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Looking For Longs In Too Many Places?


Here is the list of names that have made the cut for further consideration, and a one sentence explanation of why they may deserve a better look.


If I told you that I am sufficiently long in this melt-up I'd be lying. I have learned (I hope) not to get gored by Hoofy, but I am far from accepting that buying stocks because they are going up, or because they are going to get be bought out, or because they can borrow more than their capitalization and take themselves private, is a prudent way to invest. At least not for my taste.

But sitting on my tail (do bears have tails?) waiting for the market to agree with me is not conducive to finding new money making ideas. Hence, last night I ran through every screen I have concocted and a dozen chart scans, to see if I could come up with a few more longs to go with the usual suspects.

Should you interpret this exercise as yet another sign of Boo's capitulation, it means that you and I are in perfect synch. Nonetheless, here is the list of names that have made the cut for further consideration, and a one sentence explanation of why they may deserve a better look:

  • Atheros Communication (ATHR): No idea what the company does, but it has a very attractive PEG ratio and excellent balance sheet. Chart looks good.

  • Atwood Oceanics (ATW): It's dirt cheap (which of course could be said of most energy names); and has pulled back hard. It keeps coming up as a takeover target.

  • Digene (DIGE): It's a fast grower in a hot area; is there a good reason why it has not participated in the rally? Not cheap.

  • Electronic For Imaging (EFII): Dirt cheap if you believe next 4Q's estimates. Decent balance sheet - crappy sector.

  • Esco (ESE): The mish-mash of totally unrelated businesses is probably the reason why it trades at such a low PEG, and that's about the only reason I know of for keeping it in consideration.

  • FEI Co. (FEIC): I used to follow this one when nanotech was hot and electron microscopes were a must-own in a portfolio. Perhaps because I am somewhat familiar with it already, it is the first one I'll look at further.

  • Macrovision (MVSN): Cheap, but I am gonna want to understand how this company may be impacted by the current upheaval in digital rights management.

  • Houston Exploration (THX): Another cheap energy name that popped up through a chart scan.

  • Scientific Games (SGMS) and WMS Inds. (WMS): Intriguing duopoly in the lottery/gaming sector. Very similar charts. Both equally expensive. Is a Democratic administration already priced in?

  • Cheesecake Factory (CAKE): I don't know why I would even consider a restaurant given my thinking on where the consumer is heading. But I like the place, the food is a good value, and wherever I go there's always a long wait.

  • Blackbaud (BLKB): The chart looks good and the company is in an interesting niche. Is it too expensive?

  • Lexmark (LXK): Hard to find a worse business to be in, and this is the red-headed stepchild of the group. Which means that in the current M&A environment, given its cash flow, return on equity, and unleveraged balance sheet, it's probably a prime take-out candidate. Otherwise, it is a completely superfluous company with no rational reason for existing.

Have a great day Minyans!!!

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