I'd like to hear why anyone in their right mind still rents movies from Blockbuster (BBI) or any other brick and mortar store. Perhaps you feel like a good samaritan helping the good folks at Blockbuster pay their crippling leases or functionless employees (congrats for getting a job, but seriously...), but in doing so you pay two to 20 times market value for each rental, depending on rental frequency, gasoline consumed, etc.

I have a Netflix (NFLX) membership and see no better option for anyone who watches movies on their computer or somewhat regularly. For those less computer savvy and occasional renters there is still a far better option than driving out of your way to pay Blockbuster $5 a pop. Redbox $1 DVD rental vending machines, owned by Coinstar (CSTR), are no longer exclusive to Wal Mart (WMT) and select grocery store locations. CSTR's latest quarterly report describes recent expansion into 7 Eleven stores, gas stations and other high traffic locations, with expected future growth to many times the current number of units.

Two stocks I have profited from this year and generally follow, URS Corp (URS) and AECOM Tech. (ACM), sold off prior to reporting earnings last Thursday. Both are among the most internationally integrated and rapidly growing engineering and construction services companies. Each beat Q3 FY09 estimates, however ACM guided EPS for FY10 down from expectations, still fairly healthy at $1.90-$2 per share, supported by a backlong 3 times its market cap. Since reporting last Thursday, shares of ACM have rallied from $25 to currently $28+, over 12%. At 14+ times forward earnings, ACM seems fairly priced to me near $28 since it does not pay a dividend.

URS appears to be positioned and priced better than ACM. With similar market caps, URS has over 3 times the backlog and twice ACM's annual sales, not to mention greater earnings. In a day and a half of trading since URS reported, the stock is up from $40 to over $45 per share, still less than 12 times forward earnings.

From the prospectus:

China Integrated Energy is a non-state-owned integrated energy company in China, which is engaged in three business segments, the wholesale distribution of finished oil and heavy oil products, the production and sale of biodiesel and the operation of retail gas stations.

Wednesday on CNBC, Jim Rogers insisted that China and Brazil are the only BRIC countries worth investing in. Despite an election conducive to more capitalistic policy, India's ritualistic culture discourages competition, greed and other growth drivers. Russia is still in a newly liberated economic state, in which citizens have so much incentive to enjoy previously denied economic freedoms that they will make frivolous financial decisions until enough time passes or national policy encourages productivity and saving.

China's case is well documented and will not be rehashed here, as I believe Brazil is the only market worth investing in today. Brazil is the only nation with an immediate future of increased production and consumption. Unlike China, Brazil has provided more developed economies things they need, not things they want (sorry if I underestimate the value of your Pokemon cards, Playstations and Beanie Babies). The death of the American consumer only affects Brazil if it is a literal one, meaning Americans no longer need sugar, bananas or oil.

When I began doing stock market research this February, investor sentiment was overwhelmingly bearish. Despite the late 2008 collapse, however, all the negativity from analysts was hard for me to swallow. Based on the most commonly used valuation metrics, stocks were "filthy cheap." Profitable companies, smallcaps in particular, were trading for less than cash, low single digit P/Es and minimal fractions of book value.

Additionally, much of my inspiration to commit everything I could to cheap, profitable, growing companies came from watching an extensive interview with Jim Rogers, whose emotionless, fundamental approach has crushed indexes year after year and earned him "arguably the best investor ever" status.

With Goldman's raised price target for Google (GOOG), investors are piling into large cap tech. If related sectors are in for a upward move, the stocks listed below, small caps in good financial shape, represent opportunities for much more upside and limited downside. Money has been chasing the same few names (AAPL, CRM, PALM), which induces massive pullbacks as stocks approach fair value. Research in Motion (RIMM) is the best example of a good tech company that is range bound because, despite fundamental strength, valuing the stock above $80/share is "mathematically curious" and simultaneously invites short-selling and profit-taking. As always, relatively thinly traded, small companies experience greater price volatility than sector stalwarts. For that reason, as well as potentially finding buyout candidates, investors are best served to apply more stringent valuation analysis to cheaper stocks.

1. BSQUARE Corp (BSQR): BSQR provides training, support, testing and development services in the mobile software space. A recent collaboration with Coca-Cola (KO) seeks development of software for a new vending machine capable of dispensing 100+ different beverages. The Company is valued at $23M, has $11.8M in cash (plus $7.7M in AR, including $4.1M from Ford (F)) and profitably grew revenues in H1 FY2009 to $32.8M.
2. Spark Networks (LOV): This operator of several online dating sites trades at an all-time low, with a P/S near 0.5 and sub-15 P/E. Free networking sites like Myspace and "anti-capitalist" Craigslist pose major challenges to the future of costly internet dating services, but LOV's specialized services have a solid niche and some segments have shown growth in 2009. Despite declining revenues, first half FY2009 earnings forecasts of 11 cents per share were met and analysts maintain strong ratings on the stock.
3. TSR Inc (TSRI): This IT staffing firm provides a weak outlook for the future as business with IBM continues to dwindle. The stock still appears to be undervalued, as expenses were reduced sufficiently to maintain profitability in fully reported FY2009. TSRI is debt-free and valued at $8M, has a book value over $12M, cash over $4M and recorded 2009 revenue of $42M.
4. Sapiens International Corp (SPNS): Yet another IT company, SPNS has inched towards profitability each of the last five years. The Company develops customizable software modules for insurance companies and remains involved with clients through consulting and support services. Costs are down significantly through H1 FY2009, with EPS of 9 cents compared to an 8 cent per share loss in H1 FY2008. With over $10M in cash, this $25M company appears cheap and focused on growing profitability.
5. Artificial Life (ALIF.OB): Artificial Life develops mobile web applications for various platforms. Most revenue is generated by the Company's 60+ iPhone games, including collaborations with Red Bull, BMW, platinum recording artists and professional sports teams. Q2 FY2009 was ALIF.OB's second straight quarter of record revenue and 8th consecutive profitable quarter. With a trailing P/E near 4, high profit margins and revenue growth, the share price is likely stagnant due to recent dilution to raise capital for continued growth.

Disclosure: Long ALIF.OB

Chinese stocks have pulled back massively in recent days, after valuations climbed rapidly to highly optimistic levels and questions about the sustainability of stimulated growth in China finally entered the psyche of the investing public. Right now, buying shares of Chinese companies traded on American exchanges resembles attempting to catch a falling knife by its blade. This pullback, however, hardly implicates the resumption of a bear market in China.

China has been the story of the last several years, confidently dubbed the world's economic superpower of the 21st century by legendary investors Jim Rogers and Warren Buffett, among countless others. Output and consumption there have grown at world-leading rates in the last decade and continued, albeit more slowly, during a global recession. The national one child policy has reduced crowding in major cities and ultimately encourages individual consumption, education and responsibility. The same policy combined with a high savings rate and strong work ethic is very conducive to maintaining a rich commodities stockpile and consistent surpluses in output.

Of the stocks I've written about, Competitive Technologies (CTT) has performed the worst prior to July 30. The Company owns manufacturing and worldwide distribution rights to a highly effective and demanded pain relief device and reported, in May, guaranteed sales of $25M in 2009 and $50M in 2010. Investors were apparently induced into "panic-mode" by Q3 FY09 earnings which, like recent years for CTT, stank. The selloff since then was entirely unwarranted and gave me the opportunity to 4x my position 30% cheaper than I initially bought in. It sincerely amazed me that a quarterly report consistent with recent performance would cause a NYSE traded stock to tank, given that the Company's bright future prospects remained unchanged and no revenues were reasonably expected for FY09.

On July 30 CTT issued the following report, outlining a domestic distribution agreement for the device:

For the time being, I am abstaining from buying stocks to hold long term. That's not to say I'm not tempted, but too many integral components of the US economy, money making publicly traded companies included, are continuing to crack. It seems quite apparent that this earnings season, outside of banks and businesses with real worldwide exposure, has been driven by meager analyst expectations and contraction ("cost-cutting" is too ambiguous a word to use when people are getting laid off at recent rates). Every day of earnings I scroll through is littered with better than expected EPS despite revenues falling short. Huge American businesses (GE, UPS, CRE, most retail stores) are shrinking, and likely for good. Whether Americans are curbing consumption to educate themselves and refocus on societal contribution or they are just curling up in a ball to die remains to be seen, but the worst of the gluttony that has defined recent decades thankfully appears to be behind us.

Big business has proven capable of profiting despite diminished revenues in a recession, so companies have no legitimate excuse for underperforming in the current environment outside of "the consumer just ain't buyin'." Cost cutting is the name of the game and if revenues meet expectations, profits should beat them. People aren't looking for new things to buy, they're looking to eliminate some expenses and save on others. Corporations with any tact have advertised, if much at all, value more than style and generally counted on customer loyalty.

Treasuries were snatched up more readily than expected (as usual) yesterday, likely spurred by accelerated risk aversion due to current weakness in stocks and commodities. With all the BRIC induced buck-bashing of late, signals are so mixed on the dollar that it seems arguments, counterarguments, truth, lies... are all one and the same depending on context.

Whether one argues strength or weakness, it is understood that the US dollar is THE WORLD'S reserve currency. Therefore, with the supply of dollars and dollar derivatives at all time highs outside the US while domestic jobs and wages contract, an objective outsider (obviously an alien since no such thing is known to exist) would likely ignore possibilities of inflation or deflation and merely assert a convergence in global wealth.

Some sector indexes have lost 10% or more in the last week, but the word "oversold" is not one I've heard recently. Maybe it has something to do with markets having gained 40% in just over two months, or some sort of "brude awakening" to sky high P/E ratios, but value is by no means in apparent abundance.

Telecommunications companies are generally seen as sustainable and growth oriented, and pay frequent dividends to boost cash flow and maintain a strong share price. Verizon (VZ) and AT&T (T) are not up anywhere near 40% from March lows, however they have reported negative growth (losses for AT&T) and were not hit nearly as hard as other sectors to begin with.

1. Demand: According to the history of an all-encompassing market known as "life," demand for water is more inelastic than that for any other commodity. Companhia de Saneamento do Estado de Sao Paolo (SBS) provides clean water and treates waste water for South America's largest city's drinking, farming, industrial and cleaning needs. Brazilian stocks like PBR and VALE are dependent on international demand for oil and steel, respectively, and fluctuate with the prices of those commodities. Fundamentally, SBS is subject only to the volatility of Sao Paolo residents' "desire to live."

2. Dividends: The Company returns profits to shareholders. 18% institutional ownership is massive for a South American company valued in the billions. Corruption has always been an issue in Brazil, but the share distribution (less than 1% of the remaining float is short) and an accelerating yield over 10% in the last 20 months are very reassuring.

It should be easy for investors to understand that as markets push higher, valuations increase regardless of underlying fundamentals. Optimism may be a powerful thing but, if unfounded in today's case it provides nothing more than a TARP induced limo ride off the edge of a cliff. Traders have every reason to emphasize "money on the sidelines" and fundamentally soiled "green shoots," but buying now seems far fetched for a discerning value investor. Generally speaking, it's hard for an individual undervalued stock to garner much attention if and when the whole market takes a spill.

To be clear, I don't have any open short positions. My intentions are to establish short term positions in leveraged short ETFs if markets show a sustainable penchant for sinking, but I don't see any reason to go there yet. I do, however, see exactly zero potential for an increase in confidence in markets.

I failed chemistry in college. My ego says it was because I didn't apply myself. Still I feel grossly inept when it comes to analyzing biotech stocks. I bought Vanda Pharmaceuticals (VNDA) near $1 because of their strong cash position, then sold at $1.23 to get my money into something I understood better. If I had waited a week longer I could have sold over $12.

Nevertheless, two positions I intend to be very aggressive with are in the treatment business. Their products are not ingestible, yet both are proven to either reduce high levels of pain or significantly reduce viral loads. Neither stock is valued very highly, so shareholders get their own dose of pain with high volatility due to lack of interest.

After spending the last two weeks on a precious metals binge, preparing for the good ol' dollar's demise, I've returned to hunting for more of what my portfolio is built around: Undervalued Chinese companies driven by domestic consumption, not exports. Normally these searches lead me to thinly traded OTC stocks with less than transparent finances. Surprisingly, three companies that still meet my stingy criteria are traded on major exchanges.

1. China Cablecom Holdings (CABL): I don't say there aren't drawbacks to my findings and this company has major ones. CABL announced last month that it received a default notice for the last $2.2M owed to one of its subsidiaries from a prior joint venture. Additionally, CABL operated to the tune of a $14M loss in 2008. Surely this one sounds a little overboard on the contrarian side so far, but the stock IPOd at over $6/share a year ago and traded at over $7/share before Asian markets crashed. Establishing infrastructure for television service is expensive and costs can be expected to decline, although doubtfully enough to result in a profitable 2009. Still, with $30M in cash and assets totaling $183M, this $5M company is heavily undervalued. Insiders still own 38% of outstanding shares and nobody dares to short this stock at the current valuation.

A month ago, I thought Boeing (BA) was one of the best domestic companies to invest in. Since then, however, the company has given me every reason to think it is positioned to tank:

1. Insider selling: Two sales and no buys in the last 10 weeks is a less than compelling, yet entirely negative indicator.
2. Jim Cramer: While I believe his intentions to be generally good and appreciate the diversification advice he gives to viewers, Mr. Cramer is subject to the same corporate sponsorship that "Chuck," "Heroes" and other NBC programs are. When a confident, easy going man looks like he's swallowing a whole apple while touting Boeing, I have no choice but to question his words as they squeak out like a prepubescent teen's.
3. More Paid for Promotion: Boeing gains no business through advertising on network television (747, anyone?). Why, then, would it spend money on fact-free, ideological commercials in the same vain domestic car companies did a year ago?
4. The 787: Boeing's new high-end plane hasn't tested well against Airbus' new luxury liner.
5. Bidding for the $10B United Airlines (UAUA) Contract: With an order from the airline at least half that size surely expected to go to Boeing this year, losing the contract poses more downside risk than the positive prospects associated with winning it. Furthermore, Airbus is ready to go while Boeing is still working out kinks.

Deduce what you will, but what I see is a large scale pump and dump.

What does recovery mean? Is it the stock market returning to all time highs, somehow induced by erasing bad debt and re-instilling a world-leading work ethic in the American People? Or is it rather a population learning from its mistakes and setting goals that look past the near term for the first time in....?

To me, one sounds like a pipe dream while the other sounds like a process only some people ever gain familiarity with: growing up. Feel free to guess which I see as which.

I don't have "mad skillz" when it comes to technical analysis. I do, however, always try to understand underlying causes of market movements. As a rookie investor who entered stock markets this March, learning has been less painful for me than most. Markets have rebounded and good stock picking has been defined by aggression, not selection. I didn't make 500% on Citi (C) or Conseco (CNO) but I did take advantage of what I considered opportunities due to overselling. Lately, with the Dow 40% higher on what I consider worse than expected quarterly reports, I've looked to others for advice as I see more than minor downside potential in markets as well as some of my Western holdings. On May 26, the 200+ point up day after Memorial Day, I sold 2 of my 4 stakes in domestic companies (I have favored Asia from the start) and looked for some advice. Ever since high school in the late 90s I have looked at the socioeconomic climate around me as an unsustainable, bubble inducing force. So, naturally, the gold bugs infected me without much resistance.

By no means did I drop what I was doing and immediately buy as much precious metal as I could. My instinct was to consider gold an outdated store of value that meant nothing to me. I don't own many shiny or fancy things.

If I was money on the sidelines, I sure know where I'd be heading Thursday. Mardi Gras, anyone?

With commodities markets selling off hard on Wednesday, commodity rich countries took major hits. Russia, in my opinion, has risen with oil despite major weakness in all other sectors. Brazil is a different story. Overal production and consumption grew in 2008 and have continued in 2009, not to mention a world leading resource portfolio.

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