This morning, I closed my short put positions in THQI: some profitable, some losers. I also sold about 10% of my shares, in an effort to diversify my portfolio more. Although the stock is quite cheap at current levels, I see other stocks with similarly compelling valuations, and I want to reduce my dependence on THQI. I also don't like the way the market is reacting to THQ's news in general (nothing new here), and I think the stock should retest the 200-day MA at $24, and perhaps go lower if the broad market resumes its fall.
Toy stocks, in general, look very good. I've already bought TMAX, and I may buy more (It trades at 3 times forward earnings--after backing out most of the cash value). That's hard to ignore. Another good stock could be Galoob (GAL). It has had some problems, but appears to be turing things around. The stock has been forming a rounding bottom for several months. Any indication of profitability (which should happen soon) should cause the stock to break out. Estimates are for $1.35 next year. The stock trades at $9, so it looks cheap. The consolidating toy industry could see HAS or even MAT buy GAL or TMAX, as well as several other undervalued toy stocks. Other good values include RADAF and POWI.
Todd |
