Updated from Dec. 31, 2007, at 6:19 a.m. EST
Last week's choppy trading basically summarized how the market has acted for the past year.
Dow Jones Industrial Average
saw nice action Monday through Wednesday as the typical year-end Santa Claus rally kicked in. However, this trend was broken abruptly on Thursday as a series of negative domestic and international news items hit the market hard. And Friday's housing numbers kept a rally at bay.
As readers know, I like to look for stocks that have potential catalysts ahead of them. The catalysts I look for vary from week to week, but typically, they are earnings, irrational selloffs, regulatory decisions, company meetings and other market-independent events that could push a stock higher.
In this week's
, I highlight some companies that have been sold off irrationally by the market and could move higher in a snapback in the week to come.
But before I make any recommendations, let's see how
last week's Rocket Stock picks
fared in another choppy market.
- Corning (GLW) - Get Report: Up 2.3% at one point but ending the week just 0.2% higher. Its $500 million buyback is in full effect, however.
- Akamai (AKAM) - Get Report: Up as much as 3% on the week, but finished down 1.5%. Akamai's longer-term growth may aid shareholders in 2008. I would watch F5 Networks (FFIV) - Get Report as a tell for Akamai.
- NetSuite (N) : Down 2.9% on the week, this recent IPO remains very volatile. The stock sold off a bit once it was announced that an additional 930,000 shares were being sold to the underwriters.
- Kohl's (KSS) - Get Report: Down 3.1% for the week. Despite the company's huge buyback plan, shares keep on falling. The stock's now trading at seven times earnings.
- Dick's Sporting Goods (DKS) - Get Report: Up as much as 1.7% but ending the week down 4%. Dick's, however, is one of the few retailers that is bucking current trends. Its last quarterly earning report was amazing, sending the stock well over $30. It is being irrationally sold off with the retailers.
- Under Armour (UA) - Get Report: Down 4.9% for the week. As the weather gets and stays colder for longer, UA should be able to work through a lot of its inventory.
- JetBlue (JBLU) - Get Report: Down 5% on the week, despite the recent 19% investment by Lufthansa at $7.29.
- ValueClick (VCLK) : Down 5.6% on the week; I still believe that ValueClick will be bought out soon.
- Legacy Vulcan (VMC) - Get Report: Down 5.9% for the week.
- Genitope (GTOP) : Up as much as 15% but ending the week down 8.8%.
Now let's look at some of the picks from
First up is
. The company announced late Wednesday that U.S. regulators tentatively approved its experimental drug Stavzor, which treats bipolar disorder, epilepsy and migraine headaches.
Despite this major piece of positive news, Noven shares actually finished down 1.4% on Thursday. Trading nearer its 52-week low than its low, with a short position of nearly 10%, $75 million in cash and zero debt, Noven is poised to move much higher now that the Food and Drug Administration has hinted that it will approve this drug.
Next up is
. The stock is down more than 25% from its high in October of $25. Despite its insanely cheap valuations compared with spinoff
(of which it owns 86%), there are some concerns regarding EMC's financial services industry business.
bullish earnings report two weeks ago is a big positive for the sector. Its strength from the financial services industry negates the concerns raised by
report. This can be directly extrapolated as a positive for EMC given the percentage of its business in that area.
Last week EMC inked a deal to buy
for $85 million. EMC has $5.5 billion in total cash, so this is a relatively small buy for the company. Also, management has a proven track record as they bought VMware for $600 million in 2003; currently VMware is worth $35 billion.
With a $2 billion stock-buyback plan and double-digit earnings growth since 2002, EMC is one of the cheapest plays going into earnings season.
With the new year here, many Americans' No. 1 resolution will be to lose weight this year. And with 60% of Americans technically considered obese vs. their "ideal weight," this leads me to
NutriSystem has had major issues -- guiding down multiple times and a massive short position of almost 60% (20% higher than that of
, a heavily shorted stock I wrote about back in June).
Many hedge funds are betting against NutriSystem with valid reasons. However, the company just added $100 million to its stock-buyback program, bumping it to $200 million, and it has about $117 million in cash and zero debt.
For more detailed analysis and the rest of this week's picks, check out the
As always, 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.
As originally published, this story contained an error. Please see
Corrections and Clarifications.
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.
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.