Stock Spotlight

Wow, my mechanical formula portfolio has 5 new stocks coming onto the list on Monday. That is the most in eons! Since my mechanical portfolio has been doing so well of late, I thought I'd profile the newbies... they are some familiar names. Oh, before I start I will mention that I did buy a decent chunk of Dell this week, which was new to the list last week.

FWLT - I profiled this stock when they hit the top 100 list on October 6th. It hasn't been pretty as they are down about 50% (compared to 32% for SP500). They have been steadily earning pre-tax about $160m a quarter, not bad for a stock with a $1.9b MC. They are in a strong cash position. They see challenges in 2009, especially in their power division. Interestingly, they were relatively bullish on their construction and engineering divisions. I already own KBR, so will not dabble with FWLT.

HCKT - not exactly a household name, they provide consulting services to businesses globally. They have a bunch of cash (33m for a 99m market cap) and they have had a nice earnings stream. They do project the first quarter to be down YoY from 2008, though still making money. I think they are worth considering.

PTIE - this is a bio-tech company. I know, bio-tech and MFI don't exactly go hand-in-hand. In an "upside down" MFI list, the best stocks would be virtually all bio-techs. Looking at their financials, I'd stay away from them as their earnings stream is very unsteady. That being said, they have 170m in cash against their 190m market cap, but that game has never worked well for me. I don't have the courage to go this speculative, but this could be a big winner.

TRLG - I know these guys, I owned the stock in my early profitable days and did very very well with TRLG. They sell high-end jeans, think $300, but have been trying to brand themselves beyond jeans. The stock has ben crushed, down to $10 and change, it was pushing $30 last Spring as I recall. Pretty hard to be bullish today on high-end clothing, that is a discretionary purchase if there ever was one. That being said, they have a good management team, a strong balance sheet and they have been increasing sales despite the headwinds. They expect 2009 to be flat with 2008, earnings around $1.80. That isn't too shabby in today's maelstorm for a $10 stock. I doubt I'll buy them, but I think you could do worse. I'd buy them before COH for example, not that I think COH is a terrible buy.

DECK - I also remember these guys. When I first started MFI three years ago (yes I passed my three year annivesary with minimal hooplah) they would have been the BEST stock to buy. They went from $41 to $156 in two years. I kicked myself many times for passing. But now they have come back to $41, a complete round trip. I don't know much about them, except they make shoes which can be extraordinaily trendy, see HLYS and CROX charts. I won't be buying them this February either, let us see if I am kicking myself again in a year (not with their shoes I may add). Wow, they had a monster 4th quarter! No debt, tons of cash. Wonder why they dropped so much? They did lower guidance, still $7.25 a share is good for a 41 dollar stock. I think the issue is that their inventories are building. That is never a good sign for shoe manufacturers.

So I doubt I'll buy any of the newbies, though I recently bought prior newbies CKSW, AHCI (their CEO just had a large inside purchase) and DELL.

Take care! Happy birthday MFI.