Long and Short Themes for the New Year
Israel, alternative energy, eBay and other ideas to consider for the new year.
As we wind down the year it makes a whole lot of sense to start discussing what we will be looking for in 2008. That seems to be the prevailing theme lately so I'll run with it.
Here are some things I am pondering for 2008 on both the long and short side:
Remaining Open Minded: History tells us that the market is forward looking indicator. So far the market for some reason is not painting as bleak a picture as everyone else in the entire free world is. One side is wrong and while I have no clue it would not be prudent to close my mind to possibilities either way.
Financials in the Lock Box: Ya, I know, I was the same guy who told you earlier this year to stay the heck away and now I am buying Citigroup (C) for my 9-month-old son. No, stocks like Bank of America (BAC), Wells Fargo (WFC) or Merrill Lynch (MER) haven't found their way into my fund just yet, but for the custodial accounts I am a buyer. Those with young'uns may consider the same for '08 and beyond.
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Israel: If it's good enough for Buffett it's good enough for me. I like what I am seeing in Israeli ADR's such as Cellcom (CEL), Commtouch Software (CTCH) , Partner Communications (PTNR) and Teva Pharmaceuticals (TEVA). Rather than play the individual stocks, I am choosing to build the First Israel Fund (ISL) as a component of my emerging market exposure for clients.
Kiva.org: What a great concept. If you haven't traveled to a third world country you may not appreciate just how fantastic micro-financing is, but if you have you'll agree that this a long term hold all the way. I will be allocating funds to this organization in the very near future. Does that qualify me as an international business man? Hmm... I doubt it.
Alternative Energy: While I did close out a vast majority of my solar stocks today, I think the top is far from being in within these stocks. My top signal will be when we see ETF's launched with specific sectors such as Solar, Wind, Hydro etc. My favorites in each sector include:
- Solar: Memc Electronic (WFR), Cypress Semiconductor (CY), Evergreen Solar (ESLR), Suntech Power (STP) and Energy Conversion Devices (ENER)
- Wind: American Superconductor (AMSC)
- Ethanol: VeraSun Energy (VSE), American Railroad (ARII), which, I know, is a railroad stock but someone has to ship this stuff from the Midwest to the Big City.
- Other: Clean Energy Fuels (CLNE) I think T Boon is just getting started with this little, soon to be big, conglomerate.
Tickerville.com: My home away from Minyanville. I have been blessed to see some amazing growth here since inception earlier this year. I will actually be halting new subscriptions for a while so our little 'trading crew' can get to know one another better after the New Year. NOICE!
Peter Lynch Plays: Outside of my technical make up, I have a little Peter Lynch in me that tends to gravitate towards the 'buy what ya know' concept. I am looking at a few like the following:
- eBay (EBAY) a la Skype and Paypal: I am not sure why eBay can't figure out how to monetize Skype as I believe it is a fantastic service but if it does and doesn't decide to unload it for a big loss, I suspect this will be a major revenue booster for its business. Furthermore, its PayPal business is minting money and reminds me of the early American Express (AXP). Just what does it do with all that capital that is sitting in accounts? I think the eBay model is brilliant and the stock hasn't seem to receive the notice that Tech is back in play. It is also a virtual pawn shop and if you think the economy is going down the toilet, you probably will agree that people will look to unload their belongings through a virtual garage sale. I am long this stock and will continue to add slowly as I suspect it will be a winner throughout 2008.
- Live Person (LPSN): As companies look to cut costs I suspect those that can't outsource their help center to a foreign country will look to adopt a scalable solution such as the Live Person technology. I am going to be doing the same very soon and as a fan of the product, I suspect this company has positioned themselves to be a major player in the world of decreased corporate spending. I have yet to buy the stock but am watching for a move over the 50day as my point of entry for a few shares.
Domestic Retailers: While you can put me in the camp of the global growth story and how companies with a majority of their exposure to the international markets will do just fine, I would not want to be a domestic retailer in this environment at all. Despite some decent numbers from Jos A Bank (JOSB), the stock looks to be rolling over after putting in a major double top. I am considering wading in within this area and pressing as the stock breaks through recent lows below the $24.50 area. I suspect this would or could easily see single digits by mid-2008 if a break lower ensues.
Crocs (CROX): This is going to be a battle ground and according to some fundamental investors this company may actually be firing on all cylinders but from a technical perspective this stock is damaged goods and may be consolidating before its next break lower. Just today I started a small short and will give some shares a tight leash while others will have a very long one. Fad stocks cut both ways and I am not so sure Crocs is going to be able to keep the momentum alive with the ever changing consumer. The rubber shoes are hot today, but I am not so sure it can venture out into other product lines that will keep this growth sustained. A push through the $37.80 area or so may get this one moving to the downside rather quickly.
Air Travel: Despite what it says it will do, I hate hopping on that airliner to travel to and fro. Maybe someday I'll be able I'll be able to fly in style (www.netjets.com) but it will take a few more First Solars (FSLR) to make that happen.
2008 should be quite a year regardless of what happens. I am honored to be able to share it with you. Let's enjoy the remaining days we have in 2007, then bid it adieu and ride off into the sunset.
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