20 'Babies with the Bathwater' Stocks for This Week

At the end of each trading week, Hillbent scans the market for extremely oversold stocks with a proprietary "A" (strongest) or "B" (next strongest) ranking in terms of positive fundamentals for revenue and earnings stability. The generated results is better known as the "Weekly Babies With Bathwater" watchlist.

Past observations have revealed that such candidates may experience reversal corrections to the upside once the market reconfirms that their fundamentals remain solidly intact.

(The purpose of this list is not to provide specific recommendations, but instead serve as a starting point for investment ideas as the upcoming trading week unfolds. Please refer to our Market Condition Report to determine if market direction trend analysis supports a bullish or bearish investment bias. )

Disclosures: Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

Comments

[Alan Brochs...:]

Perhaps the new environment we are in should lead you to question the validity of your model regarding "strong" fundamentals. Just a question, really, since I don't know how your model works to characterize that attribute. RNT shows up on your list, and I have done proprietary work on that one to suggest that it is an "aids and abetts" consumption of things by people who can't afford them. It would seem that while this worked and could produce "earnings stability" and "growth" in the past, one would have to be very skeptical that it would continue to work. Similarly, I know SRDX very well. I am not sure how you characterize their fundamentals, but their "growth" has been driven by a large deal with MRK that has now been cancelled. In the most recent quarter, though, there was a big boost (at least to GAAP earnings) due to that termination. Rather than debate the details of your model, suffice it to say that these are times when sticking to what has worked in the past is not likely to prove very helpful in my opinion. I have had to totally shift my focus (away from sustainable growth at a reasonable valuation combined with good technicals) to a deeper value strategy focused on only the very best balance sheets. In the past, I liked to buy good charts, now I have to sell them and instead focus on buying oversold stocks that have overreacted to near-term news.

Feb 02 08:46 AM