Daily Stock Pick of the Day: September 2010

Thursday, September 30, 2010

Daily Stock Pick of the Day - Fri., Oct 1 2010

Markets faltered a bit today. After being up in a big way earlier today, the Dow fell 47 points to close at 10,788. The S&P and the Nasdaq followed, closing at 1,141 and 2,368 respectively. The S&P fell 3 points and the Nasdaq fell 8 points. Certainly, some profit taking is probably in order at the end of such a strong month. To see the stock market pulling back in such an orderly fashion is encouraging. I think selling pressure has been waning, but there is still so much uncertainty in the economy that I remain cautiously bullish.

The energy sector rose today. Oil prices rose above $79/barrel today. Other oil stocks like Valero (VLO) and Exxon (XO) rose in similar fashion. Consumer staples and materials fell. The big news on the scene was the report from the Wall Street Journal that said McDonald's (MCD) is considering dropping it's healthcare plan for it's hourly employees. McDonald's is doing a bit of backpeddaling today, but it's hard to see how they're not considering this. Boeing (BA) was in the news today after they reported that they are pushing out delivery of their 747-8 freighter until the middle of next year. Boeing rose almost 1% on the news after they said it would not impact them financially.

The stock pick of the day is Titanium Metals Corp (TIE). Titanium Metals is a producer of titanium melted and mill products for commercial, aerospace, military and industrial applications. So many stocks today are overbought or close to being overbought. TIE is bucking that trend and still hovering around it's 50-day moving average and closed today at $19.96. It spent most of the week being accumulated by traders. It's also been experiencing a series of higher highs and lower lows, so I definitely think strong support is building for this stock. I like this entry point here and up to about $21. I put the first target between $23-$24.

As always, stay cautious and happy trading! Check out Wall Street Survivor below!

Obligatory Disclaimer: This blog is not authored by a financial advisor or a broker/dealer. The author(s) of this blog are not registered investment advisers or registered broker/dealers. The author(s) of this blog do not provide investment or financial advice or make investment recommendations, nor are in the business of transacting trades, nor do they direct accounts or give trading advice tailored to any particular reader’s situation. Nothing contained in this communication constitutes a solicitation, recommendation, promotion or endorsement or offer by the author(s) of any particular security, transaction or investment.

Trading securities involves high risk and the loss of any funds invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. The suggestions contained in this blog are for informational purposes only and the author is not liable for any losses incurred as a result of actual investment activity on the part of the reader. This blog is presented for information purposes only and past results do not guarantee future performance.

Wednesday, September 29, 2010

Daily Stock Pick of the Day - Thurs., Sept 30, 2010

The markets closed lower today in light of comments made Wednesday by Fed Reserve Bank of Boston President Eric Rosengren wherein he indicated that the economy is growing too slowly in order to reduce unemployment or weaken disinflationary pressures. Other Fed Reserve Bank Presidents from around the country commented on the economy today. The Dow closed down 22 points at 10,835. The S&P 500 closed down 3 points at 1,144 and the Nasdaq closed down 3 points at 2,376.

In economic news, mortgage applications fell for the fourth consecutive week. There was a decline in applications for both purchases and refinances.

Solar names were in the green today. Satcon Technologies (SATC) jumped 8% today -- beware: it's share price is $3.80. The bigger names like Renesola (SOL) and LDK Solar (LDK) rose in swift trade.

I want to take today to review some of the prior picks I wrote about earlier this month. On Sept. 12, I wrote about Salesforce.com (CRM) when it closed around $118. After a mild retreat, it broke out on Sept 20 and closed at a high around $123. Today, Salesforce.com looks like it's retreating towards the 50-day moving average (about $108). It closed today at $113 and is reaching oversold territory here. Keep an eye on this one -- if the price holds between $108 and $110, this range would be a great entry point on a bounce back to $120.

The speculative play I wrote about on Sept. 14, ITT Educational Svcs (ESI) proved to be a winner. It closed that day at $57.62 in what looked like a breakout from it's consolidation pattern. Since then, ESI has steadily risen into it's 50-day moving average and now sits at $65 -- a gain of nearly 14% in less than a month. It seems to be resting here a bit and if it can hold above $65 for several days, the next target I think will be near the $80 range.

The stock I'm looking at today is Oracle (ORCL). They recently hired Mark Hurd, former CEO of Hewlett Packard. Recently, the CEO, Larry Ellison, was quoted as saying, "You're going to see us buying chip companies." He was speaking at the Oracle World Conference in San Francisco on Sept 24. That should be interesting. Analysts are saying that this would give a big boost to Oracle's recent push into the hardware space. Also, corporations are getting ready to make their I.T. spend during these final months of the year and a push into the hardware space will help Oracle further. On Sept. 17, Oracle gapped up at the open to the $27 range and closed there. It's been trading around the $27 range ever since. It's possible it will try to fill the gap it left behind and if so, the entry point around the $24-$25 range would look enticing.

As always - stay cautious and happy trading! Be sure to check out Wall Street Survivor below -- the fantasy stock portfolio trading game. It's free to play and you can test your trading skills and compete for real cash! No risk, all the fun!

Tuesday, September 28, 2010

Daily Stock Pick of the Day - Wed., Sept 29, 2010

Stocks glided into gains on Tuesday as investors expected the Fed to pump more money into the economy which put a positive spin on equities. After declining more than 80 points early in the session, the Dow closed up 46 points at 10,858 . The S&P 500 and the Nasdaq also closed higher. The S&P tacked on 5.5 points to close at 1,147. The Nasdaq added 9 points and closed at 2,379. Rising sectors included health care, consumer goods and energy. Telecom and materials fell.

Names in the news included: Endo Pharmaceuticals (ENDP), up 8% on word the announcement that it will buy private generics maker Qualitest Pharmaceuticals in a deal valued at $1.2 billion. Oddly enough, even Pfizer (PFE) rose 1.5% on news that they discontinued a late-stage study on one of their drugs, Sutent, designed to fight prostrate cancer.

In economic news, the consumer confidence index fell to 48.5 in September from 53.2 in August. Analysts were expecting this number to come in around 52.5. This decline marks the lowest reading since February of this year. Home prices rose in July compared to June, according to Case/Shiller. By their records, the 10 major metro areas rose .8% from June and their 20-city index rose .6%.

The stock pick today is Starbucks (SBUX). Full disclosure here, I'm a fan, but not a shareholder. Although as regular patron, I did not like the news heralding a rising price of a cup of java at their store, as an investor, I definitely appreciate it. The cost of coffee beans is on the rise (take a look at the coffee futures) and java roasters like Starbucks are experiencing a rise in the unroasted coffee bean this year. It's only a matter of time before java drinkers in the nation will be feeling the price pinch for their favorite blend. Starbucks is also considering raising the price of their packaged coffee that goes to the retail channels (grocery stores, super-marts, etc). Starbucks closed virtually unchanged today at $26.14 and I like it here. It's currently in a channel between $24 and $26 and if it can push higher with the September rally, I think Starbucks will rise to about $28.

Coming up on Wednesday, we'll get the reading on the weekly mortgage applications and oil inventories. On Thursday, expect the weekly jobless claims and GDP results.

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Monday, September 27, 2010

Daily Stock Pick of the Day - Tues., Sept 28, 2010

Stocks drifted lower during the last hour of the trading day and closing near the lows of the session. Volume was light amid a flurry of merger and acquisition activity.

The Dow fell 48 points, or .4% to close at 10,812. Banks led the market lower. Bank of America fell over 2% in trading today closing at $13.24. JP Morgan close off 1.6% at $39.08. The S&P 500 shaved off 6.5 points or .6% to close the session at 1,142. The Nasdaq also fell 11 points, or .5% to close at 2,369.

In merger news today, Southwest Airline (LUV) said it would purchase Air Tran (AAI) in a deal estimated at $1.4 billion, or $$7.69 per share. Air Tran soared over 60% today. Rivals Jet Blue and AMR also closed higher with this news. Also, consumer products firm Unilever PLC (UL) announced it’s intent to purchase hair care maker Alberto Culver (ACV) in a deal valued at $3.7 billion. Alberto Culver soared 19% and Unilever gained a little over 1% today.

The stock I'm looking at today is Herbalife (HLF). Herbalife is a direct seller of weight-loss shakes and other nutritional products. Herbalife derives more than 60% of it's sales from it's weight loss shakes. Driving sales of such a competitive product is what Herbalife does best. They've recently raised earnings estimates for all of 2010 and they expect sales to grow 15% this year. They've recently announced an increase in their quarterly dividend by 25 cents and they just announced a plan to buy back $51 million of their stock in the second quarter. Herbalife retreated today and it looks like it's headed back to the 20-day moving average. It closed today at $58.82 and if it can retreat back to it's 50-day (approximately $55), that would be a good entry point. This stock has been consolidating around the $60 range and could be a good first target.

As always, stay cautious. Tuesday's economic reports will bring us the Case/Schiller home price index and later in the morning, the Conference Board will be releasing their monthly consumer confidence index (consensus is 52.0).

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Friday, September 24, 2010

Daily Stock Pick of the Day - Mon., Sept 27, 2010

The bulls came roaring back today, rallying into the weekend and capping a fourth week of gains. The Dow was up almost 200 points and closed at 10,860. All 30 Dow components were higher, led by Caterpillar (CAT) , Boeing (BA) which got the benefit of a weaker dollar. The S&P 500 and the Nasdaq were up more than 2%. The S&P closed at 1,148 and the Nasdaq closed at 2,381. The VIX plunged more than 8 percent to trade slightly below 22. Gold also hit a new record high, intraday, at almost $1300 per ounce. The backstory on this is that more "quantitative easing" by the Fed could bring on more volatility in currency markets.

Friday's economic news revealed a dip of 1.3% in August for durable goods orders (July revised was .7%) New home sales for August showed no change from July. The Commerce Dept reported a seasonally adjusted annual pace of 288,000, down 29% from the same month one year prior.

Yesterday's stock pick was Wynn Resorts (WYNN). Continuing yesterday's gaming theme, today's pick is Las Vegas Sands (LVS). Like Wynn, LVS owns and operates different resorts worldwide. They own and operate several properties in Las Vegas, NV such as The Venetian, The Palazzo, The Sands Expo and Convention Center. They also own and operate properties in Macao and they are developing properties in Singapore. LVS closed today at $33.73 and it's not a bad entry point from here. I think this stock could ride the steam of the current rally and even with a brief pullback, it could test the $38-$40 range by the end of the year. Sales growth over the past 12 months is running about 51% -- which is excellent. Certainly, the exposure to the Macao and Singapore customers will prove invaluable as customer here in the states continue to languish in the current economic conditions.

As always, stay cautious. Spend some time this weekend and checkout Wall Street Survivor below. It's a great way to learn how to trade stocks, without the risk! You can sign up for free and they have a number of contests available each month. You can play for bragging rights or cold cash! Check it out!

Updated Disclaimer - Please Read Below:
This blog is not authored by a financial advisor or a broker/dealer. The author(s) of this blog are not registered investment advisers or registered broker/dealers. The author(s) of this blog do not provide investment or financial advice or make investment recommendations, nor are in the business of transacting trades, nor do they direct accounts or give trading advice tailored to any particular reader’s situation. Nothing contained in this communication constitutes a solicitation, recommendation, promotion or endorsement or offer by the author(s) of any particular security, transaction or investment.

Trading securities involves high risk and the loss of any funds invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. The suggestions contained in this blog are for informational purposes only and the author is not liable for any losses incurred as a result of actual investment activity on the part of the reader. This blog is presented for information purposes only and past results do not guarantee future performance.

Thursday, September 23, 2010

Daily Stock Pick of the Day - Friday, Sept 24, 2010

Stocks drifted lowerThursday closing near the session's lows after a some economic reports failed to provide traders with enough fuel to energize the September rally. Existing home sales did rise 7.6% in August, and the index of leading indicators gained 0.3%. However, it was a surprise jump in jobless claims (465,000) that tamped the enthusiasm of the September rally.

The Dow fell 76 points, or 0.7%, to 10,662.. After reaching up to 1137 intraday, the S&P 500 fell 9 points, or 0.8%, to 1,124. Even the Nasdaq, which actually spent most of the day on positive ground, fell 7points, or 0.3%, to 2,327. The CBOE Volatility Index, spiked more than 6 percent, to about 24. Top 10 key S&P sectors fell, including technology, which were also trending higher for most of the day.

The stock I'm looking at today is Wynn Resorts (WYNN). It pierced it's 50-day moving average today, falling 4.5% and closed at $87.05. It would be interesting to see if it rolls over here and consolidates around this price or if it falls further into its oversold territory. I think this is a great price for this stock and I like the worldwide gaming exposure this company provides. If the stock doesn't hold at this level, I think it can fall further to around $80, and then, an entry decision would need to be re-examined. However, if it can hold here, this could rebound up to $95 or better. This stock is heavily traded among the investment community, so keep your eyes on this one.

As always, stay cautious. Friday will bring us durable goods orders and new home sales. Take a break and have some fun at Wall Street Survivor below! Happy Trading!

Obligatory disclaimer: This blog is for information only. Past results do not guarantee future performance. All financial decisions involve risk and there are no guarantees. The suggestions above are for informational purposes only and the blogger is not liable for any losses incurred as a result of actual investment activity on the part of the reader.

Wednesday, September 22, 2010

Daily Stock Pick of the Day - Thurs., Sep 22, 2010

The winning streak came to a halt Wednesday led by the tech-heavy Nasdaq and banks as the Dow closed down 21 points. Still, the Dow is up 7% for the month of September.
The S&P 500 and the Nasdaq also closed lower. The S&P closed down 5 points at 1,134. The Nasdaq closed down almost 15 points at 2,334. The CBOE Volatility Index (VIX) closed at 22.50, virtually no change from yesterday.

Stock in the news today included Adobe Systems (ADBE) which dove 20% after the software firm announced a disappointing fourth quarter forecast. Also notable, PMC-Sierra (PMCS) trimmed 6% off it's share price after the broadband communications company lowered its revenue outlook.

Meanwhile, Research In Motion (RIMM) rose nicely in fast trade today. News hit the wire today that RIMM is set to unveil a tablet computer to compete with Apple's (AAPL) iPad.
In economic news, the Fed Housing Finance Agency released reports today that showed U.S. home prices fell 0.5% in July from June, and 3.3% from one year earlier. Reports also showed that demand for home loans fell for a third straight week, despite the fact that the 30-year fixed-rate mortgages rate has dropped to about 4.44%

Today stock pick is VeriSign (VRSN). VeriSign operates in Internet Infrastructure and Identity Services. It closed at $31.89 today and it looks to me like it's going to roll over a bit at this level and possibly pull back. I'd love to see a pullback to the $30-$31 range and accumulate some shares around there. It's been in a trading channel for most of the summer and along with many stocks this month, it's broken out of it's channel and trading around 4-month highs. With so much going on in this space (think authentication services), this is a stock that could bounce back to the $32 range and possibly higher on a longer term basis.

As always, stay cautious. The broad market may pull back here a bit, so pick your entry points carefully. Stay tuned for existing home sales data to be reported tomorrow (Thursday) and new home sales data on Friday.

Happy trading and remember to check out Wall Street Survivor below. It's free, it's fun and you can compete for real cash prizes! Gotta luv that!

Tuesday, September 21, 2010

Daily Stock Pick of the Day - Wed., Sep 22, 2010

Stocks ground on through most of Tuesday as traders digested news that the Fed would be willing to provide "additional accommodation" to the ailing U.S. economy.

The Dow closed up 7 points, or 0.1%, to 10,761, after climbing 70 points after the Fed released their policy statement. The S&P 500 fell 2 points, or 0.3%, to 1,139, and the Nasdaq closed down 6 points, or 0.3%, to 2,349. The CBOE Volatility Index (VIX), which traders and investors look to as a measure of fear in the market, rose 4% to close above 22 today. I don't think there's a pervasive feeling of fear in the market at this time, but the rise in the VIX today should be duly noted.

Financials and consumer discretionary names fell, but telecom gained. Bank of America, Wells Fargo and Huntington Bancshares each closed lower today. Apple and Research in Motion rose today.

In economic news today, housing starts rose 10.5%, the biggest gain since last November. Also, permits for new construction rose 1.8% in August. Keep your eye out for the existing home sales report coming out on Thursday and new home sales data is set to be released on Friday.

The stock I'm looking at today is InterDigital (IDCC). IDCC designs and develops wireless technologies and products for use in celluar and other wireless related products. It closed at $27.79 and it looks a little overbought here (see the Stochastic). If this pulls back to the $25-$27 range, it would be good to pick up some shares. It might be a good idea to scale in your position, if given the time. My first target would be about $29, but if it really got some institutional buyers behind it, it could go to $32 on a longer-term basis.

As always, stay cautious and happy trading! Check out Wall Street Survivor below. It's free to play and a great way to test your trading skills without the risk. Gotta love that!

Monday, September 20, 2010

Daily Stock Pick of the Day - Mon, Tue Sept 20 & 21

Stocks rallied again today and popped through their current trading ranges to hit a four-month high a day before the FOMC meets. The Dow rose 145 points, or 1.4 percent, to close at 10,753. The S&P rose 17 points, or 1.5 percent, to close at 1,142, breaking through the crucial 1130 barrier that has put a lid on the index's highs since flash-crash May. The Nasdaq rose 40 points, or 1.7 percent, to close at 2,355.

Many Dow components were higher, led by banks like American Express (AXP) which closed at 43.12, a gain of 4.2%, and JP Morgan (JPM) closed at 41.19, up 2.8%. Consumer discretionary and energy also rose.

The stock I'm looking at today is ViroPharma (VPHM). They develop and commercialize products that address serious diseases. Their specific focus is on products used by specialists or in hospital settings. It shot up 7% today on big volume and closed at $14.81. With the recent rally now in play, this stock could make a run to the $15.50 - 16.50 range before it's over. It might be a good idea to scale in a position -- maybe buying some on a pull back on/around the low $14 range and then keep the other half of your trading dollars to allocate shares around $14.45 or so.

Stay cautious and happy trading!
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Thursday, September 16, 2010

Daily Stock Pick of the Day - Fri, Sept. 17 2010

Stocks were a mixed bag today technology companies drove the Nasdaq and Dow higher. The Dow gained 22 points, or 0.2%, to close at 10,594. The S&P 500 fell slightly at 0.41 points, or 0.04%, to close at 1,124, while the Nasdaq rose almost 2 points, or 0.1% , to 2,303.

Most S&P 500 sectors remained in the red, led by utilities, energy, and industrials. The technology and materials sectors rose. FedEx fell even though they reported that their quarterly profit doubled. Appararently, they just missed analyst expectations. They also announced they're cutting 1,700 jobs in order cut costs. In sympathy, shares of UPS fell, too.

The stock I'm looking at today is Cognizant Technologies (CTSH). Cognizant provides custom IT consulting, technology and outsourcing services for companies. It closed today at $63.53 and it looks like it might pull back here. Some of the buying pressure seems to be waning. It could float back down to $61 and if bounces off $61, it would be a good entry point. It looks like it could run back to $64, but there's not much resistance there. This would be one of those where I'd take some profits around $64 and keep a watchful eye on the rest of the position to protect the remaining profits.

Keep in mind, tomorrow is quad-witching Friday. Index futures, index options, equity options and security futrues all expire. CPI and consumer sentiment reports are also due. Stay cautious.

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Wednesday, September 15, 2010

Daily Stock Pick of the Day - Wed., Sept 15, 2010

Stocks climbed higher today, gaining steam in the last hour of trading after struggling most of the day in a session defined by mixed economic news.

The Dow rose 46 points, (0.4%), to 10,572.73. The S&P 500 rose 4 points, (0.4%), to 1,125.07, while the Nasdaq rose 11.5 points, (0.5%), to 2,301.32. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 22.

Among the main S&P 500 sectors, health care, consumer staples and technology gained, while utilities, energy, and materials fell. Healthcare stocks were led higher by pharmaceutical distributors McKesson (MCK), Amerisource Bergen (ABC) and Cardinal Health (CAH). There were analyst reports released today that showed these distributors are experiencing better financial health themselves.

The energy stocks fell in spite of the report that showed crude inventories actually declined more than expected. Some of the focus centered around the Enbridge (ENB) announcement that they fixed a leaking pipeline.

The stock I'm looking at today is: PolyOne (POL). POL provided specialized polymer materials, services and solutions. It rose .16 yesterday on volume that was 40% heavier than its average daily volume. For whatever reason, it seems some big money has decided to park some cash here at this level. It closed yesterday and today at $10.88. If this can close at $11 or more on stronger than average volume, it can run to $13.50, and then I'd take some profit off the table.

As always, stay cautious and happy trading!

Monday, September 13, 2010

Daily Stock Pick of the Day - Tues., Sept 14, 2010

Stocks extended the September rally today on news of new global banking rules and healthy Chinese factory report. The Dow closed at 10544 (.78%), the S&P closed at 1121 (1.1%) and the Nasdaq closed at 2285 (1.9%). Trading volume rose across the board today - a bullish sign.

The stock I'm thinking about today is ITT Educational Services (ESI). A word of caution, though. This is more of a speculative play -- check the charts and you'll see what I mean. ITT provides "for profit" post-secondary educational programs to students in 38 states. This group has really taken a beating in the last four months. However, I think ESI has been consolidating for a few weeks now at approx. the $55 range. Today, it looks like it posted a reversal and closed up at $57.65. It gained 2.42 points today (a gain of 4.3%) on strong volume. This stock may very well make a run to $65 in short order because right now, about 25% of the float is sold short. A reversal like the one we saw today could spark a short covering rally before Friday (quad-witching expiration day). Also, among the "for profit" educational providers, ESI is one of the stronger players in the group. Their EPS change for the most recent reported quarter is +50%.

As always, stay cautious and happy trading. Remember to check out Wall Street Survivor. Sign up for free and play to win some cash prizes!

Sunday, September 12, 2010

Daily Stock Pick of the Day - Mon., Sept 13, 2010

Markets closed out the week higher with modest gains. For the week, the Dow gained .1%, the S&P 500 gained .5% and the Nasdaq gained .4% after being dragged down by the weakness in semiconductors.

The stock I'm looking at today is Salesforce.com (CRM). They're a cloud computing service that lets users access software via the internet. Many companies are moving to cloud computing in order to cut costs. It gives firms an ability to expand or pull back the amount the amount of data storage they use. Fundamentally, they're very strong. Their estimated EPS for 2011 is 1.16, which is a 53% increase over 2010. Mutual funds have also been accumulating shares this year. They closed Friday at $117.42 and it looks like it's going to pull back a bit from here. I like this stock much better at $110 - $112 range. Provided the pullback is mild in volume, they could retrace their upward climb and test $120 again.

There will be some key economic reports due in the coming week. Retail sales are due on Tuesday, jobless claims, PPI and Philly fed are due on Thursday. On Friday, expect CPI and Michigan Sentiment.

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Thursday, September 9, 2010

Daily Stock Pick of the Day - Fri., Aug 10, 2010

Initial jobless claims came in less than expected and lifted stocks today, but on light volume. The Dow and the Nasdaq gained .3% and the S&P 500 gained .5%. Banks rose today -- both Bank of America (BAC) and Goldman Sachs (GS) climbed higher today. Stocks that sank lower included AK Steel and Boeing.

I'm interested in a couple of stocks today. Igate (IGTE), which provides IT and outsourcing services to companies got a big lift in big volume today. It closed up 5% at $17.68. Judging by some of the technical indicators, (MACD, Stochastic), it has a little room left to run. It's trading at the highest it's ever been, so caution is warranted. I like this because after an earnings dive in 2009, analysts expect a rise in EPS this year of 67%.

Another stock that a finished strong today was JDS Uniphase (JDSU). It climbed over 5.5% in strong volume today. It closed at $11.10 today. If it clears $11.50, I think this will make a run to $13.50.

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Stay cautious and happy trading!
Obligatory disclaimer: This blog is for information only. Past results do not guarantee future performance. All financial decisions involve risk and there are no guarantees. The suggestions above are for informational purposes only and the blogger is not liable for any losses incurred as a result of actual investment activity on the part of the reader.

Daily Stock Pick of the Day - Thurs., Sep 9, 2010

In an earlier post this week, I mentioned that there are a lot of good, quality stocks that are "on sale" right now. I read an article in IBD over the weekend that talked about how McDonald's (MCD) is doing with their newest entry into the beverage market -- the fruit smoothie. Apparently, they are doing very well. The new fruit smoothies, along with the premium coffees launched a few years ago have been driving same store sales in the quarter-ended June. The article goes on to point out that with McDonald's being so prevalent in 14,000 restaurants in the U.S., many cost-conscious consumers are often closer to a McDonald's than they are to one of the smoothie chains. They've certainly got an expertise in marketing, so when you put these two elements together, they've got a real winner in this product.

So, I was looking at their chart and I just think it's a bit overextended here at $74/share. Their 50-day moving average is around $70.56 -- quite a spread. However, I put the value of MCD at approximately $91/share, so maybe an optimistic investor could pick up shares at this price and make a nice return (about 21%). Risk is on, though. MCD hasn't traded at this range in the last 3 years.

I tend to be more conservative. Starbucks (SBUX) is the major player in this space (for premium coffee, that is). Yeah, MCD has eaten into their share, but since executing some tough cost-cutting over the last 18 months, their stock has managed to rise steadily over the past 12 months. It currently trades around $24-$25 per share, but if it can hold on above it's 50-day moving average for several days, it will have a solid shot to the $28 range (price prior to May flash-crash). Analysts value this stock at around $30/share. I like the growth prospects on this - I'm keeping an eye on it.

As always, stay cautious and happy trading!

Obligatory disclaimer: This blog is for information only. Past results do not guarantee future performance. All financial decisions involve risk and there are no guarantees. The suggestions above are for informational purposes only and the blogger is not liable for any losses incurred as a result of actual investment activity on the part of the reader.

Tuesday, September 7, 2010

Daily Stock Pick of the Day - Wed, Sept 8 2010

The markets gave it up a bit today after last week's surge. The Dow fell 107 pts to (1%) to close at 10,340. The S&P 500 gave up 1.1% or 12 pts to close at 1091. The Nasdaq dropped 24 points, 1.1% to close at 2208. The Wall Street Journal revealed today that European banks may be carrying more risky debt than the stress tests showed. Investors sought safe havens and as a result, gold rose to new highs and closed at 1257. Oracle (ORCL) was a big leader today. The announcement that Mark Hurd, former Hewlett-Packard CEO, will take the helm drove ORCL up almost 6% today and closed at $24.26.

The charts on many stocks look discouraging these days. Many stocks are below their 50-day moving averages and even below their 200-day averages. It seems like there are so many good stocks that have just been beaten down with the rest of the market. It can probably be said that there are good quality stocks out there at bargain prices. I'm looking at few with good growth rates that I think are trading below their true value. For instance, let's look again at a stock in the mining sector, Cleveland-Clff (CLF). They operate six iron-ore mines in Michigan, Minnesota and Eastern Canada and two coking coal mines in Alabama and West Virginia. Earnings growth is projected to be in the neighborhood of 33%. It's P/E ratio of 7.6 is a little low compared to others in the S&P (running at about 11 times earnings). It closed down today at $66.78 (-.45%) per share right now, but this stock is valued at a minimum of $80. There seems to be some good upside here, for sure. It looks a tad overheated here, I'd wait to see if it pulls back to $61 and trade it from there.

Stay cautious, and remember: Trade to trade well.

Obligatory disclaimer: This blog is for information only. Past results do not guarantee future performance. All financial decisions involve risk and there are no guarantees. The suggestions above are for informational purposes only and the blogger is not liable for any losses incurred as a result of actual investment activity on the part of the reader.

Sunday, September 5, 2010

Daily Stock Pick of the Day - Tues, Sept 7, 2010

Stocks closed out the week with a gain, which was great, but I'm not buying the farm just yet. Volume was light going into the holiday weekend and that gives me some reason to be cautious. We got a jobs report that many felt was better than expected so people feel that the economy could be turning the corner.

The banks were the big winners for the week, gaining almost 6%. Goldman Sachs (GS) picked up 7pts or 5.3% to close at $147.29. JP Morgan (JPM) rose 1pt or 2.6% and Wells Fargo (WFC) rose 2.9%.

Tech stocks picked up steam, too. Mighty Google (GOOG) rose 7pt to close at $470.30 or 1.5% after it was revealed they are planning to get into the music business and compete with Apple -- whoa! Apple (AAPL) closed the week up 6pts or 2.6% at $258. 77.

Gold and treasuries dipped a little bit. Has anyone been following silver? The word is that it's hitting some highs.

So, speaking of gold, I'm really liking some of the gold mining stocks. In the week before last, they didn't look so great. This week, money seems to be flowing in to some of them. One of the stocks I like is Newmont Mining (NEM). I want to buy this one on a pullback to the $58-$59 range, which is likely to occur looking at the MACD and the Stochastics. I think the 50-day is solid bounce point and could run back to the $62- $63 range.

Have a good weekend. Stay cautious and Happy Trading!

Obligatory disclaimer: This blog is for information only. Past results do not guarantee future performance. All financial decisions involve risk and there are no guarantees. The suggestions above are for informational purposes only and the blogger is not liable for any losses incurred as a result of actual investment activity on the part of the reader.

Wednesday, September 1, 2010

Daily Stock Pick of the Day - Thurs, Sep 2, 2010

A big day of gains in the market today. The Dow rose 2.5% where Bank of America and Caterpillar led the charge higher. The S&P 500 gained nearly 31 points or about 3% and the Nasdaq closed up 3% or 62 points. The VIX fell more than 8% and closed below 24. Apple (AAPL) was a huge winner today on the news that they will be releasing several new Ipod models and making improvements to Apple TV which streams movies and tv shows over the internet. They closed the day $250.33, up 7 points or approx. 3%.

A good day for sure, but one day does not a trend make. The headwinds that existed yesterday and throughout August still exist and the negative trends we're seeing in the economy are persistent. Tomorrow is "retail report" Thursday where several retailers are expected to show an increase in same-store sales month over month. Will it be a Back-to-School celebration or Back-to-School bust? And remember, we have the all important jobs report coming out on Friday. I'm not optimistic that we're going to see a jobs number with a net positive gain. In fact, I'll bet it's net loss number, although perhaps the loss will be smaller than the prior month. Any way you slice it, companies are not hiring in a manner we'd like to see that foretells a recovery.

However, since I'm always looking for good stocks, here's my pick for today: Ford (F). If it can maintain some momentum and trade at $12 or above for 7-10 trading days, I think it has a good chance to rise to $15 and then I'd sell. It looks like much of the selling pressure has eased in recent days and is rising from the bottom of an oversold condition.

Volatility still rules the day. Be cautious and happy trading!

Obligatory disclaimer: This blog is for information only. Past results do not guarantee future performance. All financial decisions involve risk and there are no guarantees. The suggestions above are for informational purposes only and the blogger is not liable for any losses incurred as a result of actual investment activity on the part of the reader.

Daily Stock Pick of the Day