Tuesday, October 16, 2007

A Look at VPHM

Painful days in the investment world, a reminder of October '87. It might be time to position some funds into out-of-favor stocks.
ViroPharma Inc. (VPHM), selling at 9.57, seems to be holding up well in somewhat sad market conditions.

ViroPharma Incorporated is a bio pharmaceutical company, which engages in the development and commercialization of products that address serious infectious diseases, with a focus on products used by physician specialists or in hospital settings in the United States.

I see some positive characteristics that could signify a favorable move in the stock price, high average daily volume, may close today above its 50 day moving average (9.49), increased fund ownership over the past few weeks, stock at 48% below the 52 week high, low P/E ratio (7) and a reasonable book value of 1.58 have made this company worth looking at.

Thursday, October 11, 2007

Short Squeeze on HW?

Are we going to see a short squeeze on Headwaters Inc. (HW) any time soon? If so, be prepared to experience a nice rebound of this stock.
At this time the price is rising decidedly above its 50 day moving average on news of a feasibility study for a coal liquefaction plant in Assam, India.
If the stock holds today and builds upward momentum, those investors holding short positions on HW could be running to cover in the near future.
Trading at 15.80 today, we are at 22.3% below my original comment of 5/23/07 when it was selling at 20.41 and about even with a second mention on 8/22/07.
I like the chart formation at this time and expect positive results in the weeks ahead.

Wednesday, October 10, 2007

EDS Crosses the Line

Electronic Data Systems (EDS) just crossed above its 50 day moving average, normally that's a bullish sign.

Electronic Data Systems Corporation delivers a portfolio of information technology and business process outsourcing services worldwide. The company offers infrastructure services, such as hosting, workplace (desktop), storage, security and privacy, and communications services.

Today, with the DJIA down 65.30, EDS is up .15 at 22.75, showing strength on a weak market day. Note that between 7/23/07 and 8/9/07 the value of the stock lost about 20% on heavy volume, a CEO change could make a difference in the price behavior. Enough for a reversal?

With an average daily volume of over 3 million shares, a P/E of about 18, today's price at a 24% discount from the 52 week high, and improved earnings over the past 4 years make EDS my choice for "Flavor of the Day"

Thursday, October 04, 2007

Large Banks are on the Move

A few weeks ago, the Fed lowered interest rates making money available and more affordable for banks and lending institutions, many of them under a dark cloud after the "sub-prime" debacle.
The financial sector has been beaten up in the stock markets and several of these companies are poised for a rebound.
A chance to take part on the positive move is buying into a Specialty - Financial ETF such as KBE.
KBE's major holdings include Bank of America (BAC), Bank of NY Mellon (BK), Citigroup (C), J P Morgan Chase (JPM), Wachovia (WB) and Wells Fargo (WFC) to name a few.
KBE is trading today at about 54.00 per share, average volume near 1 million per day, dividend was 5.28% (as of 6/30/07), and has an expense ratio of .36%; its inception date is 11/8/05.
A new investment vehicle for me, I'm willing to give it a try.

About ETF's

"Exchange Traded Funds" more commonly known as ETF's could be the successors of mutual funds. With 100's to choose, they offer a chance to buy into an industry, indices, country or commodity without the cost, management skills and paper work required to purchase individual stocks.
Generally, ETF's have fewer managers, lower costs and cover as many sectors as mutual funds.
iShares, SPDR and ProShares are some of the more popular families of funds, each offering a variety of categories.
Here are a few basic factors to consider when investing in ETF's:
  • Liquidity is important, high trading volume is desireable.
  • Low expense ratio.
  • The family of funds should be run by a reputable firm.

In choosing an individual ETF, think of it as a stock and opt for the sector that you expect will do well in the future.