Guest Blogger Mishlove: His Monday Contest Stock Picks
Senior Editor, CNBC
Hey everyone. Jeff Mishlove is back with some contest stock picks. Notice his reference to weekly winner #5 Scott Cole and using earnings news as a way to buy stocks. Time to let Jeff do the talking. Here he is.
My Top Picks to Buy on Monday:
Can you make a date with a stock? Working with the earnings calendar has been key to my being able to select unique stocks for each day of the week. Scott Cole, the week # 5 winner, also reported that he employs this strategy. It’s probably the best way to pinpoint when important news is likely to be released concerning specific stocks. But, stocks don’t always keep their dates (as we saw a week ago with Lawson Software ). And, sometimes, they show up for a date unexpectedly.
For example, just last Friday, one of the top stocks was FCStone Group , a company specializing in commodity trading. This stock jumped up nearly 23% in one day – based on its earnings announcement. Wow! FCSX announced last Tuesday evening that it would be hosting a conference call on Friday the 13th. Yikes, but I missed it! I checked the earnings calendars on CNBC, Yahoo, Ameritrade and Earnings Whispers. But, none of them caught this crucial announcement. There are some other, high-priced, earnings calendars available. And, this example suggests to me that, if they can deliver, they may be worth the fees they charge.
Earnings calendars, incidentally, can be tricky. Most of them do not distinguish between announcements made before the market opens, during market hours, and after the market closes. But, for purposes of the Portfolio Challenge, this is crucial information. I found the earningswhispers.comcalendar to be the best in categorizing this information, and then verifying with the companies involved.
Now, for Monday’s Portfolio Challenge buys, I first eliminated all of the large cap stocks on the earnings calendar from my watch list. For me, this means over $8 billion in market cap. That still left me with fifteen possible choices for Monday. However, a quick scan of the charts of those stocks allowed me to eliminate ten more stocks – simply because they showed no history of single-day price jumps greater than about 5%.
Of course, a 5% upward price movement in a single day is normally very healthy. But, for purposes of the Portfolio Challenge, I’m looking for stocks that have the potential for a price jump of about 10% or more. History shows that that’s what’s required each day, on average, to become a weekly winner. Here are my remaining selections:
Steel Dynamics . This stock is very close to its all time high. Yet, over 4% of the stock float is controlled by short-sellers. Good news could mean a very nice price pop.
Werner Enterprises . This trucking company has been in a trading range all year. And, while it is in the middle of that range right now, it appears to be breaking through an important line of resistance. 17.5% of the stock float is controlled by short-sellers. If they all tried to close their positions, given the average sales volume of the stock, it would take them ten days. If good news forces them to move quickly, we could see a big price jump.
ADTRAN, Inc. . This Alabama company specializes in integrated voice and data solutions. James Altucher, with whom I was partnered on CNBC’s “How To Win” show, believes it is important to pay attention to the hedge funds and professional investors that are pursuing a particular stock. And, a quick look at James’ www.stockpickr.com website shows that this stock is in the portfolio of eight different funds. It also shows the potential for a short squeeze, since 12% of the stock float is controlled by short-sellers.
The Shaw Group . Nine professional funds hold this stock that specializes in engineering, designing, building and maintaining large-scale energy plants – including nuclear. It shows a history of price pops. In fact, it is currently priced at the same level where it experienced a nice one-day pop just last December. News has been good lately. And, over 8% of the stock float is controlled by short-sellers. All of these factors suggest the potential for a short squeeze play.
United Community Banks . Generally, the conservative banking sector is not a good place to look for large, single-day price jumps. But, there can be exceptions; and, I think UCBI may be one. Over 7% of the stock float is controlled by short-sellers. In the last thirty days, the stock has fallen more than 10%. So, there is potential for a bounce back.
If you buy one of these stocks on Monday, will they deliver in a big way for you by Tuesday’s close? Of course, we cannot be sure. But, my best guess for the day is ADTRAN, Inc. If I had to make a date to buy a stock on Monday, that would be my first choice.
Jeffrey Mishlove, PhD, is founder of www.forecastingsystems.com. He is a registered commodity trading advisor. His doctoral diploma in “parapsychology” (UC, Berkeley, 1980) is the only one in this field ever awarded by an accredited, American university.
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