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Seven Stocks On the Verge


Hype, desperation go under the microscope.


First, here are some stocks making real moves, due in part to scuttlebutt and rumors. All of the stocks in the rumor mill these days have been there before, which means they'll find believers but could fizzle quickly.

Starwood (HOT): The timing is interesting, as a potential buyer should consider making their move during a recession. Technically, the stock looks compelling as it faces resistance at $51.00 and $55.00. My firm's hotel/gaming analyst, Conley Turner, currently has a buy rating on the stock. (CRM) has been in the rumor mill for a couple of years. While a deal hasn't happened yet, this has been a great stock to own. Management's ability to execute has resulted in the shares commanding hefty valuation metrics. I'm still shocked Larry Ellison and Oracle (ORCL) or SAP (SAP) hasn't made a move on this business, as it would be a great fit for either.

Boyd Gaming (BYD) was higher on chatter billionaire Carl Icahn was preparing to take a stake. No word on what the stock would fetch in a buyout, but the shares are down from $51.00 to just over $15.00 so there's a lot of room in the middle. My firm has been burned on this stock in the past, yet our very own Conley Turner doesn't think the story should be dismissed out of hand.

Hansen (HANS) has been remarkably consistent in its inconsistency, as management just can't seem to take advantage of the company's hugely popular Monster Energy drink line. The company recently missed the mark (by a wide margin) and the shares took a drubbing. My firm's subscribers are long the stock and we thought it was wise to hold because of the unrealized value. Those sentiments were echoed yesterday by UBS, which labeled Hansen its favorite pick in the beverage space. It was long rumored to be in the crosshairs of Anheuser-Busch (BUD), which may be more eager to make the deal now that it finds itself in some crosshairs of its own.

Actionable ideas, Instant analysis. Real-time from bell to bell.

Now, here are some stocks at risk or on the verge of getting the thumbs down from investors. Like desperate gladiators on the losing end of a battle, these stocks are hanging by a thread, their fate in the hands of aggressive shorts and nervous longs. The list includes stocks that could be considered one trick ponies.

Under Armour (UA) hit the scene like an NFL linebacker slamming an overpaid quarterback - it was a runaway success. However, the stock hasn't been the same since gapping higher last August, falling apart faster than the Super Bowl dreams of the New York Jets. The stock sees support at $32.00 and then it's freefall time. Earnings for the full year continue to decrease with analysts losing confidence in core product sales and new entries into footwear.

Premier Exhibitions (PRXI) could drop even further. The stock is looking more and more like the cadavers it displays in its Bodies exhibits. There's still a sizable short position even though shares have dropped more than 75% since last August. The company broke out with a successful exhibit of the Titanic; it needs to find a new hit to avoid a collision with another iceberg.

Arkansas Best (ABFS) looks especially vulnerable as it traded lower yesterday on stronger than average volume. Ironically, the company's earnings have been pretty good and analysts have been edging higher in their full-year earnings guesses. Still, the short position is an eye-popping 36%. The stock made a gigantic move recently and is still 100% above its low point for the year. But there's a Grand Canyon-sized gap on the downside that would take the stock down to $30.00 if news turns disappointing. This is a tough short, however, and there could be more folks going out on their shields. Short interest continues to trend higher; at some point there could be a magnificent and massive wave of covering.

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No positions in stocks mentioned.
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