Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Gary105 who wrote (6687)	11/9/1997 6:34:00 PM
From: Stephen D. French	Respond to of 9285

Gary - here's a list of some short candidates from Zacks and a list of recent deletions from their z-100 portfolio: Ticker Zacks FR1 LngTrm Current grwth Symbol Name Rank P/E Consns Price 5 yrs ACCC ACC CORP 5 38 30.6 39.625 4.6 AMD ADV MICRO DEV 4 99 18.9 23.000 -99.9 ARVX AEROVOX INC 4 99 8.0 5.500 -99.9 YAEC ALBERTA ENERGY 5 38 19.9 32.750 1.0 AMHC AMER HEALTHCORP 4 36 25.0 10.500 -25.4 APL APL LTD 5 56 7.0 32.875 4.6 ABPCA AU BON PAIN CLA 4 53 16.7 9.500 -99.9 BA BOEING CO 5 36 17.8 48.000 -8.2 YCBJ CAMBIOR INC 4 70 5.0 11.125 -24.1 CHRS CHARMING SHOPPE 4 39 17.3 5.125 -99.9 CC CIRCUIT CTY-CCG 4 31 18.1 39.875 9.9 KO COCA COLA CO 4 34 17.2 56.625 17.9 CY CYPRESS SEMICON 4 34 23.6 11.125 18.1 EXBT EXABYTE CORP 5 63 20.0 10.500 -23.6 FIGIA FIGGIE INTL A 4 45 12.0 13.375 -9.1 FRX FOREST LABS A 4 33 22.1 46.250 -99.9 FTX FREEPT-MCMORAN 5 34 7.8 34.125 -14.8 GHW GENL HOUSEWARES 4 40 10.0 9.500 -99.9 JBHT HUNT (JB) TRANS 4 54 15.2 15.375 -9.2 N INCO LTD 4 92 6.8 20.625 -5.9 IRIC INFO RESOURCES 4 46 20.0 16.500 -35.8 JAX J ALEXANDER CP 5 99 23.5 7.000 -9.3 LRCX LAM RESEARCH 4 36 20.3 36.125 2.6 LFB LONGVIEW FIBRE 5 40 7.3 15.875 9.7 MDT MEDTRONIC 4 33 19.2 43.500 25.9 MTLM METAL MGMT INC 4 99 25.0 21.500 -99.9 MME MID-ATL MED SVC 4 43 15.8 14.500 -99.9 MTC MONSANTO CO 5 34 18.6 42.750 13.0 NEM NEWMONT MINING 4 35 15.0 35.000 -10.8 NMPC NUTRAMAX PRODS 4 33 19.0 12.375 24.2 PEP PEPSICO INC 5 32 14.6 36.875 8.3 RDA READERS DIGEST 4 36 8.0 22.750 -3.5 SFE SAFEGUARD SCTFC 4 47 15.5 31.000 10.0 SRCO SEALRIGHT CO 4 48 8.0 13.250 -20.4 SBO SHOWBOAT 4 33 15.0 19.875 -5.0 SABI SWISS ARMY BRND 4 36 15.0 10.750 -99.9 TIN TEMPLE-INLAND 4 49 6.6 57.375 -5.8 WGR WESTERN GAS RES 4 51 12.7 24.625 -9.4 WLL WILLAMETTE INDS 4 45 12.4 33.000 15.9 WZR WISER OIL CO 5 37 30.0 17.000 31.0 WMS WMS INDS INC 4 35 25.0 24.250 2.4 Deletions November 6: We are removing Teledata Communications Ltd. (TLDCF) from the Zacks Recommended 100. Yesterday the company announced earnings of $0.35 per share for the third quarter, $0.04 or 14% above the consensus expectations of $0.31, driven primarily by higher gross margins which were sequentially up 400 basis points at 50.2% of sales. However, year-over-year revenue growth slowed considerably due to weak orders with the company recording book-to-bill ratio below1. In addition, Teledata reported a dramatic increase in its business in Southeast Asia, which now represents approximately 30% of the total sales. This raises concerns of further revenue growth rate slowdown in 1998. So, based on these developments we are removing Teledata Communications Ltd. October 30: We are removing United Technologies Corporation (UTX) from the Zacks Recommended 100. We are reducing our exposure of the Capital Spending sector due to the expected weakness in world economies. October 30: We are removing Titanium Metals Corporation (TIMT) from the Zacks Recommended 100. We are reducing our exposure of the Capital Spending sector due to the expected weakness in world economies. October 30: We are removing Kansas City Southern Industries (KSU) from the Zacks Recommended 100. Kansas city has not been performing well since the announcement of the spin off of its railroad business. Also, we do not think that the mutual fund business is attractive at this time. October 30: We are removing Eaton Corporation (ETN)from the Zacks Recommended 100. We are reducing our exposure of the Capital Spending sector due to the expected weakness in world economies. October 30: We are removing Dana Corporation (DCN) from the Zacks Recommended 100. We are reducing our exposure of the Capital Spending sector due to the expected weakness in world economies. October 30: We are removing American Express Company (AXP) from the Zacks Recommended 100. Although earnings for the third quarter came in slightly above expectations, we think from a macro point of view American Express is not very attractive due to expected slowdown in worldwide businesses. October 23: We are removing Caterpillar Inc. (CAT) from the Zacks Recommended 100 at a price of $58.96875. Due to the turmoil in Asian economies and the expected slowdown affecting the capital infrastructure projects, we think it is appropriate to remove Caterpillar from the Zacks Recommended 100. October 23: We are removing Franklin Resources (BEN) from the Zacks Recommended 100 at a price of $102.03125. Due to turmoil in all foreign markets, we think it is appropriate to sell the stock at this time because of its huge international exposure in mutual funds. October 16: We are removing Maverick Tube (MAVK) from the Zacks Recommended 100 at a price of $42.00. Although analysts are still raising earnings estimates and the company is expected to report strong fourth quarter financial results, we are at this time removing it from the Zacks Recommended 100. There has been enormous amount of insider selling recently and considering that the stock is up almost 8-fold since we added it to the Recommended 100, we think it is appropriate to remove the stock. In addition, one of its competitors yesterday in its earnings release indicated high inventory levels, which will need to be worked off. October 8: We are removing Maxim Group Inc. (MXG) from the Zacks Recommended 100 at a price of $16.00. The stock has not performed well since we added it to the Recommended 100. In addition, recent refinancings which are to be used for expansion of both carpet manufacturing operations and new store openings is causing analysts to reduce this year's and next year's earnings estimates due to dilution. We think the company is executing well and should benefit from industry consolidations and in the longer term the stock will perform, but we have to remove it at this time due to several earnings estimate cuts. October 6: We are removing Silicon Graphics, Inc. (SGI) from the Zacks Recommended 100 at a price of $17.90625. Silicon Graphics this morning announced that it expects to report September quarter results significantly below expectations due to weakness in its server business. In addition, longer sales cycle associated with its enterprise business affected demand greater than expected in the current quarter. The company expects revenues to be below last year's levels. So, in light of this development we are removing Silicon Graphics from the Recommended 100. September 29: We are removing Tiffany & Company (TIF) from the Zacks Recommended 100 at a price of $42.59375. Although, analysts have slightly increased earnings estimates for both current and next fiscal years in light of the one cent better than expected latest quarterly earnings, we do not see any significant upside potential from current stock price level. September 29: We are removing Stratus computer (SRA) from the Zacks Recommended 100 at a price of $48.6875. We are removing Startus Computer due to earnings estimate cuts for both current and next fiscal year. September 29: We are removing First Union Corporation (FTU) from the Zacks Recommended 100 at a price of $50.25. We are removing First Union due to several analysts recently downgrading their earnings estimates for both current and next fiscal years. September 29: We are removing Electronics for Imaging (EFII) from the Zacks Recommended 100 at a price of $51.21875. We are removing Electronics for Imaging due to concerns about valuation and nervousness over the lack of positive earnings estimate revision momentum. September 23: We are removing Williams-Sonoma Inc. from the Zacks Recommended 100 at a price of $41.9375. Although analysts are still increasing earnings estimates, they have recently raised concerns about possible slowdown in the company's same-store sales for the month of September. In addition, we are concerned about the stock's rich valuation.

To: Gary105 who wrote (6687)	11/9/1997 7:56:00 PM
From: Roger A. Babb	Respond to of 9285

Gary, I do not use TA but prefer fundamental analysis. However, I do pay attention to the TA analysis of others on this thread. You should direct your question to Jon Tara or the McNabb's.

To: Gary105 who wrote (6687)	11/9/1997 11:42:00 PM
From: Jon Tara	Read Replies (1) \| Respond to of 9285

Gary, I use very simple TA for shorts - primarly moving averages and sector analysis. Keep in mind that my style of shorting is quite different from Roger's though - my focus is on short-term trading. Roger's is on longer-term fundamentally-based shorts. Tech stocks - and sub-sectors within tech stocks - tend to move as a herd. As in every herd, though, there are those at the head of the line, those at the back, and those that straggle off to the fringes. I pay close attention to the charts within a sector, and can usually find 2 to 3 basic chart patterns within a sector. I note this, try to categorize each stock into one of these basic patterns, and then look at the animals at the head of each line to get a clue what is going to happen to the ones at the end. :) That is, I try to take advantage market momentum and individual stocks that are lagged from the sector. I find the 50-day and 200-day moving averages instrumental to this approach, particularly with tech stocks. Once a serious move toward one of these averages gets rolling in the tech sector, it almost always follows through. Let's say that a sector is above it's 200-day moving average but below it's 50-day moving average. (As is currently the case for most tech stocks.) A few stocks start moving down toward the 200ma, and then some actually hit it. At that point, I would be looking for stocks that have just started the downward move. The lag will tend to be 1-2 days to a week. Any more than that, and you are probably looking at a strong stock that is going to buck the trend. I like to go short (or long, as appropriate) at the half-way point. (That is, in this case, I would pick stocks that are half-way between their 50ma and 200ma.) When the stock reaches the target, I will cover (or sell). At that point, I am not interesting in capturing any further move, as when the stock is at the ma it could go either way and it's a riskier position to be in. I will continue to watch, though. If I see some stocks start breaking their 200ma (again, this is a real-life example, and I will be watching for this in techs this week) then I would again go short. I use many other TA indicators on long trades, but for some reason, this is really all that I use for shorts. Guess you can call this "this doggie's going thataway way cause all those other doggies went thataway too..." Sometimes an individual stock will not run with the pack, and you have to take that one out of the group then. Or, it will have a mind of it's own but still be influenced. CTXS is a good example, as it's above it's 50ma. If I see techs breaking down below their 200mas this week, I think that CTXS will then be a safe short down to it's 50ma at around 60. You can only ignore the herd so much! One other piece of simple TA that I use with this sector-based approach are gaps. I will look for stocks in a sector starting to jump through old gaps, and then look for other stocks in the sector that have not yet done so. My ideal situation here is that some stocks in the sector have moved completely through the gap, and then I will target those that are near the middle of the gap. In both cases - with moving averages and gaps - I prefer that some of the stocks have already made the full move. I am not simply guessing about the direction and magnitude of the move. Instead, when I take a position I have already observed some of the stocks in the sector making the full move. The probability of most of the stocks in the sector completing the move is then very high. Incidently, the semiconductor equipment sector is an ideal laboratory for these techniques.