Ramp up your “Fun” Quotient

I’ve always loved stocks that bring out the kid in me, and when I fired up my search engines this morning, I lucked out! I’ve found three excellent companies with growing earnings, nice dividends, and appealing technical indicators—all in the entertainment industry. It’s a category that just loves summer, when families flock to leisure activities. And with the economy improving, all indicators are that this sector will have a bonanza season.

And adding an extra dollop to these companies appeal—for me—is the fact that they are midcap stocks—one of my favorite hunting grounds.

I love the small- and mid-cap universe, as they are usually companies who specialize in a few products or services. That area of investing offers several advantages for investors, including:

·       It makes their financial statements more visible, so that you can easily see early warning signs of impending trouble. No need to wade through scores of subsidiaries, trying to figure out how their fortunes affect the consolidated company, or if they are the next “Enron” in training.

 

·       These are the sorts of companies whose expertise in their industry or niche is very often attractive to larger businesses that would rather buy them than try to copy and compete with them. And that usually means a nice premium for their shareholders. 

·       They are often “undiscovered stocks”—not because they are speculative, but because they aren’t large enough yet to need Wall Street’s money, so they aren’t on the buy list at the majority of brokerage houses. That means you can buy them at discounted prices, and when they do begin attracting the attention of the analysts and institutions, their stocks can soar.

Are these Hedge Fund Darlings Really a Good Buy?

In yesterday’s article, I mentioned the recent study by Goldman Sachs, which listed the most popular stocks held by hedge funds. I’ve already shared with you the names of the 13 stocks that, technically, look the most promising out of the 50 most popular companies held by hedge funds.

Today, I want to talk with you about the 14 stocks that hedge funds can’t get enough of—yet, each one is rated a “strong sell” by my technical parameters.

Company	Symbol	Price ($)	Analyst Reco
Microsoft	MSFT	29.34	2.0
Qualcomm	QCOM	57.45	1.9
Citigroup	C	26	2.3
JP Morgan Chase	JPM	32.96	2.0
BP	BP	37.02	1.6
Anadarko Petroleum	APC	62.24	1.8
Cisco Systems	CSCO	16.39	2.3
Liberty Interactive	LINTA	16.95	1.6
Visteon	VC	41.10	2.4
Valeant Pharmaceuticals	VRX	47.92	3.0
CIT Group	CIT	34.10	2.1
Devon Energy	DVN	59.75	2.0
EMC	EMC	24.03	1.7
Illumina	ILMN	44.33	2.4

13 Top Hedge Fund Holdings that Look Promising!

13 Top Hedge Fund Holdings that Look Promising!

Last week, I discussed the dismal returns that hedge funds have been giving their investors since they last beat the S&P 500 in 2008. And I noted that the returns suffered due, primarily, to high management fees and lots of turnover.

Today, I want to share with you another reason why hedge fund returns may be lagging: Picking the wrong stocks!

Clearly—although certainly still volatile—you can see that the market has been on the rise for the past six months. But hedge funds returns don’t imitate that. And that may be because their most popular holdings are stocks that—on a technical basis—don’t look very attractive at all.

 http://finance.yahoo.com/q/bc?s=%5EDJI&t=6m&l=on&z=l&q=l&c=

Goldman Sachs just revealed the top 50 holdings of hedge funds. I decided to look at each individually and put them through my technical analysis screen. And I have to say that even I was amazed at the results!

Of those top 50 stocks, only 13 were rated Buy or Strong Buy by my indicators. Six were Holds and the rest were rated Sell or Strong Sell. Here are the 13 that look the best:

Company	Symbol	Price ($)	Technical Rating	Analyst Reco
Apple	AAPL	572.27	Buy	1.7
Delphi Automotive	DLPH	29.84	Buy	1.6
Tyco	TYC	54.60	Buy	2.0
Visa	V	120.28	Buy	1.9
Yahoo	YHOO	15.47	Buy	2.6
WellPoint	WLP	68.84	Buy	2.0
Charter Communications	CHTR	64.63	Buy	2.0
eBay	EBAY	41.49	Strong Buy	2.0
Equinix	EQIX	167.32	Strong Buy	1.9
Dollar Thrifty	DTG	81.89	Strong Buy	2.6
Mastercard	MA	416.05	Buy	1.9
News Corp	NWSA	19.69	Buy	2.2
Williams Companies	WMB	31.39	Buy	1.9

Now, I’m not suggesting that you run out and buy these stocks. And please note that technical ratings are pretty short-term in nature. But if you want to start building your own hedge fund, these might be some companies to consider.

Tomorrow, I’ll tell you about all the popular hedge fund holdings that look a lot more like sells than buys to me!

Seller’s Market Returning?

For the past few years, many folks have delayed purchases of their next home because they've had a tough time selling their current one. But those days may be nearing an end.

The National Association of Realtors has reported that inventory—the number of homes for sale across the U.S. has declined to a 6.6 month supply. That's down from 9.1 months in April 2011.

We’ve also seen a similar reduction in my neck of the woods. In my real estate area in Cumberland County, Tennessee, inventory now stands at 5.93 months, and in my smaller resort community, it’s 5.4 months.

As well, existing home sales in April rose to 4.62 million from 4.48 million in March, nationwide. And new home sales increased to 343 thousand from 328 thousand in that same time period.

My 2 Favorite Stocks for This Week

It’s been a mixed week on Wall Street. Weekend news of a new, Socialist president in France and a backlash against austerity in Greece sent the markets falling in the first half of the week.

But good unemployment numbers, import and export prices, gave stocks a firmer footing on Thursday.

The good part about the market weakness is more bargains to be had!

Here are my two favorites this week:

American Capital LTD, (Nasdaq: ACAS) American Capital, Ltd. is a private equity and venture capital firm specializing in management and employee buyouts, mezzanine, acquisition, recapitalization, middle market, and growth capital investments.

Price: $9.82

Market cap: $302 b million
Target: $12

Why I Like It: Institutions are buying; analyst’s earnings estimates are increasing; improving economy means more businesses seeking financing for future growth.

SunCoke Energy Inc. (NYSE: SXC) mines and produces coal in the Americas. It is the largest independent producer of metallurgical coke in the Americas. It offers metallurgical and thermal coal used in steelmaking facilities.

Price: $15.30

Market cap: $1.06 billion
Target: $18.00

Why I Like It: Great earnings growth in cokemaking sector; shares look ready for a technical breakout

It’s not too Late for the Boomerangers!

My parents worked incredibly hard so that their children would have better, more prosperous lives than they had. And we baby boomers largely exceeded their wildest expectations.

We’ve had the mini-mansions and two luxury cars. We’ve taken exotic vacations. We don’t do our own housework. And we’ve sent our kids to private schools and the best colleges our money can buy. We had no reason to expect that our children would not live even more comfy financial lives, did we?

That is, until the recession and near-collapse of the world financial markets drastically reduced that dream.

Young people who’ve worked hard for their diplomas in the last few years have entered a dramatically different work force than the one that greeted me as a proud college graduate.

A study by Georgetown University’s Center on Education and the Workforce found that 8.9% of recent college graduates are unemployed. And if your children do not have a college degree, that rate goes up to a whopping 22.9%.

And to further poke a stick in their eye, students emerging with their degrees have accumulated more than $1 trillion in student loans, according to the Consumer Financial Protection Bureau. The Project on Student Debt says those loans average $25,250 per person.

My 2 Favorite Stocks for Next Week

Over the Easter holiday, I had a discussion with Don’s 92-year-old dad about the pitiful rates he’s earning on his certificates of deposit at the banks. For $25,000, he’s getting about 1% per year. That’s certainly not making him any money!
We talked him into his first stock market investments a while back, and he’s game for more, so I did a little research to see what I could find that might give him a much better return.

Now, as you might imagine, he has most of his money in really safe, conservative investments. But at this juncture in his life, he’s feeling a little more speculative and wants to have some fun with his money.

And if you have a little bit set aside—funds that you don’t need right away—and want to take a bit of a risk for a whopping large return, take a look at these two Real Estate Investment Trusts (REIT), both of which are paying very generous dividends right now:

American Capital Agency Corp. (Nasdaq: AGNC) is a REIT that invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by government-sponsored entities or by the United States government agency.

Price: $30.11

Market cap: $6.75 billion
Target: $31.00

Why I Like It: Fabulous dividend, great potential to also grow capital appreciation in the near-term

Invesco Mortgage Capital (NYSE: IVR) is a REIT that invests in both residential and government-backed mortgages.

Price: $17.26
Market cap: $1.97 billion
Target: $19.00
Why I Like It: Fabulous dividend, recent uptick in institutional buying of its shares

Both of these stocks are very high-yielding REITs, and when interest rates begin to creep up, you will want to vacate your shares. But, in the interim, their dividend yields can certainly supplement your income needs, at a very healthy level.

But please be conservative and invest only a small portion of your portfolio in these shares, as they are considered fairly speculative, in terms of repayment risk.

Note: I intend to establish a portfolio of similar picks, some 25-30 stocks that I’ll update on a regular basis. I will discuss them from time-to-time in my blog and on this web site, but a full analysis of each stock—as well as detailed updates—will be available only via subscription. If you’d like more information, just contact me directly, at nzambell@frontiernet.net