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These stocks are speculative in nature and only investors who are open to taking on some risk should consider them. History illustrates that even the worst of stocks can mount pretty strong rallies. These rallies usually do not last, but they can be strong enough to produce some rather handsome returns. Investors, who are risk averse, should look for alternative plays such as those discussed in this article - McDonald's Bulls: Significantly Boost Your Returns.

The following factors should be viewed as small positive developments if present in any of the suggested plays.

  • The rate at which net income is dropping is slowing down.
  • The rate at which cash flow per share is dropping is slowing down.
  • Sales for the past three years are trending upwards.
  • Projected 3-5 year EPS growth is in 10%-15% ranges.
  • A current ratio above 2.5 0
  • A quick ratio of 2.00

Bonus factors

  • Volume spike on an up day - This is usually a sign of accumulation and maybe close to putting in a bottom.
  • Insider buying - It is always a good sign of a turnaround, especially if the stock is beaten down.
  • Book value - Trading below book value is another small positive sign as it at least indicates you are not over paying for the stock.

Company: Arch Coal Inc (ACI)

Basic overview

  1. Percentage held by Institutions = 79%
  2. Operating margin= 9.44
  3. Quarterly revenue growth rate = 19.10%
  4. Beta = 2.29

Growth

  1. Net Income ($mil) 12/2011 = 142
  2. Net Income ($mil) 12/2010 = 159
  3. Net Income ($mil) 12/2009 = 42
  4. EBITDA ($mil) 12/2011 = 824
  5. EBITDA ($mil) 12/2010 = 731
  6. EBITDA ($mil) 12/2009 = 459
  7. Net Income Reported Quarterly ($mil) = 1
  8. Cash Flow ($/share) 12/2011 = 3.14
  9. Cash Flow ($/share) 12/2010 = 3.67
  10. Cash Flow ($/share) 12/2009 = 2.41
  11. Sales ($mil) 12/2011 = 4286
  12. Sales ($mil) 12/2010 = 3186
  13. Sales ($mil) 12/2009 = 2576
  14. Annual EPS before NRI 12/2007 = 1.21
  15. Annual EPS before NRI 12/2008 = 2.45
  16. Annual EPS before NRI 12/2009 = 0.42
  17. Annual EPS before NRI 12/2010 = 1.14
  18. Annual EPS before NRI 12/2011 = 1.07

Dividend history

  1. Dividend Yield = 2.00
  2. Dividend Yield 5 Year Average = 1.61
  3. Dividend 5 year Growth = 10.2

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.57
  2. Payout Ratio 5 Year Average 12/2011 = 0.4

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 11.8
  2. 5 Year History EPS Growth 12/2011 = -11.8
  3. ROE 5 Year Average 12/2011 = 10.76
  4. Current Ratio 12/2011 = 1.55
  5. Current Ratio 5 Year Average = 1.27
  6. Quick Ratio = 0.79
  7. Cash Ratio = 0.33
  8. Interest Coverage Quarterly = 0.74

Notes

Short percentage of float is 24.3%. It sports a decent quarterly revenue growth rate of 19.3% and is trading $10.43 below book value. A five-year sales growth rate of 11.18% and year over year projected growth rate for 2013 of 136%.

Company: MEMC Electronic Materials Inc. (WFR)

Growth

  1. Net Income ($mil) 12/2011 = -1536
  2. Net Income ($mil) 12/2010 = 34
  3. Net Income ($mil) 12/2009 = -68
  4. Net Income Reported Quarterly ($mil) = -92
  5. EBITDA ($mil) 12/2011 = -639
  6. EBITDA ($mil) 12/2010 = 181
  7. EBITDA ($mil) 12/2009 = 28
  8. Cash Flow ($/share) 12/2011 = 3.22
  9. Cash Flow ($/share) 12/2010 = 1.12
  10. Cash Flow ($/share) 12/2009 = 0.44
  11. Sales ($mil) 12/2011 = 2716
  12. Sales ($mil) 12/2010 = 2239
  13. Sales ($mil) 12/2009 = 1164
  14. Annual EPS before NRI 12/2007 = 3.38
  15. Annual EPS before NRI 12/2008 = 3.24
  16. Annual EPS before NRI 12/2009 = -0.11
  17. Annual EPS before NRI 12/2010 = 0.39
  18. Annual EPS before NRI 12/2011 = 0.32

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 15
  2. 5 Year History EPS Growth 12/2011 = -48.38
  3. ROE 5 Year Average 12/2011 = 18.98
  4. Return on Investment 12/2011 = -0.24
  1. Current Ratio 12/2011 = 1.28
  2. Current Ratio 5 Year Average = 2.61
  3. Quick Ratio = 1.09
  4. Cash Ratio = 0.95
  5. Book Value Quarterly = 2.81

Notes

It's trading $1.31 below book value and short percentage of float is 10.9%.

Company: Clean Energy Fuels (CLNE)

Basic Key ratios

  1. Percentage Held by Insiders = 34%
  2. Number of Institutional Sellers 12 Weeks = 5
  3. Relative Strength 52 weeks = 58

Growth

  1. Net Income ($mil) 12/2011 = -48
  2. Net Income ($mil) 12/2010 = -3
  3. Net Income ($mil) 12/2009 = -33
  4. EBITDA ($mil) 12/2011 = -5
  5. EBITDA ($mil) 12/2010 = 21
  6. EBITDA ($mil) 12/2009 = -16
  7. Cash Flow ($/share) 12/2011 = -0.18
  8. Cash Flow ($/share) 12/2010 = 0.18
  9. Cash Flow ($/share) 12/2009 = 0.02
  10. Sales ($mil) 12/2011 = 293
  11. Sales ($mil) 12/2010 = 212
  12. Sales ($mil) 12/2009 = 132
  13. Annual EPS before NRI 12/2007 = -0.22
  14. Annual EPS before NRI 12/2008 = -0.98
  15. Annual EPS before NRI 12/2009 = -0.28
  16. Annual EPS before NRI 12/2010 = -0.18
  17. Annual EPS before NRI 12/2011 = -0.66

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 27.5
  2. ROE 5 Year Average 12/2011 = -9.56
  3. Current Ratio 12/2011 = 3.2
  4. Current Ratio 5 Year Average = 4.04
  5. Quick Ratio = 3.36
  6. Cash Ratio = 2.66

Notes

Short percentage of float is 23.2%. It sports a quarterly revenue growth of 12.7% and a five-year sales growth of 23.2%. It also has a low long term debt to equity ratio of 0.49. Year over year growth rates are projected to increase by 8.59% and 52.88% in 2012 and 2013 respectively.

Conclusion

These are not stocks one should consider holding for the long run, unless the fundamentals and or the technical picture changes considerably. In general though, when one is dealing with such stocks the best option is to bank the profits if they happen to take off. Investors who are not interested in these plays might find this article to be of interest 0 Showdown: General Electric Vs. Honeywell.

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies - let the buyer beware.

Source: Arch Coal Among 3 Interesting Speculative Plays To Consider

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com.