Top Buy and Sell Ideas Based on Thursday's Biggest Gainers

by: GuruFundPicks
The S&P 500 and the broader Russell 3000 dropped 0.3% on Thursday, July 28th, 2011. Of the 4,600 stocks that were tracked, we analyzed the top 25 gainers that closed above $1 at market-close on July 28th and rose 10% or more to determine if they would continue going up, or if they would reverse their moves going forward. The following are the best buy and sell ideas based on that analysis:
Buy LSI Corp. (NASDAQ:LSI-OLD): LSI is a designer of complex high-performance ICs and storage systems. Its silicon-to-systems solutions are at the heart of products that create, store, consume and transport digital information. Its ICs are used in hard disk and solid state drives, high-speed communications and storage systems, computer servers and PCs. The stock was up 14.1% on Thursday, and it is up 11.7% YTD. LSI reported in-line earnings and beat revenue estimates for the June quarter, but more importantly it provided strong guidance for the September quarter, projecting $535-$565 million in revenue and 11c-17c in earnings versus analyst estimates of $510.7 million and 12c.
The strong guidance is based on a number of positive catalysts that are driving the company’s outperformance. One, in contrast to the market weakness seen among telecom networking gear manufacturers tied to weakness of the overall macro-economy, the company is seeing strong corporate spending on technologies that drive cloud computing and social networking despite the overall weak economy. Two, they are projecting strong operating margins going forward tied to the earnings’ leverage in their business operating model. Three, they are projecting increasing market share gains in the September quarter that will lead to higher revenue growth. With all of the above positives, the stock is trading at a forward 12 P/E, at the bottom of its historic P/E range, while revenue and earnings are projected to show strong growth going forward. We would be buyers here based on the discount valuation and the strong growth prospects going forward.
Buy Rubicon Minerals Corp. (RBY): RBY is a Canadian company engaged in the acquisition, exploration, and development of gold properties in Canada and the U.S. It controls over 65,000 acres of prime exploration ground in the prolific Red Lake gold camp of Ontario, over 500,000 acres surrounding the Pogo Mine in Alaska, and 225,000 acres in northeast Nevada. It is news on its Red Lake property that was responsible for the 29.9% surge on Thursday as Agnico-Eagle Mines (NYSE:AEM) announced it will make a strategic investment of C$70 million, making it a 9.2% institutional investor in RBY. More importantly, the deal includes a technical services agreement that would allow RBY access to AEM’s considerable geological and environmental engineering expertise to help advance its Red Lake project in Ontario. This deal demonstrates confidence that a bigger and more established miner such as AEM has in the RBY’s assets, and it should enable RBY to pursue a faster-track to production. We believe that the rise in RBCN yesterday may just the beginning, and it could see continued momentum going forward and catch up with the rest of the group that is up 15% YTD, versus RBY that is down 39.8% YTD even with yesterday’s surge.
Sell Sino-Global Shipping America Ltd. (NASDAQ:SINO): SINO, registered in the U.S. and operating in mainland China, is a leading, non-state-owned provider of shipping coordination services, including advisory services and customs clearing to 76 ports in China. SINO provides its shipping services to ship owners, operators and charters, including intelligence, planning, real-time analysis and on-the-ground implementation and logistics support. Its stock has been extremely volatile recently since the surge began July 20th after the company announced a strategic cooperation agreement with COSCO container shipping agency in China. The stock was up 12.7% on Thursday, and it is up over 250% since the news came out. COSCO has 50 offices in coastal cities throughout China, including Guangzhou, Dalian, Shanghai, Qingdao, Tianjin, Shenzhen, Xiamen and Ningbo. This expands SINO's local agency services footprint throughout China, thereby enabling them to better service their customers and also positioning them for higher revenue due to the cross-marketing effort between both companies. We believe that this move is over until we begin to see better numbers from the company resulting from this deal, so we would sell into any rallies.
Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR): GMCR operates in specialty coffee industry in the U.S. and internationally. It distributes approximately 200 whole bean and ground coffee selections, cocoa, teas, and coffees. It is probably most famous for its patented single-cup coffee and tea brewing systems for offices and homes sold under the Keurig brand name. The stock was up 16.4% on Thursday after reporting a blockbuster June quarter report on Wednesday after the market close. The company strongly beat both revenue and earnings estimates, guided higher for the September quarter and obliterated earnings estimates for the fiscal year ending September 2012, now guiding $2.55-$2.65 versus the analyst estimate of $2.08 while revenue is projected at $746-$765 million versus the estimate of $702 million. Furthermore, year-over-year, revenue for the June quarter grew 127% to $717 million and earnings were up 133% to 49c, an acceleration in the outperformance compared to prior quarters.
GMCR still trades at a premium 74 P/E on trailing-twelve-month (TTM) basis, even based on its higher guidance for 2012, but at a discount to its current year-over-year earnings growth rate of 133%. Looking ahead, it trades at a forward 39 P/E, while earnings are projected to increase 76% in 2012, still trading at a discount based on a P/E to growth (NYSE:PEG) basis. GMCR’s amazing quarter has ignited a rally in peer coffee stocks, Starbucks (NASDAQ:SBUX), Tim Horton’s (THI), and Dunkin Brands (NASDAQ:DNKN), and it seems like the rally may have more legs. The stock meanwhile has gone parabolic, rising over ten-fold from $8-$9 range in early 2009. While GMCR is a story stock, with some even calling it the next Coca-Cola (NYSE:KO), and there might be serious long-term upside in the stock, it appears that in the short-term the stock may be a bit ahead of itself and maybe vulnerable to a short but steep correction. We would not put any fresh money to work at these elevated levels, but would look to lighten up here and look to buy the shares back at lower levels.
Dynavax Technologies (NASDAQ:DVAX): DVAX is a developer of drugs using immunostimulatory sequences technology to treat asthma, infectious, inflammatory and auto-immune diseases. The stock was up 16.9% on Thursday, and it is down 18.8% YTD. The stock rose yesterday on news that the U.S. Food and Drug Administration (FDA) Center for Biologics Evaluation and Research (CBER) advised DVAX that CBER "CBER agrees that clinical consistency of three consecutively manufactured lots of HEPLISAV has been demonstrated."
Gastar Exploration Ltd. (NYSEMKT:GST): GST is an exploration and production company focused on finding and developing natural gas assets in North America and Australia. The Company owns and controls development acreage in the Deep Bossier Sand gas play of East Texas and in the deep Trenton-Black River Marcellus Shale in the Appalachian Basin. GST stock was up 24.6% on Thursday on news after the market-close on Wednesday that tests on two wells in the Marcellus wells in West Virginia yielded a combined stabilized rate of 15.5 MMCD of 1285 Btu natural gas and 1,100 barrels of condensate per day. The CEO indicated that the tests confirmed their earlier assumption for reservoir characteristics in that portion of the Marcellus shale, and may exceed their individual well assumptions on deliverability and condensate yield.
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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 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.