the collapse of the NASDAQ as the dot-com bubble burst. It also involved debt — $1 trillion worth of borrowing by fiber optic network builders like Global Crossing that went bankrupt when they couldn’t pay their debts as their customers, the dot-coms, went belly up.

Continue reading Why the Bush debt-recession will topple Clinton’s equity-recession

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Filed under: Major movement, Expedia Inc (EXPE), Stocks to Buy, Garmin Ltd (GRMN)

Experience has taught me that catching falling knives in the stock market is incredibly dangerous, but some of these speculative names are really beginning to test my resolve. So I thought I’d share them with you.

Investors have been punishing these plays not because business has fallen off a cliff, but because they are some of the most speculative stocks around — other than penny stocks — and in this kind of market environment, investors prefer safety. That creates opportunity, if you’re willing to take on some risk. After all, these companies still have solid business fundamentals, so there will be a bottom somewhere, and I think we’re getting very close to it here. For now, put these on your watchlist, for when they do bounce, they’re going to bounce hard, think 15-20% within days.

Garmin (NASDAQ: GRMN) — At $64, this navigation system maker is down 35% on the year, but revenue growth is far greater than its current P/E of 15. Sure, there’s some margin concerns, but the chart has solid support at $60.

Continue reading How to catch these four falling knives (GRMN, MELI, FSLR, EXPE)

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Filed under: Options, Las Vegas Sands (LVS)

Las Vegas Sands (NYSE: LVS) opened the company’s new $1.9 billion resort.

The Palazzo Las Vegas is the first hotel to open on the Las Vegas Strip in nearly three years.

LVS closed at $74.46. LVS February option implied volatility of 67 is above its 26-week average of 49 according to Track Data, suggesting larger price fluctuations.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Federal Reserve, Cramer on BloggingStocks

TheStreet.com’s Jim Cramer says Parker Hannifin’s punishment for good results is typical of what to expect in this market.

Parker Hannifin (NYSE: PH) (Cramer’s Take) defines this market. The company delivers a perfectly good quarter, says international is smoking, boosts forecast, commits to more buybacks — and then loses almost 10% of its value.

That’s what this market is all about.

It was in the cards. You knew it if you listened to the conference call. Because on that call the company had to answer endless questions about how it would fare in a recession, even though it saw improvement domestically.

PH is one of those companies that keeps the Fed from easing: its commercial aerospace and engines businesses are really strong. But no matter what, the Street has decided that PH spent too much money buying back stock at higher prices — the mantra of the moment — and can’t possibly do well in the now well-baked-in Fed-mandated recession.

Continue reading Cramer on BloggingStocks: The Fed Effect: Do well, get punished

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Filed under: Forecasts, Industry, General Motors (GM), Toyota Motor Corp. (TM)

General Motors (NYSE: GM) is upbeat. Given the state of the car industry, that may seem bizarre. But the company’s CEO sees better things ahead [subscription required] due to huge cost-cutting and improving international sales.

According to The Wall Street Journal, “Chief Executive Rick Wagoner said the auto maker could see ’significant’ profit increases in two to three years.”

GM’s plan has three pieces. The first is to cut production in the U.S. if sales continue to fall. The next is to further trim the work force at the company. The last is to count on sales in countries like China to keep worldwide sales momentum.

With its shares below $23, down from almost $43 last year, Wall Street does not appear ready to buy into GM’s vision. That may be for good reason. Overseas sales can only make up for so much carnage in North America. GM may be seeing strong revenue increases in South America and Asia, but it is up against local car companies and Toyota (NYSE: TM) in all of those markets. That means that continued growth in sales outside the U.S. is by no means certain.

The GM dream may have the ring of hope, but it does not yet have a foundation in reality.

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

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Filed under: Under Armour’A’ (UA), Options

Under Armour (NYSE: UA) is recently trading at $29.90 in pre-open trading, below its close of $37.06.

UA anticipates full year 2007 net revenues to increase approximately 40% to an estimated $605 million.

Stephens Inc says: “Despite UA’s pre-announced out-performance in 4Q07, the now anticipated weight of the 1H08 marketing spend to launch the new UA footwear line is obviously putting additional discount on the stock.”

UA February option implied volatility of 100 is above its 26-week average of 55 according to Track Data, suggesting larger price risks.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: MasterCard Inc’A’ (MA), Options, United Technologies (UTX)

United Technologies (NYSE: UTX) will report Q4 EPS on January 23. UTX February option implied volatility of 32 is above its 26-week average of 26 according to Track Data, suggesting larger risk.

MasterCard (NYSE: MA) closed at $176.88. MA will report Q4 EPS on January 31. MA February option implied volatility of 67 is above its 26-week average of 41 according to Track Data, indicating larger price fluctuations.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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