Four Speculations for the Month Ahead

In this article I will list some of the names I purchased on June 12, 2009. I have researched these stocks and found they all have similar bullish trends. After each stock I will give my Bull to Bear ratio [X:Y] and the Investor's Business Daily rating (IBD). For the criteria in each of these ways of rating a stock visit my blog and check out the "Hottest Blog Posts" section.

I have been watching these stocks for the past two weeks, and I decided Friday would be the day I enter all three, as they were all down over 3% at the time.

The list and strategy I am using for each name is below:

Stock Strategy #1: Level 3 Communications (LVLT) (10:2) (IBD rated 56)

On Friday I purchased some common stock for $1.49 and was immediately able to write it out for the July $2.50 strike. Yes I have to hold the stock until July 18, 2009 but I was able to get 6.7% back on my investment with a chance of making a 74.5% return if the option happened to expire in the money. For more on covered call strategies click here.

Stock Strategy #2: Rubicon Minerals Corp (RBY) (14:0) (IBD rated 90)

On Friday I purchased some common shares on this small cap company which is based in China for $2.95 per share. Down over 5% I could not resist. The negative with this stock is it has extremely light volume, and no options on it. I believe if gold and other precious metals get even hotter, this is a great stock to keep an eye on.

Stock Strategy #3: Walter Energy Corp (WLT) (13:0) (IBD rated 99)

On Friday I speculated on this company by opening up an option call spread position for the July 40/45. I was able to get into each contract for $90 and as I expect commodities to keep rallying (as posted on Seeking Alpha here). Walter should rally as well. With over a month until options expiration I believe I'll be able to net a gain from this strategy. I was able to get into this spread while Walter was down roughly 5%.

Stock Strategy #4: Aluminum Corp of China (ACH) (13:0) (IBD rated 75)

On Friday I speculated by purchasing call contracts for the July 30 on this stock for $125 per contract. As from strategy #2, I expect metals to continue to rally and this stock should directly benefit from that.

Disclosure: Long: LVLT, RBY, WLT, ACH

Comments

[sewells:]

Rubicon Minerals is not based in China. It's a small gold exploration and development company in Canada with a notable discovery in Redlake at the F2 - Phoenix zone. I bought a bunch at $.80 a share and it has been a good play. I expect it to trade at $5 plus within the next two years.

Jun 15 08:02 AM

[Clint007:]

You better edit your comment about Rubicon in China!
Did you bought it in China market? :)

Jun 15 10:32 AM

[Marco Hickey:]

Yes I am sorry I must have got ahead of myself and was thinking of ACH which is slightly below it on the list. Thanks for catching that.


On Jun 15 08:02 AM sewells wrote:

> Rubicon Minerals is not based in China. It's a small gold exploration
> and development company in Canada with a notable discovery in Redlake
> at the F2 - Phoenix zone. I bought a bunch at $.80 a share and it
> has been a good play. I expect it to trade at $5 plus within the
> next two years.

Jun 15 03:47 PM

[NoFear:]

Regarding Rubicon Minerals:
This is a Junior Minor that very well may be sitting on top of yet another major gold discovery. Not to mention it is located right in the middle of Gold Corps vast land holdings and reserves. Gold Corp (GG) as you may not know was founded by Rod McEwen. It may serve you well to do a little research on what occurred to Gold Corp and the gold strike they discovered. Mr. McEwen, essentially turned a small Junior minor with a market cap of ~ 50M into a giant with a cap today of 24B. Although, Rod, exited around 10B he did so as a matter of fundamentally sound financial principles (No Debt) Barrack Gold & Gold Corp joined forces back then and Rod left because of the debt load Gold Corp was to assume. As you can see from today's listing of Barrick Gold (ABX) it's still dealing with enormous amounts of debt. Highly leveraged growth is not good. If you care too, visit the SEC web site and take a look at the 13Ds, read the name located on the bottom.

The US is trying to print their way out of debt without creating real job growth and that is fundamentally wrong. It will only be a matter of time the dollar deflates and if history teaches us anything at all , gold will be of more value than millions of sheets greenbacks flying off a printing press.

Regards,
NoFear

Jun 15 09:42 PM