This was originally published on RealMoney. It is being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.I think the recent run-up in stocks was a bear market rally, in part because the screens and models I use to generate stock ideas aren't giving me much. I usually want a stock to score highly in four out of five categories before giving it much consideration: earnings momentum, earnings quality, price momentum, free cash flow and return potential. This week
NutriSystem ( NTRI - Get Report), Tempur-Pedic ( TPX - Get Report) and Pitney Bowes are all yielding north of 10% free cash flow to market cap. They all have lots of hair, but also seem to be holding on to their current values. I'm not a technical analyst by trade, but when a stock holds on to values near its low for an extended period, it looks like a bottom to me. 4. Speculate The last thing I do is look to sources like Stockpickr's stocks with unusual option volume to find a few speculative ideas to consider just for a short-term trade. ADC Telecommunications ( ADCT) is trading at $17.50
Jun. 10, yet the January 2009 25's are trading high volume. Is a deal in the cards? Cognizant ( CTSH - Get Report) options sent a similar signal last week Jun. 2-6. I'm afraid of Cognizant, but ADC has at least been experiencing positive earnings momentum. It may be worth a look. Obviously these ideas aren't for everyone, but sometimes staying in the game means going outside your comfort zone. They key is then to get comfortable with the risks associated with the new plan ... and watching your holdings like a hawk. This was originally published on RealMoney on June 10, 2008. For more information about subscribing to RealMoney, please click here. Plus, to brush up on your financial terminology, visit TheStreet.com's Glossary. And if you need help getting your personal financial house in order, use one of our Calculators.