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As the global economic climate worsens with the growing economic instability in the European Union, triggering greater market volatility, investors are increasingly seeking stocks that they believe have increased opportunities for growth. This has seen significant investor interest in companies in industries with high demand for their products such as oil and gas, as well as those companies that investors believe can be bought at a substantial discount to their true value as the stock has been heavily undervalued by the market.

In this article I will review five stocks that investors are buying heavily, causing them to recently cross back above their 200 day moving averages. These are contrarian plays, moving against the market. Here is my actionable analysis:

The Washington Post Company (WPO) has a market cap of $2.70 billion and has a price to earnings ratio of 20.63. Its 52 week trading range is $308.50 to $455.68. Shares are trading around $350. It reported second quarter earnings 2011 of $1.06 billion. a slight decrease from first quarter earnings of $1.063. Second quarter net income was $45.80 million, a substantial increase from first quarter net income of $15.62 million It has quarterly revenue growth of-13.20 %, no return on equity and pays a dividend of 2.90%.

One of Washington Post’s competitors is The New York Times Company (NYT). The New York Times is trading at around $7 and has a market cap of $1 billion. It has a price to earnings ratio of 11.87, quarterly revenue growth of -3.10% and a return on equity of -5.11%. Based on these key performance indicators, it is outperforming the Washington Post, although the Washington Post pays a reasonable dividend yield of $9.40 per year or 2.7%.

The Washington Post’s second quarter 2011 balance sheet showed cash of $207.08 million, an increase from first quarter cash of $152.53 million. It had net tangible assets in the second quarter of $49.48 million, a substantial increase from first quarter net tangible assets of $4.81 million. It has quarterly revenue growth indicator of -13.2%, versus an industry average of 0.1%, and no return on equity versus an industry average of 7.10%. This indicates that it is underperforming many of its competitors.

The earnings outlook for the newspaper industry is poor. For some time the industry has been grappling with declining advertising revenues due to the advent of the internet. This has triggered a long-term structural decline as more readers are able to access free online news, thereby making the print-advertising model increasingly irrelevant. This has been exacerbated by the global economic meltdown and recessionary economic environment.

When considering whether the Washington Post is a good investment, we need to consider not only the industry outlook, which is increasingly poor, but also the company’s fundamentals. At this time they indicate that the company has declining earnings growth and a potential decline in future net income, which does not bode well for the company. Despite the company being able to increase net income and cash holdings I do not believe that it represents a good investment opportunity, nor do I agree with the increased investor interest in the company, due to the poor industry outlook and negative quarterly revenue growth. Accordingly, I rate the Washington Post as a sell.

Alexander’s Inc (ALX)

Alexander’s has a market cap of $2.1 billion and a price to earnings ratio of 28.49. For a 52 week period its trading range has been $315.09 to $460.31. It is currently trading at around $400. The company reported fiscal second quarter earnings of $62.04 million, a decrease from first quarter earnings of $62.87 million. Second quarter net income was $20.16 million, an increase from first quarter net income of $18.21 million. It has quarterly revenue growth of 4.9%, a return on equity of 21.69% and pays a dividend with a yield of 3%.

One of Alexander’s competitors is Acadia Realty Trust (AKR). Acadia Realty Trust currently trades at around $20 and has a market cap of $820 million. It has quarterly revenue growth of 2.8%, and pays a dividend with a yield of 3.6%. Based on these performance indicators, Alexander's is a superior bet.

Alexander’s cash position has improved as its second quarter 2011 balance sheet showed $579.1 million in cash, an increase from $521.02 million in the first quarter. Its quarterly revenue growth of 4.9% is less than the industry average of 8.2%, and its return on equity of 21.69% is higher than the industry average of 1.20%. These indicators show that Alexander's is a well-managed company that isn’t generating growth on the scale of many of its competitors.

The earnings outlook for the retail REIT industry is positive despite the challenging economic conditions and market uncertainty. Overall, the industry is seen as an attractive investment because REITs generate income through attractive dividend yields and the fact that they own hard assets that can move with inflation. However, there is some concern expressed regarding REITs that invest in property in the retail sector, as the retail industry has been hit hard by the poor economic climate, high unemployment and negative consumer sentiment. This means that sales for the retail industry are declining, affecting earnings and net income, and thus affecting their ability to pay rent or expand. This has seen an increase in the vacancy rates for commercial retail centers, which will have an impact on revenue for REITs invested in retail properties.

Essentially, investing in REITs is an income play that provides some inflation protection, as they own hard assets that should increase in value with inflation. When this is considered in conjunction with Alexander's increased net income in a difficult economic environment, solid performance indicators, and attractive dividend yield, I understand the recent investor interest. On this basis, I rate Alexander's as a buy.

Biglari Holdings (BH)

Biglari has a market cap of $428 million with a price to earnings ratio of 14.53. For a 52 week period its trading range has been $279.86 to $464.77. It is currently trading at around $350. The company reported fiscal second quarter earnings of $169.5 million, a substantial drop from first quarter earnings of $211 million. Second quarter net income was $8.68 million, an increase from first quarter net income of $5.65 million. The company is achieving quarterly revenue growth of 6.2% and a return on equity of 11.16%.

One of Biglari Holdings competitors is Denny's Corporation (DENN). Denny’s is currently trading at around $3.50. It has a market cap of $350 million, with a price to earnings ratio of 16.36. It has quarterly revenue growth of -2.30% and a negative return on equity. Based on these performance indicators, Biglari is outperforming Denny’s.

Biglari Holdings’ cash position has substantially declined. Its second quarter 2011 balance sheet showed $17.32 million in cash, compared to $69.21 million in the first quarter. Biglari Holdings' quarterly revenue growth of 6.2%, versus the industry average of 8.9%, and a return on equity of 11.16%, versus an industry average of 29.6%, indicates it is outperforming many of its competitors.

The overall outlook for the restaurant industry is quite positive despite the poor economic climate, high unemployment and negative consumer sentiment. The National Restaurants Association in a recent survey of participating members reported a net increase in traffic and positive same store sales growth. This is likely because consumers are trading down to more economical food options. Biglari should benefit from this trend.

Despite Biglari’s increase in second quarter net income, I feel the increased investor interest is unwarranted, primarily as it has reported a decrease in earnings and cash holdings. Accordingly, I rate Biglari as a hold.

CME Group (CME)

The CME Group has a market cap of $16 billion and a price to earnings ratio of 14. Its 52-week trading range has been $236.50 to $328. It is currently trading at around $250. It reported second quarter 2011 earnings of $838.30 million, an increase from first quarter earnings of $831.60 million. Second quarter net income was $293.70 million, a decrease from first quarter net income of $456.60 million. The CME Group has quarterly revenue growth of 19.2%, a return on equity of 6.18%, and pays a dividend with a yield of 2.1%.

One of the CME Group’s closest competitors is the Nasdaq OMX Group (NDAQ). The Nasdaq OMX Group currently trades at around $26 and has a market cap of $4.59 billion. It has a price to earnings ratio of 10.83, quarterly revenue growth of 26.00% and a return on equity of 8.70%. Based on these performance indicators it is both companies are performing on par.

The CME Group’s cash position has improved, the second quarter balance sheet showed $693 million in cash, an increase from $664 million for the first quarter. The CME Group’s quarterly revenue growth rate of 19.2% is greater than the industry average of 15.3%, and its return on equity of 6.18%, is greater than the industry average of 6%. This indicates that it is outperforming many of its competitors.

The earnings outlook for the investment brokerage industry remains poor in the short term, primarily due to the worsening economic climate, poor investment returns and high unemployment rate, all of which are affecting consumer sentiment.

Despite the CME Group’s solid performance indicators, I do not believe the current investor interest in the company is warranted, primarily due to the negative industry outlook and the company’s decreased second quarter earnings and net income. On this basis, I rate CME Group as a hold.

CNOOC Limited (CEO)

CNOOC has a market cap of $84 billion and a price to earnings ratio of 8.3. Its 52 week trading range is $141.27 to $271.94. It is currently trading at around $188. It reported second quarter earnings 2011 of $98 million, a substantial increase from first quarter earnings of -$1.43 billion. Second quarter net income was $137 million, a substantial increase from first quarter net income of -$1.16 billion. CNOOC has quarterly revenue growth of 51.20%, a return on equity of 31%, and pays a dividend with a yield of 3%.

One of CNOOC’s closest competitors is China Petroleum and Chemical Corp (SNP). China Petroleum currently trades at around $100 and has a market cap of $90 billion. It has a price to earnings ratio of 7.89, quarterly revenue growth of 31.00% and a return on equity of 17.53%. It pays a dividend with a yield of 2.70%. Based on these key performance indicators, CNOOC is performing more strongly than China Petroleum.

CNOOC’s first half 2011 balance sheet showed cash of $7.7 billion, an increase from the previous end of year balance sheet 2010 of $7.63 billion. CNOOC’s quarterly revenue growth of 51.20%, versus an industry average of 19%, and a return on equity of 31.02%, versus an industry average of 11.4%, indicates that it is outperforming many of its industry competitors.

The industry outlook for oil and gas producers is quite positive, primarily due to the ongoing boom in demand for resources driven by the growth of the Chinese economy. This indicates further opportunities for strong earnings growth, which when combined with a weak US dollar, should make U.S. exports more competitive. This bodes well for oil and natural gas demand and producers like CNOOC.

When the economic backdrop is considered in conjunction with the company’s strong performance indicators, increase in net income and attractive dividend yield, CNOOC appears to be a very attractive investment opportunity. I rate CNOOC as a buy.

Source: 5 Stocks Investors Are Buying Like Crazy