SHREVEPORT, La., March 8, 2005 (PRIMEZONE) -- StockPickReport.Com (IARD #119079, http://www.stockpickreport.com - the web's only non-mainstream stock rating service), rates Sun Microsystems, News Corporation Limited CL A, XM Satellite Radio Holdings Inc., OmniVision Technologies Inc.
STOCKPICKREPORT RATINGS:
Sun Microsystems (Nasdaq:SUNW) - BUY
http://www.stockpickreport.com/abrating.php?sym=SUNW
News Corporation Limited CL A (NYSE:NWS.A) - BUY
http://www.stockpickreport.com/abrating.php?sym=NWS.A
XM Satellite Radio Holdings Inc. (Nasdaq:XMSR) - BUY
http://www.stockpickreport.com/abrating.php?sym=XMSR
OmniVision Technologies Inc. (Nasdaq:OVTI) - SELL
http://www.stockpickreport.com/abrating.php?sym=OVTI
Tuesday, March 8, 2005 StockPickReport Commentary
Well, Martha Stewart went back to work today and her company's stock was down 9.04% on the day. Well, you might say, that doesn't make a heck of a lot of sense, does it?
Of course it doesn't. By making plays in the market that make "so much sense" can be devastating to your portfolio. The market, and stocks, move in anticipation of events. Martha Stewart Living Omnimedia Inc. (MSO) was up from $25 to $35 in the past three months for a move of 40%. It's the old "buy on the rumor, sell on the news" adage of Wall Street.
Just like recently when Krispy Kreme got a new CEO, and the stock started to move up (the not-so-smart money) and then the stock tanked another 50% from there. So, be careful when you are looking at plays that make "so much sense" when they are based on single events. We know a broker who has a client that demanded he buy Sirius Satellite Radio Inc (SIRI) at about $7 only to see it drop to the low $5's.
His rationale? Once Howard Stern starts broadcasting, the stock will take off. Well, that is just too simple. What you really want to do is start buying three months before Stern starts broadcasting, then sell the stock the day before he's on the air. That's how you make money on single event strategies.
On a more macro-global level there are plays that make sense, which you can act on. Like China using 50% of the world's cement. Like global demand for steel rising constantly. We got a call today, (and we are not making this up) from the same broker we mentioned who has another client that wants to buy Lucent and Nokia. We then responded: "Everyone we know has a cell phone". "Do you think demand is growing more for steel, or cell phones"?
Let's think this through: cell phone prices are GOING DOWN, and everyone we know has a cell phone. Margins are getting pinched. However, demand for oil and steel is surging still, and prices are rising.
Seems like an easy decision for us: Buy oil. Buy steel.
Our favorite oil stock as you know is Suncor. Our favorite steel stock is Posco (PKX), a South Korean steel company with a forward P/E of 5.47 and market cap of 19.51 billion. Remember, market cap is key. Let's think--could PKX be worth $50 billion in a few years?
You bet it could. Not just because they're selling more steel, but because of more mutual fund money going into international funds as well as what we call "an acceptable P/E shift". Meaning, that these companies could have higher valuation and still be viewed as a acceptable. It happened with homebuilders, with P/E's of 5 going to P/E's of 8. Should the forward P/E of PKX be worth, let's say, 10, then that's a double in the stock. A forward P/E of 20 would be a quadruple, and that's without an increase in earnings, only an increase in demand for the stock. We expect an increase in both.
Now that's something.
Investing Notes Monday, March 7, 2005: Wall Street started the day fairly flat. By half-time the broad markets headed above water. The equity markets closed basically flat. News about strong employment numbers, Martha Stewart, plus, profit-taking, helped the tone of the market.
If you have questions or comments, please email don@stockpickreport.com. For More Commentary Go Here: http://www.stockpickreport.com
All commentary written by Don Harrold, Senior Analyst.
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If the links to our ratings above do not work, please use these:
Sun Microsystems (Nasdaq:SUNW) - BUY
http://www.bigtimenews.com/russell1000/SUNW-Stock-Quotes-News-and-Research.php
News Corporation Limited CL A (NYSE:NWS.A) - BUY
http://www.bigtimenews.com/russell1000/NWS.A-Stock-Quotes-News-and-Research.php
XM Satellite Radio Holdings Inc. (Nasdaq:XMSR) - BUY
http://www.bigtimenews.com/russell1000/XMSR-Stock-Quotes-News-and-Research.php
OmniVision Technologies Inc. (Nasdaq:OVTI) - SELL
http://www.bigtimenews.com/russell1000/OVTI-Stock-Quotes-News-and-Research.php