Stop for a second with the worrying! Even in the bear market of 2000-02 the best strategy was to selectively find volatile stocks to go long.
The past week was a tough one for investors, with subprime fears, rising oil and overall concerns about the health of the international markets on everyone's minds. Last week's
Rocket Stocks column
highlighted companies scheduled to report earnings that we believed offered substantial upside potential. The portfolio highlighted
, which ended the week 17% higher; as well as
, which was down 5.6%; and
, which fell 7.6%.
This week we take a look at a few names that have been beaten up over the last week and are poised for a snapback rally, as well as a few companies set to report earnings that also have high
For the entire list of stocks as well as the analysis for each pick, check out the
portfolio at Stockpickr.
Let's take a look at a few names from this week's list. First up is
( BBBB), which is a relatively unheard of stock. However, if you're a college student, it is very likely you live on Blackboard.
Blackboard provides enterprise software applications and related services to the education industry in the U.S. Its Blackboard Learning System allows education providers to support an online teaching and learning environment. With it, professors can post their materials online for students to access if they miss a class or need further information.
Blackboard is slated to report earnings results after the market closes on Tuesday, July 31. As it did last time it reported, the company will likely crush earnings. In fact, Blackboard shares climbed to an all-time high the last time it posted earnings and offered better-than-anticipated guidance.
Next up is
, which will report earnings before the market opens on Wednesday, Aug. 1.
While shares of the credit-card company are 100 points higher over last year, the shorts have been trying to link the stock with all of the recent credit and subprime issues. We believe the earnings numbers are going to be red hot, forcing the large position of shorts to cover.
A few things to note:
1) MasterCard makes a very small amount of money on each credit-card transaction that takes place.
2) It looks like the $13 million investment MasterCard made in Redecard, a Brazilian company that is coming public, is now worth more than $300 million once Redecard comes public in Brazil. This number has not been reflected in analysts' earnings models.
3) MasterCard is also a good play on the weak dollar.
Keep in mind that there is a short position of 11% in this stock.
Next up is
, a name that has appeared on our Rocket Stocks list before because it has a very high short position, a characteristic we often look for.
In its most recent earnings report last week, the weight-management products company reported a higher quarterly profit mainly on growth in its core women's market, but it guided below analysts' views, sending shares down more than 15% in after-hours trading Tuesday. NutriSystem made it clear on the conference call that it is starting to expand its men's and seniors' lines as well as moving into Canada.
NutriSystem is a snapback play as the shorts are really pressing their bets with this stock. This one reminds me a lot of
. It trades at just 12 times cash flows, and has a short position of 32%.
For the entire list of stocks on this week's list as well as the analysis for each pick, 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 at midday each day to see what stocks are making the biggest moves and why.
- Always check the Biggest % 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.
- Biotech Short Squeezes: Dendreon and others can often be found in this category.
- Top Insider Purchases and Buybacks.
- 52-Week Lows List: As with the list above, you must check this portfolio every day if you hope to find volatile stocks.
- Stocks Rising on Unusual Volume: These are stocks with the potential to break out.
- System Trades of the Day: These are trades triggering that day in various backtested trading systems we've developed at Stockpickr.
- Stocks With Unusual Options Activity: Unusual activity in these stocks the day before suggests that someone perhaps knows something.
- Latest Activist Situations: These are beaten-down stocks that hedge funds are accumulating shares of and demanding change for. Believe me, these hedge funds piggyback each other. And once they start rocking the boat, things happen quickly. This should be on the must-view list.
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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