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Dykstra: Back to the Well on This Pick

After a great opportunity in April, Headwaters deep-in-the-money calls look ripe again.

Certainly, the vast majority of you are aware that Barry Bonds hit his 715th career home run on May 28, passing Babe Ruth as the second-leading career home run producer, behind Hank Aaron's 755.

Lost in the hoopla was the pronouncement of such. Dave Flemming, 28 years old, is the youngest play-by-play announcer in Major League Baseball. He broadcast the Giants' games for their flagship station, KNBR, with veteran Jon Miller, best known for his Sunday night ESPN baseball broadcasts with Joe Morgan.

Imagine the adrenaline rush experienced by young Flemming as he announced the launch, descent, and landing of the mammoth 455-foot bomb by Bonds to dead center, which moved him ahead of Ruth. But unbeknownst to Flemming, only his partners in the booth actually heard "the call." Evidently, at the very instant Bonds' historic blast took flight, Flemming's hand-held microphone ceased to function, depriving untold thousands of Bay Area fans the opportunity to experience "the call" first-hand.

At age 28, Flemming was poised to make the deepest "deep in the money call," which he believed he did. Sadly, "the call" did not go through. In essence, history will reflect that it was never made. Is this an omen for the long-term yield on the

Barry Bonds, who will almost certainly have to return for another year to have a legitimate chance to break Aaron's record? Only the future will provide us with that answer.

Clearly, Bonds faces a lot of headwinds in his pursuit of "Hammerin' Hank's" hallowed record, which leads to my pick this week:




The last time I discussed Headwaters was back on

April 25, when the stock closed at $33.89. The stock then rallied in anticipation of its earnings announcement May 8, trading as high as $36 on May 3 through May 9, the day


Headwaters said all of its major businesses reported revenue increases for the quarter. By segment, sales of coal combustion products increased 21% to $58.5 million, while sales of construction materials rose 21% to $131.7 million, and revenue from alternative energy rose 23% to $79.5 million.

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noted here, the accompanying spike provided a great opportunity to book profits on the original call on the August $25 calls.

Remember, this is not a "buy-and-hold" operation. Our goal is all about making money; we want to profit at least $1,000 after we purchase our deep in-the-money call. To help ensure that, we set a good till cancel (GTC) limit sell order. This way, we don't have to watch the tape every second the market is open.

We are protecting our investment -- if the stock makes a nice move and spikes up during the trading day, your order will automatically get filled because you set a GTC limit sell order. This will allow you to capture that $1,000 gain


making a phone call, or watching your computer all day

Fast forward to the present: Headwaters common stock has been completely annihilated since May 18, when it lowered guidance to reflect the idling synthetic fuel facilities because of volatility in oil prices and customers' uncertainty over the phase out of certain tax credits.

I have been following this stock every day, and I have watched those operators just take this stock apart. It has been relentless! But it has finally found a bottom. That is why the Headwaters August $22.50, deep in-the-money calls, which closed Friday at $4.60, look good. This is one of those rare situations where we don't have to go out for to six months -- the company is just too good for this stock to keep going down, and on Friday it acted like it found its bottom. Also, the man, Jim Cramer, recommended Headwaters on his TV show,

Mad Money, last week. We have a lot of reasons to like this play, especially if you like money!


Life is a journey, enjoy the ride!

At the time of publication, Dykstra was long Headwaters although holdings can change at any time.

Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.

Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.