Hot Stocks for '08: Circuit City (CC)

It wasn't long ago that Circuit City (NYSE: CC) had an offer on the table from a private equity firm for a takeout at $20/share. Well $20 a share seems like along time ago for Circuit City shareholders.

This company has turned into a total mess. Trading down at around $4, that stock has dropped more than 75% this year. Ouch! So why do I think it's a hot stock for '08? The fact is that the stock has gotten so beaten up I expect both a January effect type rally in the shares, and rumors of another buyout bid to propel the stock higher. While the way things are heading for the company, a buyer may surface only after they file for Chapter 11, I think someone will see the value in the brand and the distribution channel with all the stores and make a bid for the company. With a good management team, this stock could get back to the $10-12 range.

This is definitely a speculative play, but I have a feeling the reward far outweighs the risk.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no position in any of the stocks mentioned as of 12/30/07.