June 28, 2010: 11 Service Sector Micro-Cap Growth Ideas

Investors regularly need fresh ideas to explore. I ran a screen on micro-cap stocks with company values in the $100-300m range within the service sector. These stocks beat the S&P 500 average by 20% or more over the past 52 weeks. All stocks were rated a SmartConsensus Buy.

The list should be used as a starting point for investors, and, as with all stock lists, it "is what it is". No more, or less.

Autobytel(ABTL): Ten day trading average of 160g shares, it is priced at $1.15/share with a 52 week spread of $0.40-1.42.

ChipMOS Technologies Bermuda, Ltd.(IMOS): Ten day trading average of 234g shares, it is priced at $1.55/share with a 52 week spread of $0.57-2.00.

Collectors Universe (CLCT): Ten day trading average of 27g shares, it is priced at $13.10 with a 52 week spread of $3.47-14.89.

Cost Plus (CPWM): Ten day trading average of 137g shares, it is priced at $3.83 with a 52 week spread of $0.95-5.98.

Diamond Mgt. and Technology Consultants (DTPI): Ten day trading average of 281g shares, it is priced at $10.96 with a 52 week spread of $3.78-11.49.

Emmis Communications (EMMS): Ten day trading average of 237g shares, it is priced at $2.19 with a 52 week spread of $0.24-2.45.

Gray Television (GTN): Ten day trading average of 716g shares, it is priced at $2.90/shares with a 52 week spread of $0.38-4.88.

Hastings Entertainment (HAST): Ten day trading average of 30g shares, it is priced at $7.62 with a 52 week spread of $3.60-9.38.

IDT Corporation (IDT): Ten day trading average of 30g shares, it is priced at $9.79/share with a 52 week spread of $1.56-11.38.

Journal Communications (JRN): Ten day trading average of 215g shares, it is priced at $4.57/share with a 52 week spread of $0.86-6.52.

The Providence Service Corporation (PRSC): Ten day trading average of 171g shares, it is priced at $15.48/share with a 52 week trading range of $8.80-18.57.

Be careful to use limit orders on micro-cap stocks.

The Author has no position in any of the above securities.

June 24, 2010: 21 Large Cap/Low PE Stocks

Occasionally, investors shake the tree with a broad screen to see what securities fall to the ground. Today,I programmed a Standard and Poors Large Cap screen. The following large cap ($10-50b) securities have a four or five star S&P rating coupled with a low PE and PEG valuations. For brevity, just the securities (in no particular order) and their recent closing price are reported. The reader is encouraged to use this list as a starting point for further research.

WellPoint (WLP) $53.03
ACE Limited (ACE) $52.88
Prudential Financial (PRU) $57.03
Chubb (CB)$51.90
Credit Suisse Group (CS) $40.13
Freeport McMoran (FCX) $65.06
UnitedHealth Group (UNH) $30.21
Aetna (AET) $28.93
POSCO (PKX) $105.14
Corning (GLW) $18.14
State Street Corp (STT) $35.81
National-Oilwell Varco (NOV) $35.75
Chevron (CVX) $72.26
Gilead Sciences (GILD) $36.21
CVS Caremark (CVS)$31.43
Murphy Oil (MUR) $53.50
Walgreen (WAG) $26.13
Research In Motion (RIMM) $59.64
Taiwan Semiconductor (TSM) $10.15
Conoco Phillips (COP) $53.51
Sterlite Industries India (SLT) $15.06

I would encourage income-oriented investors to use screens such as the above to investigate preferred and bond components in addition to the common stock listing, as these may represent attractive value at this time.

June 16,2010: Want Income? Here are a few ideas.

For some reason, many investors look for yield in the wrong places. How about those "can't miss" accidental high yields from the likes of BP? Are you satisfied hoping that, over time, yields will grow on common stock when the paradigm is changing before our eyes?

Here are a few preferred stocks that merit attention from income-oriented investors that in most cases will also have some upside call protection.

My favorite is Archer Daniels Midland Preferred A (ADMpA).Yielding 8.57% and trading at $37.62/share, ADMpA has a call at $50.00. It trades an average of 73,000 shares/day. This security has a 52-week trading range of $33.80-$51.81.

Another is HRPT Properties Trust(HRPN). Yielding 7.65% and trading at $19.61/share, HRPT has a call of $20.00. It trades an average of 16,000 shares/day. This security has a trading range since issue of $18.58-20.35.

Prudential Financial Inflation-Linked Notes (PFK). Want yield plus inflation protection? Yielding 4.58% and trading at $24.82/share, PFK has a floating rate based upon the CPI plus 2.40%. It has a call of $25.00. It trades an average of 28,000 shares/day. This security has a 52-week trading range of $17.35-25.51.Of interest, this security pays a monthly dividend.

If one is inclined to look at ETFs, you may wish to explore several of the preferred ETFs such as iShares' PFF ETF, which most readers are familiar with. One not so well known is the Barclays Capital Convertible Securities ETF (CWB), which invests in many interesting convertible securities and has a current yield of 4.74%. CWB trades at $33.21 and pays a monthly dividend. The market cap is 276m.

These ideas may entice you to explore the world of overlooked and not infrequently mispriced preferred securities. Each security has specific characteristics, some good and some dicey. And always remember to avoid market price orders. Know your "limit".

June 5,2010: Real Estate Flops In May

The latest Credit Suisse First Boston Monthly Survey of Real Estate Agents has been released (taken last week). I prefer this survey because it relies on timely reports from active Realtors and other real estate professionals in the top fifty metropolitan areas of the country. CSFB cuts through the hype and spin,instead, relying upon boots on the ground to assess and predict.

The results for the home market are poor, post tax-credit. Traffic levels were weak at the beginning of May and remained weak thereafter. CSFB will be following traffic patterns carefully to determine how long the post tax credit slowdown will last, with their expectation being that it will not improve from depressed levels anytime soon (perhaps in the Fall,if the stars align to improve the economy).

The worst declines occurred in Texas (Austin, Dallas, and Houston),Florida (Jacksonville and Orlando), Seattle and Washington D.C. metro. Decreased traffic nationwide was most evident in areas with relatively low average selling prices (high proportion of first time buyers). California appears to be less daunting, as the California tax credit assisted home buyers.

Renewed pricing pressure is appearing again, with the largest decrease in home prices reported since November, 2009. CSFB believes that price pressure downward is and will be commonplace, still. High existing home inventories remain.

From a securities standpoint, new home builders/developers are more reasonably valued now after an average 28% decline in recent prices as a whole. Builders now trade at an average 1.25x adjusted book value. CSFB believes that further declines are likely in stock prices this summer, at which time they may be prone to recommend buying the strongest of the lot.

Building supply companies face further weakness as product volume and pricing slips, in spite of the efforts of companies such as USG and MHK to hold the line.

Agents, in a monthly exercise, were asked to rate home builders. Highest were Toll Brothers (TOLL), Pulte Group (PHM) amd D.R. Horton (DHI). Lowest were Hovanian Enterprises (HOV), NVR, Inc. (NVR) and KB Home (KBH). It should be noted that some may rate a home builder based upon incentives given to compensate the real estate professional.

The over fifty-page document presented the mild to horrific problems facing the real estate industry, city by city and region by region. There were but a few spots of hope. Quotes from agents were generally discouraging in almost every respect.

Those involved in real estate know that there is always a good deal somewhere, especially for the experienced property investor. This survey generally does not focus on this relatively small group, nor on commercial and industrial property. A review of prior CSFB survey reports displays that their methodology in the compilation of the monthly report is a valid assessment tool.