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The Best of Kass

NEW YORK ( TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Among his posts this past week, Kass explained why Avon and Yahoo! are two stocks that could see gains despite weak fundamentals; why FedEx's recent announcement is worrisome on the economic front; and why Oaktree is an attractive financial stock.

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Good Dogs
Originally published on Friday, Sept. 21 at 9:27 a.m. EDT.

  • Avon and Yahoo! have weak fundamentals but potential share price catalysts.
  • "If every instinct you have is wrong, then the opposite would have to be right."
    -- Jerry Seinfeld to George Costanza (Jason Alexander) in Seinfeld's "The Opposite" episode

    Avon Products (AVP - Get Report) and Yahoo! (YHOO - Get Report) are two investment dogs, with weak fundamentals but potential share price catalysts.

    In the case of Avon, Coty has already bid nearly $25 a share for the company, only a few months ago. Coty has delayed its IPO until 2013, and, in all likelihood, its interest would only resurface after an IPO.

    Nevertheless, the share price is low, and I like the risk/reward ratio.

    In the case of Yahoo!, hedge-hogger Dan Loeb is a significant shareholder (and board member) who seems to be guiding the company in making the right moves (asset sales, Mayer appointment as CEO, etc.) and, to me, is likely to be a responsible and value-creation-oriented steward for all Yahoo! shareholders.

    At the time of publication, Kass was long AVP and YHOO common; long AVP calls.


    Another Sign of Stagflation
    Originally published on Wednesday, Sept. 19 at 10:43 a.m. EDT.

  • Let's dive deeper into FedEx's recent announcement.
  • In an earlier column I suggested that stagflation is knocking at our door.

    To illustrate that case, let's take deeper dive into economic bellwether FedEx's (FDX - Get Report) announcement yesterday in which the company reduced its EPS guidance for its May 2013 year from a range between $6.90 and $7.40 to a range between $6.20 and $6.60.

    In doing so, the company pared back its June forecast for 2013 U.S. real GDP to +1.9% from +2.4% and reduced its projections for global real GDP growth for this year and next year to +2.3% and +2.7%, respectively, from +2.4% and +3.0%, respectively.

    So slowing growth is seen by FedEx, but, at the same time, in support of my stagflation thesis (knocking at the door), the company announced an increase in shipping rates to +5.9% on Jan. 7, 2013, though lowering of the fuel surcharge will reduce this to a +3.9% increase.

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