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In
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Winners, Losers,
and Why
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From the Blog
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This Week's Updated
Watchlist
Just
for comparative purposes, the Russell 3000 was up 0.25% last week, and
the S&P 1500 was up 0.27%. In other words, it was a pretty benign week....
for most stocks. A few groups, however, went hog wild in
good and bad ways.
A quick run-down
before we dig in deeper: Photographic products exploded with a 19% gain,
while multi-line insurers were the runners-up with a 13% pop. Industrial
REITS took the #3 spot. On the downside, the tires and rubber group tumbled
the most with a 10% dip, and commodity chemical stocks were next in line
with a loss of about 6%. Heavy electrical equipment names were third from
the bottom, with a 5% tumble.
 Winners
The photographic
products group rally was led by one name... Eastman Kodak (EK). The stock
took off following news that the company was placing digital photo printing
kiosks in 70 Discount Drug Mart locations in Ohio. Fuel was added to the
fire the following day when the company unveiled - at a trade show -
what appears to be a reinvented mindset... possibly the one that will let
the company survive the passing of the analog age.
Most spokesperson
quotes are self-serving company fodder, and this one isn't much different.
However, "We'll provide attendees with an entirely new demonstration
of how KODAK Products deliver applications and solutions that help customers
grow their business," indicates that Kodak has finally figured it out.
It's a start,
though after years of operating losses (let alone net losses), Kodak has
a deep hole to dig itself out of.
 PICO
Holdings Inc. (PICO), Unum Group (UNM), Prudential Financial Inc. (PRU),
The Travelers Companies Inc. (TRV), and other insurers all posted big gains,
though for no specific reason other than AIG-induced euphoria. While insurers
are essentially underestimated, they're not deserving of the six-week rally.
Be leery.
So what lit
a fire under REITS last week, and industrial REITS specifically? [All
REITS had a pretty nice run over the prior five sessions.] Alexandria Real
Estate Equities Inc. (ARE) blazed the trail, though news of a stronger
Q2 income and a raised outlook actually came a couple of weeks ago for
the large cap real estate name. Confidence was boosted for the whole group
when U-Store-It (YSI) was able to raise $161 million in a public offering.
Our outlook
for REITS is a very positive one; the group was excessively beaten up last
year, and even a marginally-improving economy bodes well for the industry.
Losers
 As
for the losers, the plunge in the tires and rubber group was entirely attributable
to Goodyear Tire & Rubber Co. (GT). The company was neck-deep in union
troubles, and the already-overbought stock just cracked under the pressure.
Though the impasse
with the United Steelworkers of America was resolved on Saturday, the outlook
for the industry - longer term even - isn't a positive one. Factor
in a looming U.S. tariff on imported Chinese tires, and Goodyear could
really suffer.
See, most of
Goodyear's sales come from foreign customers. If China's tires are rerouted
to - and heavily marketed in - non-U.S. markets thanks to a heavy
tariff, Goodyear's market share should take a decent hit. The tariff isn't
a sure thing yet though; look for a decision in September.
Chemical companies
that took the biggest hits include The Dow Chemical Company (DOW), Eastman
Chemical Co. (EMN), and Celanese Corp. (CE). While these names remain a
little pricey on average, the lack of a specific selling catalyst and
the nature of the business for most of these companies doesn't suggest
there's a bigger problem at hand.... just a little turbulence.
And finally,
heavy electrical equipment makers had a rough week, though it was a few
bad apples spoiling what was otherwise a positive week for the industry.
Nidec CP (Nihon) ADS (NJ) and Eaton CP (ETN) were the only significant
losers.
In short, this
group's net aggregate problems are not a concern, and not even
just because most of these stocks advanced last week. With an average
P/E of 21.3 (trailing twelve months) what's not to like?
In fact, this
is one of the few groups - obscure as it may be - that we highly
recommend investors go individual stock-picking within. That obscurity
is why the opportunity exists... nobody else has even thought about tiptoeing
into this arena. Moreover, many of the small and micro caps look even healthier
than the mid and large cap electrical equipment companies.
Final Word
That's it for
today. Hopefully this news - with some real perspective on what it actually
means to investors - was a breath of fresh air from a media outlet.
Just bear in mind the process is a journey and not a destination. Stay
tuned, and we'll do the same again soon for the next wave of market news
that actually matters to you.
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This
Week's Updated Watchlist |
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We've got a
lot of additions and subtractions for this week. Note that our sort and
scan methodology was widened to include slightly bigger stocks (though
still micro caps). Also, we're not just focused on penny stocks any longer,
but also higher-priced equities.... which tend to trade better, even if
less explosively. Hopefully you'll be able to utilize even more of our
ideas.
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U.S. Gold Corp.
(UXG) - still going strong, still need to buy on the dips
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Oncothyreon Inc.
(ONTY) - bullishly broke above consolidation range
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Echo Therapeutics,
Inc. (ECTE) - let's drop it, dipped too sharply
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ICO Inc. (ICOC)
- despite the pullback, still a bigger-picture bull idea
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BRT Realty Trust
(BRT) - fell back, but remains in an uptrend
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ERF Wireless, Inc.
(ERFW) - time to drop it, stuck in a range
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FCStone Group,
Inc. (FCSX) - let's drop this one too, not getting traction
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Aradigm Corp. (ARDM)
- time to dump it, going nowhere
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COPsync, Inc. (COYN)
- let's pull the plug on this one too
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Lifevantage Corporation
(LFVN) - the bears are still gaining momentum here
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China Solar &
Clean Energy (CSOL) - there's still a rally attempt in play
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Kemet Corp. (KEME)
- this one's looking a little less certain now
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Amicas Inc. (AMCS)
- still in an unending rally... be cautious
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Frontier Energy
Corp. (FRGY) - let's dump it, just can't get moving
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Tesoro Corp. (TSO)
- nice runup lately, but could be building even bigger rally
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Compass Minerals
Int. Inc. (CMP) - close to the tip of a wedge, not yet breaking
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Mariner Energy
Inc. (ME) - an interesting albeit volatile upside possibility
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TRW Automotive
Holdings Corp. (TRW) - really trying to break down
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Service Corp. Intern.
(SCI) - after the gap from early in the month, ready to tumble
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Rackspace Hosting
Inc. (RAX) - if support at $13.18 breaks down, look out below
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Centerline Holdings
Inc, (CLNH) - not yet rolling, but close to breaking out
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ITC Deltacom Inc.
(ITCD) - ridiculously low volume gains, until Friday
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Celsius Holdings
Inc. (CSUH) - heading into the tip of the wedge, bears are winning
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Transatlantic Pete
Corp. (TAPFF) - pullback has been slight, but heavy selling volume
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Updated: 8:15 pm PDT (03:15 GMT), November 2, 2010
