Introducing Two New Paper Pprtfolios

First, my apologies for the delay between new posts. This week featured 3 midterm exams, so I had to tend to the responsibilities of being a student.


I've created two new paper portfolios on UpDown.com - the StudentStocks Fund and the StudentStocks Commodities Account.

The Fund will feature short-, mid- and long-term plays on valuations and fundamentals. I'm assembling the portfolio as I write this, so when an initial makeup is structured, I'll post the components.

The commodities account is a trading account, as I try to exploit (gamble/guess) the movement of commodities. Right now, I own DUG (ultrashort oil and gas), and have shorted ConocoPhillips, KOL (Coal ETF), CNX (a coal producer), GDX (Gold Producers) and GLD (a gold ETF).

So i'm currently betting on a pop/deflation of the current energy bubble. As prices swing from high to low, I'll change sides of positions.

I plan to update performance from both accounts approximately weekly; hopefully, I'll produce some good, tradeable ideas for readers.

UpDown.com is a free paper-trading site where you can earn real money. If you're interested in opening an account, email me!



"I trade with TradeKing: $4.95 stock and options trades, plus lots of tools. It's simply the best way to invest. Click here to find out more."

Doubling up on CROX; NTRI stock losing weight

Crocs released earnings after the bell, and even though estimates came in largely in-line, the stock tanked after hours. Margins were down (partially due to having to air-mail goods to retailers after the Mammoth sold out during the holiday season), but profits came in right around the street's consensus.

CROX reaffirmed the full-year forecast, which is for $2.70 EPS. After-hours, the stock was trading around $27.

CROX grew revenues 99% in Q407... and will continue to grow (at a slower pace) throughout 2008, especially as they release their clothing line.

It's unfathomable to buy such growth potential at a 10 P/E. When the earnings originally came out, I thought that these might have been the earnings that firmed investor confidence, as BWLD's were last week. That wasn't the case.

Once again, just like BWLD, I got in a little to early (in the mid-30s for CROX). I doubled my position today at $28. But investors are discounting another cheap growth stock too heavily, and CROX should take off soon.

Also, after the bell, Nutrisystem reported earnings and guidance that didn't please the street. The stock has lost about 70% of its value since the summer, when it traded around $70/share. It ended the after hours session at $18, after trading below $17 for a period of time.

The bad NTRI news? 2008's earnings look likely to decrease from 2007's numbers, and negative earnings growth certainly isn't a good thing. Nutrisystem blames this on difficult macroeconomic conditions, which is a convenient albeit reasonable excuse.

It should not be ignored that NTRI's lowered projections of $130 in earnings this year; based on the 35 million outstanding shares, that breaks down to nearly $4 per share. Considering NTRI is now an $18/stock, the P/E is like five.

The downward trend is certainly concerning, but short-term problems and fears about future expansion have punished NTRI too much. I'm going to look into some LEAPS for NTRI - maybe just January 09's, because with such a low multiple, I don't think NTRI can stay depressed for too long.

"I trade with TradeKing: $4.95 stock and options trades, plus lots of tools. It's simply the best way to invest. Click here to find out more.

A Slew of Stocks - Tech, Banks, Coal, and More.

Well, let's hope I don't, but last time I wrote about the prospects of a strong opening/daily performance, the market didn't perform positively.

However, once again, futures are up after a positive sessions in Europe (on Monday) and in Asia (on Tuesday).

I'm hoping for a couple pops on stocks I personally own; over the weekend, both Microsoft and Crocs received positive writeups in Barron's. (I own MSFT calls and CROX shares). Also, I'm long VIX puts and the VIX price has been falling as the market makes small (1%) positive moves. Also, in another post, someone reported that bank shares were up overseas; I'm hoping that bodes well for my CFC stock.

To substantiate this post with something other than personal investments most of you don't care about, I'll write about a bearish idea I have (and have executed in a paper account).

Coal stocks were sitting at 52-week highs before a downgrade by Goldman on Friday. On Wednesday, I discussed a potential trade in shorting coal with my father (who is a registered investment adviser). He discouraged the idea, so I didn't do anything immediately in any real-money account, but in my paper account at UpDown.com (more on that site later) I shorted both CNX (Consol Energy) and KOL (the new coal ETF).

My reasoning is thus: extraordinary circumstances have caused a temporary bubble in coal demand. Snowstorms in China and floods in Australia caused production to cease from many mines, and a combination of legitimate supply concerns and speculative fears drove the price of coal skyward.

There's one problem with coal getting this expensive this fast - there's so much of it in the ground. Unlike oil, which might have 50-100 years left, or natural gas, with a slightly longer timeframe, it's common knowledge that there are hundreds, if not thousands, of years of coal consumption left in the ground.

According to simple economic theory, what happens when the price of a good increases? Producer surplus increases, and producers become even more motivated to bring goods to market. As they record huge profits (as they may in the coming quarters), coal producers will surely ramp up production.

Then, when the snow melts, the waters retreat, and the coal dust settles, there will be more production capacity than there will be demand.

Big coal companies like CNX are trading at valuations of about 50-70x TTM earnings and 15x forward earnings (which take into account higher prices). But if prices fall (or even stabilize), these valuations will be unjustifiable. Look at big oil/gas companies - Exxon, Chevron, Conoco, Marathon, BP, and most others trade at multiples of less than 10.

So when the coal companies tanked Friday, I made nice 5% one-day returns on my newly-shorted shares. If only I would have done it with real money.

***Note: UpDown.com is a site I recently discovered. I have been using it for less than a month (so have not been eligible for payment), but here's how it works: you beat the S&P or write highly-recommended reviews, and you get paid. If anyone is interested in joining, just message me.

"I trade with TradeKing: $4.95 stock and options trades, plus lots of tools. It's simply the best way to invest. Click here to find out more."

Four in a Row?!

I'm knocking on wood, crossing my fingers, and picking four-leaf clovers as I write that title... I don't want to do anything to jinx an unbelievable four-day rally that it looks like we'll continue today.

The US markets look set to move after good earnings from here and abroad. Toyko markets moved up 3+%, the most since 2002, after Japan's economy grew much more than expected. The rest of Asia followed upward.

Europe is up more moderately, but that's fine with me... UBS reported a huge, terrible loss because of subprime writedowns. For them to report that and for the market to still be up.... I like that.

US futures are trending higher for all three major indexes. Comcast just released excellent earnings, and the NASDAQ should have some positive reaction after (so-called) good earnings from Baidu.com (BIDU) after the bell yesterday. (On a side note, I think that BIDU is a high-PE "pig" that needs to be slaughtered... but if it's gonna pull up my tech stocks today, i'll be ok with that.)

A nice move today will be very beneficial to my trading account here and my longer-term Ameritrade account... between the two accounts, I have February ATVI and SNDK calls that, as of yesterdays close, were about $.30 away from the strike price.... if the positive market momentum can push them above the strike prices in early trading, then I'll be able to break even (or maybe even sell profitably!) in trades I had written off as losses.

Looking forward, the MSFT options that I wrote a trade note about buying look like they'll work out well (still knocking on wood). MSFT closed a tad under $29 yesterday (the option's strike price) with an entire month left. As I stated before, as clarity increases concerning the Yahoo deal (and just as the market goes up), MSFT has a lot of ground to make up towards its high of $37. I also bought some $30 SNDK calls yesterday as the stock appears to be picking up some momentum.

So, if the market opens up big, I plan on profit taking on a few trades, just because I'm not sure about the sustainability of a weeklong rally. But the market is still dirt cheap, and if economic conditions continue to stabilize/improve, this could prove to be the beginning of the end of the best buying opportunity for years to come.

"I trade with TradeKing: $4.95 stock and options trades, plus lots of tools. It's simply the best way to invest. Click here to find out more."

BWLD Blow-out Quarter

Well, the title was a little exaggerated to grab attention, but thankfully (and as I expected), BWLD reported a strong quarter that should rejuvenate investor confidence.

The street expected $.31, and BWLD came in at $.34, which was a 4 cent (13%) increase over last year's numbers (when the extra week of last year [yeah, they have funny accounting stuff]) is disregarded).

I'm long BWLD stock in my Ameritrade portfolio, and I was long calls until 3:45 pm. I sold them off because the IV was around 80; the March 25 calls were trading at $2 when the stock was at $23 and change.

After hours (and before the conference call), the stock is up over $26. I probably would have made a little more money if I had held my options, but the IV will drop tomorrow morning and they'll probably stay around flat. The stock isn't too heavily traded after hours, so if the call's contents are good we'll see much more volume (and maybe price movement) tomorrow morning.

I dollar-cost averaged all the way down from the mid-30s to the low 20s; I've been waiting for the stock to get back on track. Missing earnings (barely) last quarter derailed this value-growth play; now that the company has controlled cost, beaten estimates, and reported a great quarter (considering the tough economic environment), it's time for earnings expansion AND p/e expansion (BWLD, before the announcement, traded at a 17 forward p/e, which is below its 20+% growth rate).

I'm hoping for a good call, and a slow, steady return on my investment.

(Earnings press release here)

"I trade with TradeKing: $4.95 stock and options trades, plus lots of tools. It's simply the best way to invest. Click here to find out more.

Recent Trades and BWLD

Here's a few quick thoughts for any regular readers (if there are any) to keep up with:

Yesterday, I did my first two options trades in a while.

I bought Microsoft March 29 calls (the stock was at $28.20). My thinking behind this is that the Microsoft-Yahoo marraige will begin to clear soon, and as uncertainty leaves the arena, MSFT shareholders will feel more secure. Plus, the stock only has to rally a couple points in over a month for it to be a profitable trade.

Second, I bought March 25 puts on the VIX (S&P 500 volatility). As the awful news is now mostly fully exposed (though there's some hidden stuff trickling out, recently AIG's writedown), the market will start to calm down. Most major banks have already written down most of what they'll have to. Also, earnings have been largely OK, and once that season passes, there probably won't be much for the market to freak out about . I'm hoping to unload this in a week or two.


Lastly, BWLD releases earnings today. I have no idea if they'll beat, meet or miss, but the stock will probably move big in one direction or the other. I'm long, so I obviously have faith in the company, but there's obviously some chance that investors may get blindsided by a bad report. However, I think they'll report in-line with estimates, and reaffirm future growth, which should hopefully help move the stock higher.




"I trade with TradeKing: $4.95 stock and options trades, plus lots of tools. It's simply the best way to invest. Click here to find out more."

ATVI Followup; More Earnings Next Week

Well, Activision did report a truly outstanding quarter yesterday, firmed guidance for this quarter, and had lots of good forward-looking commentary during the call.

However, the stock didn't move much after hours last night. Interestingly, for having released earnings, very few shares traded after-market; with a daily volume of about 6 million, less than half a million shares traded after hours.

In the pre-market this morning, ATVI shares are changing hands closer to $27, which is good. Hopefully when the market opens, the shares will continue higher. It's nonsense that companies with excellent earnings and guidance like ATVI aren't being rewarded in this tough market.

Next week, I think I'm going to do something with Chiptole's earnings in the latter half of the week. I don't expect them to blow out numbers; however, the stock has fallen from $150 to $105 (while I was unfortunately on the sidelines, after predicting declines in multiple posts on this blog), so it's already coming down to earth. I'm hoping it bounces before earnings so that I can short. Another method may be selling-to-open some out-of-the-money calls; however, that's dangerous, because if they somehow blow away it could be disastrous. However, the implied volatility is through the roof, so options are fetching a premium now that will evaporate the morning after earnings.

Another stock I've lately been turned onto is MadCatz (MCZ). They are a tiny video-game accessory maker. I think that they're going to benefit from the great holiday quarter that every other video company has enjoyed; plus, they recently inked a long-term deal to produce all of the instruments for EA's Rock Band. The downside is that the stock is at 80 cents and volitile; a disappointment and the penny stock could plummet.






"I trade with TradeKing: $4.95 stock and options trades, plus lots of tools. It's simply the best way to invest. Click here to find out more.