Sunday, September 30, 2007

Lindzon explores Crocs, crowds and consumers

Great piece on CROX by Howard Lindzon today.

Noise and Crowds…So Costly

Money SPENT by the consumers and money FLOW from the institutions is all you need to follow to beat the market. Combine this with money management (the real holy grail) and you will manage billions.

Howard was an early seller of Crocs and explains more about the psychology of the market, particularly with young growth stocks. I'm still holding my shares. You can't have mine.

Saturday, September 29, 2007

Fils-Aime talks

The San Jose Mercury News seems to have as good a connection with Nintendo as any newspaper in America. Today, they released a Q&A with Nintendo America's chief.

Mercury News: Nintendo to tap valley for ideas

Q Are you already planning your replacement for the Wii?

A You know, our hardware group, literally as soon as the system's out the door, they're already thinking about what's next. That's true for any of our platforms.

Finally, The Sims meets the Wii

I started writing about this colossal combination months ago, as a former fan of The Sims. The Wii is the logical, perfect console for the game, even with all of the game's flaws. (Yeah, it shouldn't take 45 minutes to use the toidy, I think.) Aside from the child-oriented MySims characters (Rated E for Everyone), I'm waiting on more grown-up friendly fare. So this is the new development.

Gamespot: The Sims 2: Castaway

Sounds promising, fun premise, but I'd still like to see more. I'd rate myself an 80 out of 100 in terms of my affection for the game. If EA can come up with more twists, or even some of the exisiting titles, in Wii console form, I think it'll take off. (The Sims 2: Pets for Wii was released in April.) I'm bullish on EA, but more so on NTDOY.PK, of course. The technology will almost certainly improve beyond our imaginations, so I think just about every sport, every hand-eye coordination activity could end up as a Wii game. It could cater to fans of baseball (already on the market) to GTA to knitting. Imagine what the billion-dollar adult entertainment industry would do with Wii technology. The potential is ginormous (gigantic and enormous), which is why I view the Wii as a killer app with almost no peer relative to its industry.

Even without more developments with The Sims — EA is in early development of The Sims 3, supposedly — I'm expecting a very merry Wii Christmas.

Friday, September 28, 2007

Google's cellphone outlook

Looking a little deeper at Google's next chapter of Global Domination.

BusinessWeek: Will A Google Phone Change The Game?

Google and advertisers drool over the growth potential in wireless. The more than 2 1/2 billion phones in use worldwide exceed the number of PCs and TVs combined. On Sept. 17, Google announced a Web program aimed at advertisers who have created sites for display on cell phones and other handheld devices. Like its online ad network, Google's AdSense for Mobile delivers ads relevant to the advertiser's mobile audience.

Apple reaches into past

Leave it to Apple to resurrect the dead.

MacNewsWorld: Apple Gearing Up for a Newton Take 2?

A new incarnation of the ill-fated Newton personal digital assistant could see the light of day, as reports suggest Apple is deep into the development stages of creating a PDA with multitouch features. The minitablet device will run an embedded version of Mac OS X Leopard and is expected to hit the shelves next year, according to reports.

Thursday, September 27, 2007

Focus Media CC transcript

Transcript of the (almost eternally delayed) Q2 earnings report conference call.

Focus Media Q2 2007 Earnings Call Transcript

For the record, anyway. Something about this whole process doesn't smell right, but maybe I'm just sour because I'm no longer long. Anything that remotely stinks as bad as Dendreon's management has me racing to the exit door. That's a good thing.

China Mobile dials up a promotion

Back in spring, when Chinese stocks started to appeal to me, I couldn't ignore China Mobile. As the dominant cellphone carrier in the MIddle Kingdom, I read that the big cities had been saturated already. All that was left were the rural areas. I thought of CHL as a steady, reliable, but slow growth mover.

Boy, was I wrong. Here's a closer look.

China Mobile ADR (CHL) $83

• The skinny
I never really anticipated the growth of cellphone technology. I never realized back in the spring exactly how dependent Chinese are on their cells to get on the internet, far, far more than us in the states. And with the coming expansion of the industry — online gaming through cellphones, for example — there's really no barrier to how far CHL can go when the country has a population of 1.3 billion. BEEEEEELLLLLLION.

• Earnings

• Fundamentals
See the financials at Yahoo Finance
It's easy to think of a giant conglomerate like China Mobile more like a utility, but that wouldn't be right. Though the P/E is 34, the forward P/E is just 25. The profit margin (22%) and operating margin (34%) are insatiable. Quarterly revenue growth (21%) and earnings growth (25%) are tremendous. Total cash is $24.6 billion, with total debt at just $4.8 billion. Short interest is miniscule, but that's not a big deal. What's not to like?

• The chart

I have to confess, at first glance, this looks like CNOOC's chart. Same explosive move after the fed rate cut, a multitude of up gaps. Crazy, but in China, oil and cellphones rule.

• News
We believe CHL continues to generate strong subscriber growth, having reported 11.2 million net additions in July and August, putting the company on pace to outperform our forecast of a 20.5% customer increase for '07. We are raising our '07 earnings per ADS estimate by $0.02 to $2.82 and our '08 projection by $0.12 to $3.27, reflecting higher revenues, as CHL further expands in rural markets. We are also increasing our 12-month target price by $7 to $87, incorporating a 10.7% free cash flow growth rate, up from 10.1%, into our discounted cash flow analysis.

Grade: A-. I read this stock wrong in the spring, giving it just a B grade — same as Microsoft. What I failed to gauge is that MSFT's growth curve is behind it, while CHL's growth is ongoing, perhaps short of the peak by many months or years. This is a true A- stock, not a B grader. I don't consider CHL a buy here at 83, but when it dips below its 10-day SMA, I'll be watching more closely.

Pupule says: Wait.

Starbucks promoted to B+

Time for a revisit with Starbucks. When I last looked at the numbers, this was a B grade stock.

Starbucks Corp. (SBUX) $26.97

• The skinny
Down from an all-time high of 40 in mid-November. Law of big numbers in effect. The Co is, arguably, maxed out in the U.S. On the other hand, expansion in China, Europe and Mexico play into the weakening dollar nicely.

• Earnings

• Fundamentals
See the financials at Yahoo.
Current P/E is 33, forward P/E is 25. Much more reasonable now than it was a few months ago. Profit margin (7%) and operating margin (10%) are acceptable for a retailer. I'm just used to seeing larger margins with my A and A- stocks. Quarterly revenue growth (20%) is nice, while earnings growth (8%) is middling at best. Balance sheet shows total cash ($330 million) below total debt ($883 million). No real chance at a short squeeze here with only 3.8% of the float short.

• The chart
Definitely a bottom feeder's fantasy. I love bargains, but I need substance behind any buy. Of course, if SBUX is going to be such a guaranteed winner in three, six, 12 months from now, it would not be at 27, would it? Risk is always part of the equation. This is rarity among most stocks I look up: trading below its 10-day simple moving average, at its 50-day SMA, and below its 200-day SMA. Unlike other stocks I've picked up below their 10-day SMA, this stock is not down due to a market correction.

• News
Starbucks downgraded to sell; shares slip
NEW YORK (MarketWatch) -- Shares of Starbucks Corp. fell Thursday morning after Banc of America Securities cut its rating on the coffee-shop operator.

Analyst Andrew Barish cited slowing growth levels for the Seattle-based company (SBUX), increased cannibalization and more intense competition for the downgrade to sell.

"Although we believe that the company controls a very strong brand and can continue to grow, we believe the pace of growth will be slower [with international business still too small to make significant contribution to operating profits, and could be several years away from such a contribution], and that expectations are too high for a short-term recovery," Barish wrote in a note to clients.

Starbucks has been grappling with higher expenses -- particularly dairy costs, increased competition from players including McDonald's Corp. (MCD) and slowing same-store sales. In the past year, the company instituted two price increases to offset costs.

The Bank of America analyst said that the company's wage increases for all hourly team members and the unit-level manager compensation increases may have had an impact on margins, particularly as same-store sales comps have slowed.

Again, there's hope, but nothing substantial enough yet to show me that SBUX can increase its fundamentals and margins. I like the price here, but I'm not in love.

Grade: B+. Growth is going to work well, but keeping costs down is an issue. I'm moving SBUX up a notch from B to B+, but it's certainly still not among my favorites in the A and A- crowd.

Pupule says: Buy small if at all.

Starbucks? Just the green tea, please

I enjoy a few minutes (sometimes a few hours) in the comfy, air-conditioned confines of a Starbucks. Happens once, twice, maybe three times a week. Conveniently located near my mid-day pit stops. I may long for a Vanilla Bean Frappucino, but lately, I've been disciplined enough to get the Green Tea (iced) at just $1.60. I don't need the extra fat and calories from a Vanilla Bean Frap, and it costs $2.50 more anyway.

But SBUX the stock is what piques my imagination. Expansion in China. Cool Factor. Is it just too big to grow any more, though? The stock has been stuck in coffee sludge for almost a year now, ever since it hit $40 in mid-November. The P/E became astronomical and the PPS couldn't justify further buying. I'm not a short, never will be, but ...

Anyway, I sit there in Starbucks with my Apple PowerBook (yes, too cheap to buy a new MacBook), Crocs on my feet and Green Tea in my belly. The thought of owning any SBUX shares hasn't occurred in a long time, but Howard Lindzon offers his reasoning for buying in here below 27.

Lindzon: Starbucks…enough marked time?

Of course, Howard is purely about trends and it has served him well. Fundamentals and technicals be damned in Howard's world. What strikes me more than his ability to spot and own trends is his penchant for finding stocks at a discount. In this case, SBUX is more than 30% off its all-time high. That's something I can dig. A little more digging and maybe I'll be convinced enough to buy more than a Green Iced Tea.

Climbing the Great Wall of Hesitation

Lust is a primitive thing that normally does very little in the way of positive production. But I will confess that I'm lusting for stocks have one of these denominators: 1) Oil, 2) China, 3) Killer Application.

Oil is freaking king, just like Jed from the Beverly Hillbillies used to sing. I don't know if singing the praises of CNOOC Ltd. and not getting on board before a 75% run in the past six weeks had an effect. I just know that the cost of crude oil is something I can spend less time bitching about if I just employ the old "Can't beat 'em, join 'em" approach. But as a bargain hunter, I freeze up when I see CNOOC (CEO) at $163 per share.

China was in play two years ago. China was in play one year ago. And even at the start of this year, when I really started to pay attention to the market for the first time in years, countless analysts and columnists echoed a red alert. The Chinese markets were saturated, overvalued, blah blah blah. Boy, were they wrong as heck. And then there's this. On Saturday, China takes its googlicious-level money (trillions) and will start putting it to real work.

AP: China to Launch Multibillion-Dollar Investment Fund on Saturday

Yup, forget the manini yields of treasuries. China is going to flood markets around the world with their happy money. No takeover attempts. Just getting a better return. Good news for financials? How good? How deep will they dip into non-political stocks? This is gonna be a helluva thing to observe, especially since the U.S. put up such a fight when CNOOC tried to buy some U.S. oil interest a year ago.

Conversely, it's hard to find a bargain among the Chinese ADRs at this point. James Altucher has his Chinese Rockets series of portfolios, but more recently, he lists a bunch of penny stocks in Portfolio III. Penny stocks.

Altucher: Chinese Rocket Stocks Part III

One of his criteria is that these Chinese companies absolutely must have a trong balance sheet. Major cash flow. But I'm not so big on one of his picks, NetEase (NTES). It's a good company with its toes in four different sectors, including online gaming. I prefer Shanda Interactive (SNDA), which is focused in online gaming and will emerge as one of the best in that area.

He also touts Solarfun Power (SOLF).

Last week, Solarfun announced that it has secured three multiyear framework commitments, which should consistently drive earnings for some time. It also announced that it signed its first non-domestic, long-term supply agreement (which starts in 2008).

Worth taking a much closer look. I'm almost devoid of Chinese stocks, which makes me almost heretical considering how much I actually like them. I just get wary unless they're brest of breed, and with the Chinese stock leaders at nosebleed levels, finding the kings is tough in the middle of a stampede. The hunt will now commence with discipline. Fundamentals. Technicals. Lust takes a back seat.

Tuesday, September 25, 2007

I love you, I hate you (FMCN)

Eric Savitz explains the latest on Focus Media. It's a strange, suspicious scenario that I wanted no part of after the "delay" to straighten out the earnings report.

Eric Savitz: Focus Media Soars As Audit Committee Finds No Undisclosed Rebate Payments

Now that I'm out, the stock is running wild. I should've trusted Basic Axiom of China Stocks #1: No industry leader shall fail (not if the government can help it!).

Brew Review: Big Swell IPA

Big Swell IPA (Maui Brewing Co.)
Appearance (0 to 4 stars): 4.0
Aroma: 3.5
Flavor: 3.5
Texture: 3.5
Drinkability: 3.5

Overall score: 18.0 / 20.0

Cost: $2, 12 oz. can, Liquor Collection.
On the label: See photos.
Summary: I am not a fan of pale ales. Not a hater, but my preference is for malts, porters and stouts. Yet, this brew blew me away. It looks amber, but the flavor is one of a kind. Not sour, not bitter, but definitely strong and smooth. No weird aftertaste. It's a flavor that I can't identify, and it won me over. Quite a kick at first with the carbonation, and it goes down smooth, with just a bit of fizzle.

On the whole, these three brews from Maui Brewing Co. are outstanding, distinct and wonderful. I was not a believer in canned beer until this week. Everything MBC said about cans and what they do today (as opposed to the stereotype of the past) is true. They work. They keep the brews very fresh. And though they are recyclable, I'm saving my as souvenirs.

Can't wait until MBC turns out more of their award-winning brews for me to taste.

Reviewed on Sept. 19, 2007.

Bully for Baidu

Is this the right stop? Do Baidu passengers get off here and wait for a cheaper fare on the next round? Frankly, a stock that soars from 161 to 300 in five weeks is either a) on steroids, b) from another planet, or c) supported by cultists. But really, how does a relatively teeny company not only fend off, but dominate the Chinese search engine space over King of the Warlords, Google?

I have always, and will probably continue to suspect that protectionism is alive and well in the MIddle Kingdom. Is it our responsibility to select stocks that are truly independent? Is it our business to invest (or trade) only in stocks that are on an even playing field? I say no. The rules are in place, and if you don't use them to your advantage, there will be no whining allowed later. That being said, I regret not staying in Focus Media and Sina, but not as much as I lament not being seriously long in CNOOC Ltd. and Baidu.

I figure I'm not alone. How many of us know China is a runaway train and still don't won't dip both feet in the water, let alone plunge in? Is this where BIDU pulls back 50 points? Does BIDU pause, refresh, and then run another 140 points?

There is no logic, though some may try to convince me otherwise. R. La Monica: The Baidu bull run

Munarriz touts Crocs again

My favorite Motley Fool writer has struck again. Rick Aristotle Munarriz highlighted four growth stocks of his liking, including Crocs. Why is that notable? Contrary to the herd at Motley Fool, Munarriz has been high on CROX for a long time. At MF, CROX was voted "Worst Stock of 2007" when the new year began. The cumulative rating of the stock was one star out of five.

The big Aristotle also likes 4Kids (KDE), XM Satellite Radio (XMSR) and TiVo (TIVO).

Munarriz: 4 Catalyst Stocks for the Fourth Quarter

I wonder how much longer the MF herd will keep dissing CROX. The stock hit a new (mid-day) high of 64.95 today.

Pit stops today for growth kings

Wow. No posts here for three days. Maybe I have a life after all. Some passing thoughts on a supposedly down day.

• Georges Yared is right. Again. Just a few days ago, he wrote that AAPL's life below $150 per share was coming to an end soon. The stock has run from the 130s to today's high of 150.22 in a short time. Yared has been a persistent bull when it comes to certain growth stocks. He's been right. Bull's eye right, and that's why I continue to absorb his writing.

• BIDU continues to fluctuate today. With the NAS flitting below and above neutral in this first hour, BIDU dropped to 295 before rallying back to 300. An insane run for a stock that hit a subprime-sludge low of 161 on August 16. I can't help but think that a lot of money has gone to BIDU stock because a) it's in China, and b) it's a search engine. And that's it. Profits are nothing special. All Baidu really has is huge growth margins in a country of 1.3 billion people, most of whom still don't have computers. That's where cellphone web access comes into play, and that's why I wonder why BIDU is taking so long to anchor itself in that realm. Chinese access the web more by cellphone than computer. It's not even close. I just wonder if Alibaba, a major IM company that's 40% owned by Yahoo, will ever open an ADR in the states.

• CROX is running up again. A lot of bulls are expecting the Co to share robust mid-Q3 numbers during a presentation this morning. The stock broke through the 60 barrier on Monday with major volume.

• Among the small group of stocks on the plus side early in the day was GRMN, which hit an all-time high of 120. Stock pulled back and is now at 117.58. The stock has doubled since late May, and I wonder if a split is imminent. I'm not a big fan of splits, but I don't avoid them, either.

• LULU has been sitting for much of the morning at 39. When Cramer pumped the stock last week with a long segment, LULU made a couple of runs to the 41-plus range. I think LULU sits in this range until earnings, but you never know...

• MCD is consolidating after last week's magical run off the announcement of a 50% increase in the dividend. I got a few shares, mainly for my nephew (he loves the chicken snack wrap and has loved McDonald's all his life), but I don't see another run in the shares until earnings. Maybe the Co can make a deal with Apple and give away iTune songs in the McCafe and at the drive-thru. So wacky that it could happen.

• NILE had a couple of runs to 105-106 recently, but pulled back to 99-100 both times. Today, the stock is locked mostly in a 98-100 range, taking a breather since its run from 80 during the past two weeks. No complaints here. I'm just glad I got a little piece at 80. Sure, I wish I'd gotten more at 80 (or even 75), but this was pre-Fed rate meeting, so what I did (by my standards) was spooky. The older I get, the more adverse I am to risk. It's the dang truth and I can't deny it.

• RIMM broke into positive territory before much of the market and has kept its gains. I wonder how sales are going in China.

• Another favorite of my nephew's, Under Armor, hasn't been much in this rally. UA is down 1.2% to 63.92. I just think the forward P/E (47) is still a bear argument that a lot of bulls have bought. I can't argue against it when CROX is trading at a forward P/E of 23.

• Nintendo is forming a base here above 60, much to the relief of longs like me who had foolishly bought more shares at these levels. Though I won't be buying any stock at these lofty prices, it's reassuring to know that my A and A- stock picks have great reasons that more than justify their valuations. The Wii is still a killer app, as is the DS, and that won't change going into Christmas season.

I love you, I hate you: Well, well. Focus Media has finally cleared up its Q2 filing mess and the stock is up 15.4% so far. I would be angry about this, as a former FMCN long, but I'm past that. At some point, this is still going to be a piece of Chinese advertising that I want, but I need a bargain price first.

And speaking of China, Yingli Green Energy is up 3.7% to 25.64. The whole oil patch craziness is intriguing. Oil prices go up, CNOOC Ltd., PetroChina and Exxon go up, and so do the solar/clean energy stocks. I'm just surprised, with the U.S. economy slowing, that I haven't kept my toes in China's waters.

Saturday, September 22, 2007

Las Vegas Sands betting big in Macao, Singapore

Examining casino resort stocks this afternoon. Leading off is Las Vegas Sands, owner of the palatial Venetian hotels. Talk about opulent.

Las Vegas Sands Corp. (LVS) $129

• The skinny
A major player in Macao with a $2.4 billion, 32-story Venetian. I stayed in the Las Vegas Venetian about eight years ago for a conference. (Free for me, of course. I'd never spend that kind of money for a place I hardly stay in.) We spent so much time in seminars that all I saw of my opulent room was a few minutes before sleeping and a few minutes after waking up. I did enjoy the incredible beauty of the hotel, though.

• Earnings
Numbers are bullish for 2008.

• Fundamentals
See the numbers at Yahoo Finance.
Solid margins. No question, earnings growth and cash flow numbers were hit by the buildout in Macao.

• Chart
LVS has exploded in the past two weeks, from an 87-110 range to the current 129. Trading far above its simple moving averages.

• News
1. LVS is raising $3.3 billion in loans to build in Singapore, according to a story on Friday.
SINGAPORE (Dow Jones)--U.S. gaming giant Las Vegas Sands Corp. (LVS) has mandated eight banks to arrange a S$5 billion ($3.3 billion) debt facility, the largest high-yield syndicated loan for a project in Asia ex-Japan in several years, two bankers close to the deal said Friday. Las Vegas Sands will use the money for the construction of the Marina Bay Sands casino in Singapore.

See a photo of the Marina Bay Sands in Singapore, due to open in 2009.

2. S&P downgraded LVS on Thursday.
The shares have doubled in the past year and appreciated nearly 39% over the past month. Now, with shares sporting a price 139X trailing earnings, we see them as significantly overvalued. While LVS will likely enjoy benefits of its development projects, including possible rapid EPS growth, the shares are nonetheless priced at nearly double the peer-average P/E ratio on '08 EPS. We lower our assumed weighted-average cost of capital and, following LVS's early successes in Macau, we are boosting our target price by $17 to $117. But at current market prices, our opinion is sell.

I don't consider LVS a screaming buy, nor do I think it's forgettable at these levels. This is clearly tied to the US and Asian economies, and certainly a way to play the China market. I think Macau is golden. Even if the US economy slows, the coffers of average and high-end Chinese citizens are growing by leaps and bounds. Some of those high-end folks will filter down to Macau and add to LVS revenues. Hard not to like this stock. Just not at this current level.

Grade: B+. There are clearly questions about an oversaturation of hotel rooms in Macau. I'm optimistic, but cautiously so.

Pupule says: Wait.

Friday, September 21, 2007

Brew Review: Coconut Porter

Coconut Porter (Maui Brewing Co.)
Appearance (0 to 4 stars): 4.0
Aroma: 4.0
Flavor: 4.0
Texture: 3.5
Drinkability: 4.0

Overall score: 19.5 / 20.0

Cost: $2, 12 oz. can, Liquor Collection.
On the label: See below.
Summary: Careful on the open. The can had been moving around, from the fridge to my living room, then sat for a good 5 minutes. Still, when I pulled the tab, a good explosion let out a tablespoon or two. Rather combustible, right? The aroma of coffee, not coconut, is what permeated the room. And with my first sip from the mug, it was sweet, rich and tasted completely like coffee. Is the coconut mixed with coffee? According to MBC's website, where they show step-by-step photos of the process, there is no coffee. Whatever the case, it's an aromatic, rich flavor with a good amount of kick. I really could have scored this a 20 out of 20. It almost tastes as if it belongs in a coffee cake or some sort of coffee pastry, or it could be an ingredient in a coffee glaze or syrup to go over ice cream.

This brew needs no complementary dish. It's rich enough by itself. This brew has won an award in the World Beer competition, and I understand why.

Reviewed on Sept. 17, 2007.

Thursday, September 20, 2007

CNOOC: The 'other' Baidu

I pumped my tank full during an all-too-rare stop at Costco in Iwilei over the weekend. At $2.98 per gallon, I was happy to get the lowest price on Oahu. I was also happy to get a $1.50 hot dog and soda deal a few minutes later. Neither the constant use of gasoline nor the consumption of hot dogs and soda are any good for our bodies and the ecosystem. But there I was, getting a good deal all the way around before driving off to cover a football game 25 miles away.

Gotta get it cheap, no escaping that. But as gas prices come down, I can't help but expect $4 per gallon in the near future. Crude oil prices hit $83 per barrel today, and with production declining (supposedly) in the Middle East, we're at the mercy of producers, refiners and everyone in between. So, if we can't beat 'em, why not just join 'em?

I remember pounding the keyboards for CNOOC Ltd. (CEO) over the past few months. Again and again, I ranted and raved about the great future of this Co. I vividly recall writing about the stock (CEO) being a steal in the 90s, 100s, and in the 110s recently. The P/E hovered at 11 for the longest time. Not the best of breed in China — that would be PetroChina — but with 1.3 billion residents and a major increase in auto sales and gasoline demand, CEO is a prime best-of-all-worlds kind of stock. Not just being in China and being an oil/natural gas Co, but having the protection of its government.

And yet, I didn't buy a single share.

So CEO ran from 92 (subprime sludge low) to 155, pulled back today to 148 and is completely not fit for purchase, technically. But I think Goldman Sachs is right. Oil will hit $100 a barrel sooner than later, and GS could be right about a $135 price. (I don't even want to imagine the possibility of $200 per barrel.) Does the average man or woman have any way to fight back against these exhobitant gas prices?

A part of me wants to say, "Yes. If we can't beat 'em, join 'em! Buy all the CNOOC and PetroChina and Exxon and ladee-dah oil stocks that you can!" I mean, CNOOC ran up 60% since August 16, so there were many opportunities ... if you had dry powder. As gas prices rise in the coming weeks, I'll be more peeved and more eager to buy some CEO for the first time.

Coming soon, $200 for a share of CNOOC Ltd. Who woulda thunk it? CNOOC is the other Baidu.

LULU is an honor student

Yes, lululemon athletica is on the board here. I don't do yoga, don't wear skimpy yoga apparel, can't do the splits or downward dog. But, as I explained earlier today, LULU is a great, young growth company that has the capital and the game plan to succeed in a great market. Women love yoga. Women love to shop. They will shop at lululemon.

That, plus sensational Q2 numbers, is why I give LULU a well-earned A- grade. How about that ... I'm starting to own more of my A and A- grade picks.

Bargain shopping yields 3 fair prices

Flat market today. A pause to refresh. Pit stop. Calm before the storm. Whatever cliche works for you, the next question is, where does the market go from here? Do stocks simply ramp up or will the market just tread sideways until earnings?

I'm guessing it will be the latter. U.S. economy slowing, global economy still forging ahead. Speaking of the latter, I'm surprised with my lack of China exposure in my portfolio. At one time, I had small pieces of Focus Media and Sina. I got out of FMCN because of its internal accounting issues. The Co still hasn't reported Q2 results, and Nasdaq hasn't settled their situation. SINA is China's top portal, and I would feel OK about stepping back in at a healthy entry point.

Baidu? At these levels, no. No way. A trader's fantasy, though. Now I want to look at what may be in the bargain bin of A and A- grade stocks.

Amazon 89. Leveling off and volume has declined for the past three days since the Fed rate cuts. After blowout Q2 earnings, Georges Yared wrote that the mutual funds would be marching into this stock. Then the market got skittish and AMZN went to 69 on sub-prime meltdown day (August 16). Well, 69 to 89 in a month ain't too shabby. The stock is trading slightly above its 10-day SMA (87). Jeff Bezos rules online retailing, and someday, Outer Space. The stock usually trades like the black sheep of the A grade family. Lags behind, then explodes. Pupule says: Wait.

Apple 140. Down for a second day in a row, just fractionally, on lower volume. Still trading above its moving averages; 10-day SMA is 137. Yared writes that the days of AAPL below 150 are numbered. I remember thinking that the stock was stuck in the 90s forever. That was in April. And then I let go of my shares despite my complete and utter belief about the iPhone and the Co. Never again, never again. Pupule says: Wait.

Crocs 56. The effect of nationwide reports about the sandals and escalator accidents is beginning to subside. Though CROX was up 2% today to 56.45, it continues to trade below its 10-day SMA (57) and EMA (56.99). Today's gain came on lower volume — there's not much conviction on either side of the fence right now. Is this a great buying opportunity? Pupule says: Buy small.

Garmin 106. Stock was down nearly 1% today on lower volume. GRMN (106.75) is a hair above its 10-day SMA (106.44) and EMA (106.25). Like all the A graders, this is a great Co that is hard to resist. Pupule says: Buy small.

Research in Motion 90. Down 1.4% today, but well above its moving averages. 10-day SMA is 86, EMA is 87. Pupule says: Wait.

Baidu 277. The stock was up again today, fractionally. BIDU has traded higher in nine of the last 10 sessions. Insane. The stock is at nosebleed levels. The 10-day SMA is 242 and the 10-day EMA is 249. Pupule says: Wait.

Blue Nile 99. Bit of a surprise that NILE is holding up with strength here. Strength? Yesterday, the stock hit 98 and did a free-fall to 91. Looked like the end of a nice ride for me (from 80). But NILE gathered itself and longs pushed it back up to 95. Today, with continued solid volume, NILE hit 100 briefly before recording an all-time closing high. Stock has been up in eight of the last nine sessions and is trading far above moving averages. 10-day SMA is 86; 10-day EMA is 89. Pupule says: Wait.

Chipotle Mexican Grill 110. Down 1.8% after five up sessions in a row. Volume today was low, but the stock is still above its 10-day SMA (97) and 10-day EMA (107). Pupule says: Wait.

CNOOC Ltd. 148. Oil hit a new high at $83 per barrel, but CNOOC dipped 3.5% today. Inevitable after zooming from a low of 92 one month ago to a high of 155 yesterday. Still a ways to go before my favorite oil/natural gas stock is buyable. 10-day SMA: 134. 10-day EMA: 137. Pupule says: Wait.

Flowserve 77. The opportunity to buy this pump parts company was a week ago, when I wrote about its discounted price. FLS is finally joining the party, and in a big way. Down a skosh today, but still expensive. 10-day SMA: 72. 10-day EMA: 74. Pupule says: Wait.

Google 552. Like NILE and FLS, GOOG was terribly oversold not so long ago. Since disappointing the street with Q2 results (and only because the Co invested in a ton of new employees mostly in China), the stock languished until this week. Today, GOOG was up another 1% on steady volume. In fact, the stock has been up seven of the last eight trading days, and volume on that down day was miniscule. 10-day SMA: 529. 10-day EMA: 533. Pupule says: Wait. When Baidu cools off, so will Google.

lululemon athletica 39. Another day, another all-time high for LULU (41-plus mid-day). Volume was substantially down today, but today's increase (3.6%) defied the market's down day. Four up days in a row, lower volume ... might be time for the stock to take a breather. Then again, tomorrow's Friday, and some of the big houses might want to furnish their rooms with sparkling new lululemon goodies. Trading well above its 10-day averages. Pupule says: Wait.

McDonald's 54. A nice, reliable way to play China's booming economy. Mickey D was down 1% today, but volume was weak after several huge days on the upside since the Co's announcement of a 50% dividend hike. I sit in Starbucks, but I invest in Mickey D. 10-day SMA: 53. 10-day EMA: 50. Pupule says: Wait.

Nintendo 63. The stock languished in the 50s for a six-week stretch, doing its best CROX imitation. Now that the Co has announced increased supply of the Wii console for the US this holiday season, there's reason to be bullish again. Apparently, longs didn't wait, pushing the stock up in four out of five days. Today's 1.1% decline was due, and the trend is up, but it's better to be patient. 10-day SMA: 59. 10-day EMA: 60. Pupule says: Wait.

Potash 98. Instead of slowing momentum, Potash saw volume increase in today's massive 5.1% run-up. This stock never ceases to amaze me. I find myself writing the same things about POT that I did about CEO. 10-day SMA: 90. 10-day EMA: 91. Pupule says: Waaaait.

Synaptics 46. Huge move up came to a halt yesterday. Today, the stock sold off 3%. 10-day SMA: 44. 10-day EMA: 45. Close but no cigar. I like touchscreen, I like this Co, but ... Pupule says: Wait.

Under Armor 63. Having a high valuation (forward P/E of 48 versus CROX's forward P/E of 22) doesn't help UA sometimes. Down 2.9% today, five down days in the last six and nine downers in the last 12. Co needs at least one more blowout quarter to silence the bears, shorts and doubters. Until then, the stock will continue to snooze. UA (63.34) is trading below its 10-day EMA (63.60) and just above its 10-day SMA (63.26). Pupule says: Price is reasonable, but buy very small if at all.

Best buys

Pumping the lemon

Cramer is pumping LULU right now, likening it to Under Armor and Crocs. This is not just a quick pump. He's devoting an entire segment as he wears a headband and sits on the floor in a faux yoga position. Cramer insists that lululemon athletica is not just a yoga apparel company, but a women's apparel company.

Sounds good to me (the guy who just bought some shares at 38.38 the other day). Now he has LULU's CEO, Bob Meers, on the phone.

"We do not need to be in (big) markets. In fact, we do well in college towns," Meers says. And yet, LULU is about to conquer America, with stores opening in rapid succession.

"They're going to quadruple their number of stores," Cramer squeaks. The CEO is rather deadpan and low-key, not a rah-rah guy. Fine with me. I just hope they reel in Mike Myers as Austin Powers and get him and his posse of babes to do the first lululemon TV commercial.

The stock was at 40 (after hours) even before the segment began, then went to 40.95. TV is a funny thing.

Wednesday, September 19, 2007

Crocs will move on

Tragically, kids are suffering foot injuries while wearing Crocs as they get on escalators. This, of course, happens on the mainland. In Hawaii, where most people wear slippers (flip flops) everywhere, it's not a problem. Maybe it's being accustomed to them, knowing almost by instinct how to walk with them on ramps, stairs ... escalators.

I hope parents become more alert up on the mainland and have their children take off their Crocs sandals before getting on escalators. Better safe than sorry. As for CROX the stock, this will come to pass. The products in themselves do not kill or injure anyone, no more than a fly swatter can blind you, no more than a banana peel can kill you when you slip on its peel.

Chiquita is still in operation after all these years. I think Crocs will be around for quite some time.

The negative, coast-to-coast news about the escalator problem has driven the stock down to 55 while the rest of the market has soared into the stratosphere following the Fed rate cuts. CROX is the only stock among my A and A- grade picks that is even close to its 13-day moving average. In fact, CROX is well below the 13-day MA and closing in on its 50-day MA. Great growth stocks don't do this very often. The last ones I saw like this were Blue Nile, Flowserve and Google about one week ago. A buy at that time of any of the three has proven golden for longs. I mustered up enough pre-Fed courage to buy small positions of NILE and RIMM.

Whether Blue Nile can sustain its gains remains to be seen. NILE surged from 75 (two Fridays ago) to 98, matching an all-time high, today. Then came the pullback to 91 before the stock closed at 95. Volatile, yes. And no longer a sensible, technically-sound buy.

Latest takes on iTouch & Apple Inc.

Walter Mossberg is the guru of technology media. Well, he looks the part, at least. Here's his take on the iTouch.

Mossberg: Apple's iPod Touch Is a Beauty of a Player Short on Battery Life

Here's what Apple bull Georges Yared wrote today. (Hint: target $210.)

Yared: Apple (AAPL): Last chance to buy under $150?

I almost dove in and got more AAPL today, even at this expensive price. But I'm already overweight in Apple, so I went with a swing trade on LULU. AAPL may outperform LULU in the long term, but at least I'm smart enough now to hold my Apple shares instead of selling them. I did that back at 92. Never again.

Canadian Invasion is welcome

I almost loathe short-term trading, but with the market this robust, it's almost criminal to sit on the sideline and let everyone else have all the fun. So, I dipped the pinky toe in the water and found it warm enough to be comfortable. Sort of comfortable. I waffled as LULU traded in the 37-38 range before finally stepping in at 38.38.

A large percentage of my holdings are for the long term and always will be barring a free market meltdown. But why lululemon athletica?

• Yesterday's massive fed rate cut (50 basis points) will benefit retailers big, big, big.

• Strong fundamental numbers. The only "disappointment" over Q2 was that the Co projects 5-6¢ EPS, while the street wanted a flat 6¢.

• Strong growth numbers, with major expansion in the US.

• I don't like niche products and companies that much, but women love yoga, yoga continues to stretch over the demographic (pun intended), and women are primary consumers.

• The PPS is being manipulated by MMs or there's more buying pressure than we can see. There were significantly large sell orders in the 37.50-38.00 range, and yet the price moved up.

• Today's volume in LULU is already nearly double of yesterday, when the stock lagged somewhat behind the market rally. Breaking out to a new high. I don't necessarily believe in breakout buying any more, but this stock has a lot of air above it to grow after being in the 30s since the IPO.

I'm not a fan of buying on breakouts, which is what LULU is doing today on above-average volume. There is no technical foundation to this buy, and that's something that unsettles me. That's the chickens**t side of me. Here's to the Canadian Invasion. Famous Canucks follow.