20 'Bathwater Babies' and 19 'Dogs with Fleas' for the Week

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our ETF Trends Report to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

1) Stocks with Hillbent’s proprietary "A" (strongest) or "B" (next strongest) ranking in terms of positive fundamentals for revenue and earnings stability comprise what is better known as the "Weekly Babies With Bathwater" watchlist. (See results below)

Weekly Babies With Bathwater (08-07-2009)

			Wkly	Wkly Vol	Avg 5D Vol	Hillbent
Company	Ticker	Price	% Chg	% Chg	% Chg	Grade
O Charleys	CHUX	$9.15	-11.94	54	28	B
Calif Pizza Kit	CPKI	$14.93	-9.52	73	54	B
Dyncorp Intl-A	DCP	$16.95	-16.54	1082	322	B
Divx Inc	DIVX	$5.41	-7.20	183	121	B
Dolan Media Co	DM	$11.90	-12.69	301	127	A
Enernoc Inc	ENOC	$26.48	-13.69	117	252	B
Excel Maritime	EXM	$7.48	-17.07	240	100	B
Fti Consulting	FCN	$46.90	-13.83	551	296	B
Mellanox Tech	MLNX	$13.72	-13.33	141	239	B
Targa Resources	NGLS	$16.65	-12.28	160	209	B
Plains Expl&Prd	PXP	$25.98	-9.32	44	68	B
Rehabcare Group	RHB	$21.41	-11.01	199	75	B
Swift Energy Co	SFY	$17.99	-8.68	386	186	B
Sirona Dental	SIRO	$23.90	-8.04	293	357	B
Sun Life Finl	SLF	$30.94	-9.27	29	34	A
Stec Inc	STEC	$29.15	-14.49	278	145	A
Skyworks Solutn	SWKS	$11.23	-7.04	32	25	B
Tekelec Inc	TKLC	$16.49	-10.33	86	83	B
Tessera Tec Inc	TSRA	$26.20	-6.73	49	32	A
Orthovita Inc	VITA	$5.27	-19.27	315	187	B

2) Stocks with Hillbent’s proprietary "E" (weakest) or "D" (next weakest) ranking in terms of negative fundamentals for revenue and earnings stability represent what is better known as the "Weekly Dogs With Fleas" watchlist. (See results below)

Weekly Dogs With Fleas (08-07-2009)

			Wkly	Wkly Vol	Avg 5D Vol	Hillbent
Company	Ticker	Price	% Chg	% Chg	% Chg	Grade
Amcol Intl Cp	ACO	$20.88	11.01	-27	-5	E
Amer Dairy Inc	ADY	$29.09	9.03	-15	-42	E
Assurant Inc	AIZ	$27.32	7.05	-36	-4	E
Astec Inds Inc	ASTE	$29.29	8.24	-19	-34	E
Belden Inc	BDC	$20.16	14.94	-43	-7	D
Baldor Electric	BEZ	$28.10	9.08	-38	-15	D
Columbus Mckinn	CMCO	$15.58	7.67	-20	-10	D
Amer Ecology	ECOL	$17.79	8.94	-55	-14	E
Gardner Denver	GDI	$31.26	7.09	-55	-35	D
Harman Intl Ind	HAR	$26.61	7.82	-37	-65	E
Harley-Davidson	HOG	$23.76	5.13	-8	-20	E
Hexcel Corp	HXL	$10.90	6.76	-60	-58	D
Jacobs Engin Gr	JEC	$43.74	6.74	-43	-15	D
Lincoln Natl-In	LNC	$22.64	6.84	-18	-17	D
Myr Group Inc	MYRG	$19.49	8.16	-20	-52	D
Omnicom Grp	OMC	$35.99	5.85	-9	-13	D
Pinnacle Fin Pt	PNFP	$16.80	7.69	-39	-21	D
Wabtech	WAB	$37.37	11.06	-13	-18	D
Whitney Hldg	WTNY	$10.42	18.95	-5	-16	E

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

[Robert Mart...:]

Clinton:

I'm glad to see that your screen includes revenue stability, which is especially important at this stage in the economic cycle. Many momentum models ignore revenue signals, and this can trap investors into names with strong EPS growth and weak earnings quality. I have noted this here:
seekingalpha.com/artic...

The bullish screen ("Babies with the Bathwater") turns out a very wide variety of ideas. This is a great start for further research.

I noticed that many of the bullish ideas are in healthcare and energy. Healthcare has strong revenue and earnings momentum, but I'm surprised that energy made the cut, due to a downturn in the energy cycle. I guess there are winners despite the industry headwinds.

Thanks for your articles--keep it coming!
Rob

Aug 12 12:45 PM

[Gravity404:]

"downturn in the energy cycle." ?

Oil is at $75 today.

JEC is up 6% because it was down 8%. JEC is a great long term buy. They do a lot of other stuff outside energy...

Aug 13 10:22 AM

[Robert Mart...:]

Gravity404:

I should have been clear about my time frame. Oil is up 100% from its lows, but is still 50% off its highs of last year. Therefore, second quarter earnings for the oil companies were terrible on a year-ago basis.

Thanks for the comment--I regret any confusion.
Rob


On Aug 13 10:22 AM Gravity404 wrote:

> "downturn in the energy cycle." ?
>
> Oil is at $75 today.
>
> JEC is up 6% because it was down 8%. JEC is a great long term buy.
> They do a lot of other stuff outside energy...

Aug 13 01:06 PM

[ramisle:]

I can assure you that a close look at the fundamentals of EXM will reveal that it is the disease, that is carried by the flea, sitting on the backside of the dog!
Of the many articles written in SA about EXM and dry bulk, it is the comments below, by people who have been following dry bulk, that will reveal the many problems with the sector, and DRYS and EXM in particular.

Aug 14 05:56 PM