Go Long and Rock On

At times, I seek inspiration from new music. I find a good rock 'n' roll song goes with some stock research like a fine Sauterne with a foie gras terrine.

Today, I have three stock ideas for you and three Southern rock bands for complementary listening.

02Micro With Kings of Leon's 'Aha Shake Heartbreak'

The Kings are the best band out there right now, bar none -- I will fight anyone who says otherwise. Their first record goes well with any stock research, but on Aha Shake Heartbreak, the Followill boys really hit their stride.

If you want to listen to the Kings on your laptop computer, 02Micro (OIIM - commentary - Cramer's Take) can help you out. The company makes power-management integrated circuits that improve battery performance by providing dedicated functionality features, like the ability to use the CD player without booting up the computer. The company also offers products for security applications, like smart-card authentication.

O2 reported a disappointing quarter Wednesday, providing an attractive entry point. This company stands out for me because it isn't expensive and has growth, a great balance sheet and a tremendous number of patents protecting its intellectual property. It trades at 14 times forward earnings on 19% revenue growth. If we ex out the cash, the company trades close to 10 times forward earnings.

This seems like a strong risk-reward situation to me, given a portfolio of products for hot end markets and a strong history of growth. It has tripled revenue over the past five years while remaining consistently profitable. If the company is able to maintain its strong growth trend, the shares could see $20 in 24 months.

Lakes Entertainment, With Drive-By Truckers' Blessing and a Curse

Let's gamble on gambling. It is one of the vices we seem to unanimously enjoy, and all forms of gambling are proliferating across the U.S. There are now 35 states with at least one casino of some kind.

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At the time of publication, Bulwa was long Bentley, O2Micro and Lakes Entertainment, although holdings can change at any time.

Steven Bulwa is an independent portfolio manager based in Toronto. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Bulwa appreciates your feedback; click here to send him an email.