The Hype

The hype comes in all shapes and forms. For most of us avid Wall Street fans we may read or hear about it through our favorite shows, blogs, or newspapers. And the hype reminds you of the teams like the New England Patriots. A great team that was poised to win it all. Many people overlook the fact that there were a number of games that New England could have and should have lost during the regular season and post season before the let down loss in the Superbowl. A number a games would have told you not to believe the hype like the Indianapolis Colts or New York Giants regular season games that exposed the Patriots. Now lets take a similar view to the market right now. Yes, people are excited because the markets are moving up and the Dow even touched 13,000 recently. But how quickly we forget what brought us to this point. The market is still suffering from the stuff that that gave it upset stomach in the first place. The hype is people like Henry Paulson coming out recently and saying that the market turmoil or upset stomach could soon be over. That's like saying that you can give the markets Pepto and this will all be over. Sorry folks, that is not the case and unemployment is now at levels that mirror the last recession in 2001 and many economists believe that it will continue to deteriorate. The financial markets are still a mess...don't believe me, as Citigroup who is throwing up and selling businesses left and right. And I am sorry for the analogies but I want this point to sink in, the markets are don't with us yet.

I won't change my stance at this point and like most of the stocks that are on our radar or that we have recommended here at Urbanomics. Take Ricks Cabaret (NASDAQ: RICK) which is up rough 13% today, H&R Block (NYSE: HRB) which took out new 52 week highs, and Coinstar (NASDAQ: CSTR) which exploded after their earnings announcement as proof that we are picking timely market plays. Ricks Cabaret is a great small cap stock that probably continues to do well even during a recession catering to big wigs who spend big bucks at their "higher-end" (no pun intended) establishments. And H&R Block should probably be coming of a strong tax season as people are eager to file and qualify for the great tax rebate check that our government came up with to stimulate the economy. It will do one thing and that's stimulate bill paying and retail business. Lastly, Coinstar is doing well after a great earnings season and they are benefitting from increased sales in their DVD kiosk business through a big contract with Walmart. I hope you also love the sector specific plays and REALIZE that high commodity prices are here to stay for awhile. Clayton Williams (NASDAQ: CWEI), AK Steel (NYSE: AKS), the exchange traded fund OIH (AMEX:OIH), and others are all great plays and make you feel a little bit better when you buy gas at the pump or buy something made from steel.

Enjoy the weekend and holla back!

Why I Won't Sell(out)

I won't sell out because I keep it real, you know what I'm saying. I mean that's my job here at Urbanomics, to keep it real and uncut. And the problem is this tag gets thrown on a lot of people all the time. Take your favorite hip hop artist and you get a real quick example of what I mean. Let's look at 50 Cent, the hardest rapper, forget rapper...man alive. He took nine bullets and lived to rap about it through his music. Who can forget the debut album, "Get Rich or Die Tryin'", which exploded on the scene in 2003 laced with gangsta rhymes, tight beats and catchy hooks. I won't test his gangsta, with tracks titled:

~Many Men (the hook goes "wish death upon me")
~ What Up Gangsta
~ Don't Push Me


And everyone will remember "In Da Club" and "Wanksta" as memorable hits that put 50 on the radar. My how quickly times have changed. Now I won't call my man 50 Cent a sellout but many have questioned the general since the release of that first album. Maybe it was the tracks that he later dropped such as "Candy Shop" or "Amusement Park" or is it just human nature to take shots at the guy on top by calling them a sellout and wishing for his demise from the thrown.


So what does all this have to do with stocks? Well many people sell or sell(out) on stocks because their stocks made it big...kinda like 50 Cent did. As documented in my last post, I highlighted Clayton Williams Energy Inc. It is one of the high flyers of the year but it wasn't always that way. This company first came up on my radar way back in 2006. Yep, it was January 2006 when I made my second wave of investments in the oil industry. A year two before that you may remember major purchases like PetroChina that we made before the great Warren Buffet
revealed his acquisition of a large number of their shares also. A small oil and gas exploration company called Clayton Williams made a splash on my stock screener. With small victories in my portfolio, I was looking for more small and mid cap stocks to purchase with the opportunity for huge upside. Run a chart of this stock since the beginning of 2006 and you will quickly learn that this stock was trading down since the beginning of 2008. But as Warren Buffet has always mentioned if you believe that you have obtained a stock at a discounted price then hold onto that investment until its true intrinsic value has been reached. Well it caused me great pains to watch my investment drop to levels of roughly 30% declines at some points, but you have to think long term! The economics behind oil and gas were pointing in the right direction and all it took was good management to pull this company up off the ground. Today CWEI has taken out new 52 week highs once again and this wouldn't have been hard to see. Going into its earning CWEI sold some of its oil fields which is guaranteed to present a nice upside to short term earnings going into its quarterly earnings meeting. After this meeting the market loved what it heard and pushed CWEI up 7% more on the day. On the year CWEI has run up over 100% and I am still not looking to sell anytime soon. I ain't no sell(out) just because CWEI is hot. If the fundamentals look good I am sticking with my stock and keeping it real. Take 50 Cent for example even though people have taken shots at him, his second album sold over 1Million copies in JUST 4 days.

Knowing when to sell is a tough thing so we will look at some times when we have gotten it right and also some thoughts from the big dogs that do this for a living.

Holla

This Just In...

I ran a screen tonight and recent stocks that have come to my attention are:

Patriot Coal (PCX)
AVID Technology (AVID) - $20.44
Amylin Pharmaceuticals (AMLN)
Owens Corning (OC) - 20.56
Biomimetic Therapeutics (BMTI) - 9.65 * This one has taken off and we need to wait for a pullback.

I will actively look to add Owens Corning to my portfolio. AVID has been in my portfolio before and I would look to make a short term gain out of this trade again.

Enjoy,

URB

Best Performing Stocks

Patience is something that cannot be taught. And as I have evaluated some of the best performing stocks of this year so far, I am pleased to note that one of our recommendations comes in on all the lists with big returns this year. It is Clayton Williams Energy Inc (CWEI). This stock has been with us so long that if patience is your weakness it would have been exposed. If you gave up on this stock that was in a sector we have constantly talked about week after week you would have taken part in these great gains. Need more proof check out these:

Urbanomics post on Clayton Williams, and other energy plays...notice the date of the article and the message from 2 years ago to stick with Energy stocks, Clayton Williams and Weatherford, and Chesapeake Energy.

http://urbanomics.blogspot.com/2006/04/portfolio-alert-ballin-of-wall-street.html
http://urbanomics.blogspot.com/2006/01/stock-update.html

Motley Fool's take on this year's top stocks:
http://www.fool.com/investing/small-cap/2008/04/17/the-years-top-stock.aspx

Seeking Alpha's write-up on top stocks:
http://seekingalpha.com/article/75107-another-month-of-08-in-the-books

I like to note that a few of my friends are making great recommendations at this point and one of their stocks is actually topping the list. This stock is Finish Line (FINL) and what I love about this stock is that we were 100% on the money with our analysis. Now I did not buy into this stock but my recommendation was to wait for the legal proceedings from the Genesco trail to end and look to accumulate this stock in the event that the judge allows Finish Line to walk away from its original deal to acquire Genesco. I didn't like the potential acquisition and it looks like the street agreed with me. Also I would like to point out that another one of my friends has been enjoying an incredicble ride with the credit card network processors Mastercard (MA) and Visa (V). Again, I do not own shares here but I think these are great plays due to the fact that the networks don't have exposure to customers with deteriorating credit concerns like the big credit card issuers do (Bank of America, Capital One, Citigroup)...they just run the transactions back and forth.

Touch My...

Now I would love to finish the title of this post with a song I can't get out of my head..."Touch My Body" by Mariah Carey. What's crazy is people will say she's too old for me but whats wrong with a mature older woman thats seems to get better with old age. And to make matters worse the remix ain't half bad either!

But I know you're thinking, this is way too much information (TMI) and what does this have to do with stocks. Well...nothing so how about I let you into my mind and let's elaborate a little bit more on some of the stocks that are lighting up my radar. I call this the "Touch My Stocks" portfolio, even though they will never replace my Mariah. And what better to start my list off with then a truly gentlemen stock, Rick's Cabaret. As always I emphasize, only buying stocks at great price points that give you the opportunity to jump in a favorable discount. Its tough to wait for these levels but we must be patient.

Touch My Stocks Portfolio:

Ricks Cabaret (RICK)
Superman Price: 14.80
Accumulate from anywhere below 16.90

New York Times (NYT)
Price: 18.68
Accumulate from anywhere below 19.87
Note: Eager to see that private equity firms have pushed and obtained 3 seats on the NYT Board of Directors and may look to push strategic alternatives; also NYT is a proud family owned members and they may want to sell before the private equity firms begin to call the shots...do I hear another media firm sale to Rupert Murdoch

Move Inc (MOVE)
Accumulate from anywhere below 3.05

Asset Acceptance Capital (AACC)
Accumulate from anywhere below 10.89

Coinstar (CSTR)
Accumulate from anywhere below 29.04
Thinking about pulling out my cape and supermaning the stock @ (28.50)

H&R Block (HRB)
Accumulate from anywhere below 19.26

Jeffries Group (JEF)
Superman: 14.82
Accumulate from anywhere below 17.59

A Perfect Storm...

Unfortunately the perfect storm continues as another critical problem is looming and this one is on a global scale. The world is becoming hungrier and hungrier. There are recent stories that are surfacing with details of third world countries around the world that are struggling to feed their people or going to extreme measures to guard food and crops as the prices of food continues to surge.


Commodities like copper and food are to be watched closely. Stories that once sounded absurb about thiefs here in the US stealing copper from new housing developments or even power lines are becoming NORMAL. And now stories about around the world of uprisings over food prices is also becoming NORMAL. Some say the perfect storm surrounds the following reasons:



~ Rising oil prices

~ Rising demand by emerging countries like China and India for food and other commodities

~ Rising demand for biofuel which has lead to land and crops once used primarily for food to now be used as an alternative fuel for oil

Now these are not laughing matters but as the prices continue to rise in commodities like wheat, corn, copper, oil, natural gas, aluminum, etc...I continue to stick by the trades that make these industries possible. I have given you those names here recently, but I also ask that you include the agricultural plays.

Stay tuned for more information on how to profit from the commodity storm.

Sell the Rally!!!...

I am sitting here because I got the chance to get home early and watch my main man, crazy Jim Cramer. And he is attempting to go after the infamous question of when you sell stocks. His main points are to sell into the rally for big winners, and also for losers that have gone up due to the momentum of the market. During his show, Cramer talks about taking on unnecessary risks (due to things such as your stock going up too much) and your portfolio not being diversified. I do agree that it becomes a tough situation when you have the following scenarios:

1. A great stock does very well for you and now consumes a large amount of your portfolio
2. You made great choices on an industry or sector like oil and own a number of stocks in that industry/sector
3. You have a loser or dog of a stock and it begins to rally when the market rallies

URBANOMICS ANALYSIS

Cramer responds to these situations by saying that you need to take a little bit of the table and stay diversified, have cash on the sidelines, and sell a dog into a momentum rally.

I am torn between this stance because you know I am an avid follower of Warren Buffet, who believes buying a stock at a discounted price and paying attention to the fundamentals, not the stock price. My position is that you should never be afraid to sell a portion of a big win and definitely sell a dog that begins to rally. However I will lean toward Buffet and his position on owning, holding, and selling stock. I will give my interpretation of his opinion:

Owning a few really good stocks, is similar to being an agent and signing some very good college hoop stars. Some of these athletes will go on to be professional basketball superstars and if you are the agent then your agent fees will grow and one of your major superstars will become a big portion of your income.

Here comes the kicker --> For me to tell you that you should sell your really good investments is like me telling you, as an agent, to get rid of negotiating Michael Jordan's contract because he's so good that his bigger and bigger contracts are bringing you in so much money that its dwarfing your other clients.

No! Holding on to superstars, and investments:
- Reduces your transaction costs
- And it increases your after-tax returns

You would never let go of Jordan and therefore you should not sell an investment just because you've gotten huge returns. Keep the superstar investments until the fundamentals change.

Recent picks I hope you like:
~ OIL HOLDRS ETF (OIL)
~ AK Steel (AKS)
~ Medcath (MDTH)
~ Burlington Northern Santa Fe (BNI)

On the URB Radar for acquisition at the right price:
~ Ricks Cabaret (RICK)
~ NY Times (NYT)
~ Move Inc (MOVE)
~ Asset Acceptance Corp (AACC)
~ China Digital Holdings (STV)
~ Coinstar (CSTR)
~ H&R Block (HRB)