The Stock Masters'  Instablog

Has anyone else noticed it's getting harder and harder to find "cheap" stocks lately? I for one, have.

 

I'm thinking once the market hits 10,000, the Sith will reign again. Give yourself to the Dark Side. Together, we will rule the Galaxy! (via short positions in the imminent bear market)

It's pointless to resist.

The bears have begun to build up short positions in the following stocks: (PFCB,PALM,LDK)

Before we get in to these, remember that if the Market decides to go higher, the short squeeze on these stocks could leave your portfolio in ruins. But with the correct timing, you will look like a genius shorting these at the right time, just before the market begins an inevitable correction. Proceed with caution.

 

P.F. Chang's China Bistro (Public, NASDAQ:PFCB)

38% Short Interest

If we've learned anything from South Park, it's that P.F. Chang's will leave you constipated for 2 days straight.

Chang's is ripe for a short position. Although the company beat revenue expectation by .10 during Q2, The Company continues to expect a negative sales environment for the remainder of 2009. As a result, the Company anticipates average weekly sales for fiscal 2009 to decline approximately 6% to 7% at the Bistro and approximately 3% to 4% at Pei Wei. Consolidated revenues for fiscal 2009 are expected to increase 1% to 2% compared to fiscal 2008.

As you know, Wall St. only cares about short term results. So look for PFCB to fall for the rest of the year.

Palm, Inc. (Public, NASDAQ:PALM)

36% Short Interest

The rapid rise in Palm can be attributed to it's Palm Pre - and a massive short squeeze.

But analyst Tim Long of BMO Capital Markets last week started the stock at "market perform," saying that Palm's future lies squarely in its ability to manage its core business -- developing and selling smartphones -- against proven names like RIM and its BlackBerry.

"Our concerns are based on the competitiveness of the market and the company's history of lackluster execution. There has also been a lot of speculation that Palm is an acquisition target of a number of companies, which we think is unlikely," he said.

Once the acquisition talk starts to fizzle, so will PALM's share price.

LDK Solar Co., Ltd. (Public, NYSE:LDK)

37% Short Interest

This may be the most risky play of all. With a 52 week range of $3.75 - $52.40, shares are well below peak value. However, look how the bears have been slowly building a position in the stock over the course of the year. If the market goes down like I think it will when we hit 10,000, you can expect LDK shares to be cut in half.

 

Settlement Date	Short Interest	Avg Daily Share Volume	Days To Cover
7/15/2009	19,696,955	3,839,939	5.129497
6/30/2009	18,044,181	5,219,744	3.456909
6/15/2009	15,863,243	7,605,550	2.085746
5/29/2009	13,719,877	4,743,613	2.892284
5/15/2009	13,174,842	3,413,614	3.859500
4/30/2009	12,743,758	2,066,448	6.166987
4/15/2009	14,574,509	3,817,689	3.817626
3/31/2009	12,699,177	4,510,052	2.815750
3/13/2009	11,831,376	2,248,926	5.260901
2/27/2009	11,456,477	3,401,303	3.368261
2/13/2009	10,609,242	1,765,787	6.008223
1/30/2009	9,528,951	1,502,191	6.343368
1/15/2009	10,850,336	2,699,144	4.019917

 

No positions in PFCB,PALM, or LDK.

On July 13th I wrote SL Green Realty Corp.'s 30% Fall Since June, Bank on Sinatra? when SL Green Realty Corp. (NYSE:SLG) shares had fallen close to 30% since June and trading around $19 a share. Pointing out that REITs had lost their luster, but what makes SL Green so compelling is its assets in New York, and they have some of the most valuable properties in the world a la midtown Manhattan. Checking back in on SLG today shares are at $28.83 a cool 54% increase in 16 trading days.

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Last Tuesday (7/21) the Masters wrote Honda Motor Shares: Ready for a Comeback?  You bet they are, since that time shares have gone from $27 to $30.81 thanks to an undervalued market and today's increased earnings outlook for 2009 giving Honda Motor Company (NYSE:HMC) shares the ol... 1-2-shabadoo

1-2-shabadoo indeed.  Like we said:

Honda has said it anticipates a loss in the first half but a return to profit in the second half, resulting in a small profit for the year.

However as we all know, any glimmer of hope can send HMC shares up 5 to 10% next week, stay tuned

Honda (NYSE: HMC), whose North American production operations are based in Marysville, Ohio, told investors Wednesday it earned $77.3 million (7.5 billion yen) in the three months ended June 30. That’s down about 95 percent from $1.64 billion (173 billion yen) last year, though analysts were expecting Honda to slip to a quarterly loss.

Revenue in the fiscal first quarter fell about 30 percent to $20.6 billion (2 trillion yen) from $27.3 billion (2.87 trillion yen) a year ago, driven by a 35 percent sales slide in North America, which accounts for the largest chunk of the company’s sales.

Honda told investors it’s expecting slightly lower revenue than a previous forecast in April, but said both motorcycle and automobile unit sales should be stronger than first forecast.

As a result, Honda raised its fiscal-year earnings expectations by more than one-third. Honda in April projected earnings for the year ending March 31, 2010, of $421 million (40 billion yen), but said it now expects profit of $604 million (55 billion yen).

Honda Motor Co.’s Marysville-based manufacturing arm has more than 12,000 workers at assembly and engine plants in and around Central Ohio, where they produce Honda Accords, CR-Vs, Elements and Acura TLs

and RDXs. The company also operates a recently completed plant in Greensburg, Ind.

Happy Safe Investing Masters and hopefully a few of you cashed in on the 7 day move.

No positions in HMC

Just a reminder that we pointed out the massive selling of SanDisk (NASDAQ:SNDK) and iRobot Corp. (NASDAQ:IRBT) after their Q2 Earnings Calls last week, SNDK has managed to gain back 9% since bottoming Friday and IRBT is still moving down.  Let's not forget that the Ivanhoe Mines (NYSE:IVN) talks with the Mongolian government resume today, its time for IN-N-OUT Investing.

Masters keep an eye on these stocks this week, there are gains to be made with any bounce back or trend continuing down, but we think these bad boys will recover in the next few weeks for a few points (as SNDK has already done since Friday).

PLACE YOUR BETS
Taking a position in SanDisk or iRobot is based on the premise that these two stocks are oversold whereas Ivanhoe Mines is trading on the media and coverage of the talks with Mongolia.  Its a roll of the dice for Ivanhoe but for Mongolia to demand more of a cut or make it harder for Ivanhoe is just bad business, but stranger things have happened, big business doesn't always win (does it?). 

Review the following articles from last week if you missed them and add SNDK, IRBT, and IVN to your watch list:

irobot Corp. $ 10.61 IRBT 0.09

Short Interest (Shares Short) 1,982,400 Days To Cover (Short Interest Ratio) 19.2 Short Percent of Float 10.30 % Short Interest - Prior 1,784,400 Short % Increase / Decrease 11.10 % Short Squeeze Ranking™ -55

% From 52-Wk High ($ 17.62 ) -66.07 % % From 52-Wk Low ($ 7.00 ) 34.02 % % From 200-Day MA ($ 10.06 ) 5.18 % % From 50-Day MA ($ 12.72 ) -19.89 % Price % Change (52-Week) -27.60 %

Don't call it comeback if Honda Motor Company (NYSE:HMC) manages to pull of a decent Q1 2010 earnings call next week (July 28th) and all anyone cares about is the guidance -- will things improve? Honda sales were down 30% in June and in the last 3 months Honda shares have only managed to drop 3.4%. HMC shares are stuck in the $27 to $30 range, so can it finally move come next week or will Asimo spill the coffee?

CAN ASIMO & HONDA PULL IT OFF

That's the big question we are all wondering and with auto sales doing so poorly when will we hit bottom or even stabilize?

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Tim Geithner has been on a mission pimping the U.S. Dollar: its staying power, the World's Reserve Currency, how the U.S. is committed to a 'strong dollar', blah, blah, blah. Say the Powers-that-be can get the Dollar on the comeback trail then there's no better bet to play than the PowerShares DB US Dollar Index Bullish (NYSE:UUP) which is trading just $1.50 above its 52-week low.

BOTTOM LINE

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