Stock-picking games such as the
contest offer a great way to build a certain discipline in stock-picking.
To compete, let alone win, such a contest, it's not good enough to select quality stocks that you think are likely to move up slowly but surely over the next two years; you need to choose stocks that can accelerate
There's an urgency to these stocks. They are volatile, they have a catalyst, and somehow or other, they are cheap. In other words, they are more likely to go up 40% than down 40%, but certainly the latter is possible.
Keeping a constant eye out for such stocks -- a discipline you have to hone if you are going to compete in a stock-picking contest -- will also help you keep an eye out for longer-term trading possibilities that can become very cheap in the short term.
In my previous columns about Beat the Street --
How to Win a Stock-Picking Contest
Beat the Street by Playing Ugly
-- I wrote about
, all of which have done very well. (You can still sign up for
-- it's free, and the grand prize is $100,000.)
I've updated the list for all the earnings activity this week and set up my next watchlist of Beat the Street stocks,
, on Stockpickr. As part of my research in compiling this watchlist, I gleaned this from several Stockpickr portfolios:
- Top 20 Most Volatile, stocks that are most volatile on earnings days.
- 10 Short Squeezes, an updated list of stocks with high short interest and high insider buying. If you pit the insiders vs. the shorts, the insiders have a high likelihood of winning, and that's worked well over the past few months.
- Biggest % Losers, a list of stocks for which we describe when and how each was crushed. Stocks that are crushed are more likely to snap back huge than stocks that are at 52-week highs. That's not to say stocks at their 52-week highs aren't good buys; they just aren't likely to go up another 40% in a week. Or even 2%.
Among the Beat the Street names on my
Jos. A Bank Clothiers
. Why does it make my list of stocks that have the potential to move significantly higher this week?
- The stock traded 10% lower Thursday after the retailer reported lower-than-expected same-store sales growth. The market ignored the fact that same-store sales were still 10% higher year over year.
- There are 7.6 million shares short the stock, which would require 18 days of nonstop short-covering should the stock move higher. This stock is set to explode if it ticks upward.
- The company trades for less than 10 times cash flows with double-digit growth. Earnings per share are expected to climb from $1.95 in 2006 to $2.24 for fiscal 2007 to $2.54 for fiscal 2008.
- It releases earnings Tuesday, April 17.
One of my favorite bloggers, Crossing Wall Street, lists Jos. A Bank among his
Next, let's look at
. Here are the reasons this stock makes the list:
- It reports earnings Thursday, April 19.
- It trades for 10 times cash flows.
- Its 25% year-over-year growth means it's cheaply valued.
- It's a takeover target because all exchanges are ripe for consolidation. (And if you don't believe me, its CEO, David Kalt, had this to say in a recent interview with MarketWatch: "Consolidation is the one constant that remains in our industry.")
- The stock is about 30% off of its 52-week highs.
- It has exceeded estimates in each of the past four quarters.
- Analysts have upped estimates for this quarter in the past 90 days.
OptionsXpress also appears on my list of
. This is a list of those stocks that have a price/earnings-to-growth, or PEG, ratio of less than 2 and a growth rate greater than 25% and that have been getting upwardly revised analyst estimates. The stocks on this list are also solidly off their 52-week highs.
Other stocks on the Top Growth Surprises list include
, names that I believe offer both growth and value.
My list of contest stocks also includes
, which I believe could surprise on its call this week, as well as one IPO play that I actually believe is a quality stock and is ready to break out here.
For the full list, check out my
portfolio on Stockpickr.
For my prior list, which I compiled and wrote about three weeks ago, check out the
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
to send him an email.
TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.