Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.
Bernie Schaeffer, editor of Schaeffers Investment Research, chose International Securities Exchange (NYSE: ISE) as his top pick for 2007. The stock has risen 40% on news that Deutsche Boerse AG plans to acquire the firm. For those who own the stock, Schaeffer recommends selling.
For his new favorite idea, the advisor turns to electronics retailer RadioShack Corp. (NYSE: RSH). He explains, "The stock has been flying high in 2007, doubling in value in less than six months and moving to a two-year high. Throughout this impressive rally, the stock has enjoyed the reliable support of its 10-day and 20-day moving averages.
"RSH shares have also benefited from their 10-week moving average, which neatly guided the equity higher following a late-April pullback in the shares.
"This performance has clearly dwarfed the accomplishments of the broader retail sector. RadioShack's weekly relative-strength measure, as compared to the AMEX Retail HOLDRs Trust, has been on the rise since January and is now at a 26-month high.
"The company has been impressive in the earnings confessional as well. RadioShack's first-quarter earnings, reported in late April, hit 31 cents per share, well above year-ago results of 6 cents per share and easily better than analysts' consensus view of 14 cents per share.
"While the equity has already doubled this year, its backdrop of extremely negative sentiment suggests that additional upside is likely for the latter half of the year. Because many investors have yet to buy into the stock's rally, there is plenty of buying power left waiting on the sidelines.
"Short interest is a force to be reckoned with for RSH, accounting for more than 17% of the stock's available float. At the current time, it would take almost five trading days (at RSH's average daily volume) to buy back all of these shorted shares. This accumulation provides the foundation for a notable short-covering rally.
"The Wall Street contingent has also failed to board the RadioShack bullish bandwagon. Data from Zacks shows that there are 13 brokerages following the stock, and not one has deemed the shares worthy of a 'buy,' despite their 100% growth so far this year.
"There are currently 10 'holds' on the stock and 3 'sells.' Upgrades could be in the offing; votes of confidence from the analyst community would likely attract additional buying power from the sidelines."
See all 20 stocks the advisors picked for the second half of 2007.
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