This weekly Rocket Stocks column and portfolio is meant to generate ideas for momentum traders looking to profit from short-term market catalysts and exploit stock-specific news.
As the third quarter ended last week, portfolio managers marked up their assets to increase performance; as a result, stock names such as
Research In Motion
( RIMM) and others had big moves. However, statistically speaking, buying into that rally has been a losing proposition.
Thus, I positioned this week's
to be as market-independent as possible. As I always say, of the roughly 8,000 public companies, at least 1,000 to 2,000 stocks will go up. It's our job to find those stocks.
But before I make any recommendations, let's take a quick look at how
last week's picks
panned out. (And you
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- EMC (EMC) , as I said in my midweek update, I would have sold for a 4% gain Tuesday.
- Circuit City (CC) - Get Report, ended the week down 8.8%.
- Optium( OPTM), up as much as 8.5%, and ended the week up 5.5%.
- E*Trade (ETFC) - Get Report, ended the week down 3.3%.
- Downey Financial (DSL) - Get Report, down 4.8% for the week.
- Yamana Gold (AUY) - Get Report, down 6% for the week.
- NYSE Euronext (NYX) , a midweek sell when up some 4%.
- Apple (AAPL) - Get Report, a midweek sell when up 2%; however, the stock ended the week up 4.6%.
- Urologix (ULGX) , up as much as 4.7% but ended the week down 3.6%.
- Cabot (CBT) - Get Report ended the week down 10%.
- Cree (CREE) - Get Report (a midweek addition), up as much as 11% but ended the week up only 2.6%.
- ValueClick (VCLK) (a midweek addition), up as much as 9.5% but ended the week down 3%.
Now let's take a look at the
One thing most readers on this site know is that I love stocks with massive share-buyback plans. Such plans generally help decrease the float of shares, increase earnings and, most importantly, it's great to know that the company is buying shares along with you. This leads me to my first pick,
Valero is an oil refiner with a $5 billion share-buyback plan, one of the largest in the market. However, Valero has been stalled in the $65-$67 range even with oil above $80 a barrel.
As crack spreads near their lowest level in some time, pressure has been put on refiners such as Valero and
and could affect operating margins. With tons of cash on the books and a price-to-earnings (P/E) ratio of 7, Valero likely is going to move, playing catch-up to oil next week. I believe it could easily trade to $72.
Look for a rebound in crack-spread margins to help boost Valero among other refiners; this could rocket shares, which have not been following crude oil prices.
Next on the list is
, which has been on a horrible slide ever since it posted subpar earnings back in late July. It is down some 33% from its early-July highs. That makes the stock now worth a look.
With a short position of 18% leaning on the stock, it is no wonder FreightCar America has had trouble moving. However, with investors such as
and other large hedge funds investing in the rail space, shorting such stocks will likely backfire. My guess is that Buffett is indirectly playing international growth via the rails; it is the safest way for him.
FreightCar America manufactures, rebuilds, repairs and sells freight cars that are used for hauling coal and other commodities, and it seems like a great way to indirectly play the current transition back into the rails. With a $17-per-share book value and $1.3 billion in revenue and zero debt, look for FreightCar America to move higher this coming week.
It's about to move much higher as it sports zero debt and a high book value. It's also a great play on the transition back into rails.
Another stock worth a look this week is
. I mentioned this retail stock last week in my weekly column
Top 10 Stocks with Big Insider Buying, Buybacks
Kohl's just reported that it will repurchase $2.5 billion worth of common stock over the next three years, and it's no surprise as the stock is near its 52-week low. A buyback of this size (13% of total outstanding shares) indicates that management believes it's time to get on board here.
On top of the buyback, Deutsche Bank reiterated its buy rating and $75 price target. The bank believes the repurchase plan will add to full-year 2007 and full-year 2008 earnings-per-share growth. Kristin Bentz, former Lehman Brothers consumer equities analyst and now managing editor and consumer retail contributor at
, also feels that Kohl's is a buy.
As for the rest of the week's picks, I will take a closer look at
and see how high it's likely go. I'll also look at a very speculative Chinese stock,
, which on Thursday traded 200 times its normal volume. I wonder what is up with that? And now that oil is over $82 a barrel I take a look at a few solar plays and alternative energy plays.
To see all of the picks and full analyses, check out the
To find the snapbacks and potential breakouts on a regular basis, check out these Stockpickr portfolios, which I use in my own research each week:
- Today's Hot List: This daily list is a must-view every midday to see what stocks are making the biggest moves and why.
- Always check the Biggest Percentage Losers, a list of stocks that lost big the day before, because they can snap back hard. When you check this list on Stockpickr, you can see which stocks are owned by the quality hedge funds and mutual funds. Pay attention to those. They will be buying at the lower prices, so you should be also.
- Ditto for the 52-week-low list. You must check the above two lists every day if you hope to find volatile stocks.
- Biotech Short Squeezes. Dendreon (DNDN) and others can often be found in this category.
- Stocks Rising on Unusual Volume: These are potential breakout stocks.
- Stockpickr's System Trades of the Day: These are trades triggering that day in various backtested trading systems we've developed.
- Stocks With Unusual Option Activity: Perhaps someone knows something?
- Latest Activist Situations: These are beaten-down stocks that hedge funds are accumulating shares of and demanding change in. Believe me, these hedge funds piggyback each other. And once they start rocking the boat, things happen quickly. This should be on your must-view list.
One final place to frequent is the
section on Stockpickr, where ideas such as those presented in this article are thrown around daily.
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 president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for
The Financial Times
and 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.
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