The S&P 500 fell 2.1% and the broader Russell 3000 fell 2.2% during the week ending July 15. Of the 4,600 stocks that were tracked, 58 stocks fell more than 15% during the week and 45 stocks rose by more than 15% during the week (see table). These stocks were analyzed to determine if they would continue going up or down in price, or if they would reverse their moves going forward. The following are the best ideas based on an analysis of the 45 stocks that gained more than 15% during the past week.
Buy Zagg Inc. (ZAGG) manufactures protective film coverings for the surface of consumer electronic and handheld devices. Its flagship brand, the invisibleSHIELD, is a protective, high-tech patented film covering, designed for iPods (AAPL), laptops, cell phones, digital cameras, PDAs, watch faces, GPS systems, gaming devices and other items. The stock was up 21% last week and is up 101% year-to-date.
ZAGG trades at a forward price-to-earnings ratio (P/E) of 19, a discount to its growth rate. Revenues grew from $38 million in 2009 to $76 million in 2010, and are projected to grow to $147 million in 2011 and $204 million in 2012. Earnings also grew strongly from 20c in 2009 to 41c in 2010, and are projected to grow to 66c in 2011 and 85c in 2012. Furthermore, the company has beat analyst revenue and earnings estimates for each of the last four quarters, so it seems likely that analyst estimates may be conservative and that ZAGG may be a better value than it appears based on those estimates.
The market for smart devices and their accessories is growing strongly, and ABI Research has estimated that the demand for accessories alone will reach $63 billion in 2011. With projected sales of $147 million in 2011, ZAGG captures only a small portion of this market. It has the brand recognition to expand beyond protective covers and capture a larger share of that $63 billion accessories market. Its recent acquisition of iFrogz, a top earbud/headphone provider, is a step in that direction. The acquisition gives ZAGG additional product and channel diversity, and allows it to capitalize on its brand name to keep growing revenues and earnings at strong rates going forward by expanding into other accessory categories. Of the six analysts that cover ZAGG, two rate it a strong buy and four rate it at buy; there are no hold or underperform/sell ratings on ZAGG. We would start building a small position here, and add more on any pullback to the $12 range.
Buy Agfeed Industries Inc. (FEED) is engaged in the animal nutrition and commercial hog production business primarily in China. The stock rose 21% during the week and is down 50% YTD. FEED trades at a forward 4 P/E while revenues are up strongly, up to $93 million in the latest reported March 2011 quarter, which is a 100% increase year-over-year. Unlike other China small-cap companies plagued by fraud allegations regarding even the existence of their basic operations, FEED has a U.S. subsidiary, M2P2 LLP, that is a key supplier to Hormel Foods Co. (HRL) and is one of the largest pork producers in the U.S., with an annual production capacity of 1.3 million hogs. Only one analyst, Rodman & Renshaw, currently covers FEED; it has a Market Outperform rating and a $3.6 target on the stock, well above the current price in the $1.50s.
Sino Clean Energy Inc. (SCEI) is a Chinese producer and distributor of coal-water slurry fuel in China. Its shares rebounded 48% last week to $2.38 after falling from $9.67 in early November 2010 to $1.15 last month. The company’s shares have been under heavy selling due to fraud allegations.
China Education Alliance (CEU) is a Chinese provider of exams and test papers for colleges, secondary and elementary schools. Its shares rebounded 15.4% last week to $1.05 after falling from $5.80 in October 2010 to 81c last month. CEU trades at a trailing 12 month P/E of 3 due to fraud allegations, as with many other Chinese small-caps.
Petrohawk Energy Corp. (HK) is engaged in onshore exploration and production of oil and natural gas properties in LA and TX. It was up 55% for the week on account of being bought out at a large premium by BHP Billiton Ltd Adr (BHP), an Australian company engaged in the mining of metallurgical coal, energy coal, iron ore, oil, gas, diamonds and base metals.
Other Big Winners Last Week
Other prominent big winners last week included Golden Star Resource Ltd. (GSS), a Canadian international gold mining and exploration company producing gold in Ghana, West Africa, that was up 31% last week; General Maritime Corporation (GMR), a provider of international seaborne crude oil transportation services in the Atlantic basin with a fleet of 31 vessels, that was up 17%; Midway Gold Corp. (MDW), a Canadian company engaged in the acquisition, exploration and development of gold and silver properties in NV and WA, that was up 31%; Clean Energy Fuels Corp. (CLNE), a provider of natural gas as an alternative fuel to over 480 vehicle fleet customers in the U.S. and Canada, that was up 20%; and Shengkai Innovations inc. (VALV), a Chinese manufacturer of ceramic valves for electric power, petrochemical and chemical industries, that was up 87% for the week.
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our opinions and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.