Fourteen stocks have been reviewed so far with eight of them potential contenders for 2010. These include some picks from 2009, some old dependables and a few more on the speculative side.
During the year I have written on occasion about selling put options (naked puts) because the premiums offered were very generous and from my perspective assumed market collapse. This was reflected in my July post Serious Money: The world's dumbest market
Today I am considering four naked puts and two more stocks. The options are all based on stocks now in review.
The clock is ticking away the time before the year ends and I have only begun to sort out the possibilities. In Part 1 of this series, I discussed breaking up my potential picks into three categories: contender, on the fence, and out of the running until the 10 stocks have been identified.
Four contenders have been considered so far: American Eagle Outfitters (AEO), Anadarko Petroleum (APC), Anglo American ADR (AAUKY) and Diageo plc (DEO).
Six more are included in today's review: EZCorp Inc. (EZPW), General Electric Company (GE), Wells Fargo & Company (WFC), Annaly Capital Management ( NLY), Intuitive Surgical Inc (ISRG) plus Berkshire Hathaway (BRK.B). These include the remaining five from 2009 and one more familiar to most investors.
The market continues to befuddle the bears as the third quarter earnings and stock prices continued to move in a positive direction.
During this period Washington has taken charge of the auto industry and helped prop it up with the "cash-for-clunkers" program. They continue to subsidize the real estate market with first-time home buyers incentives, and very low interest rates. The banks are being refueled by the Federal Reserve with interest rates as low as zero, while all the time currency stability has been sacrificed. This has driven gold prices to new highs.
This is the third review of my 2009 stock picks through September 30 (see: Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more). This years picks have annihilated index comparisons, so much so that I must attribute some of my good fortune to luck. However, I do believe the original reasoning was sound and the outlier nature of the gains certainly a result of an oversold market living in fear.
Among the stocks that have been doing surprisingly poorly, of the nine, is EZCORP (NASDAQ: EZPW) that owns and operates a chain of pawn shops and cash advance outlets.
Today it is trading significantly lower, from yesterday's close of $12.89, off about 14.5%, bouncing around the $11.00 mark. The stock is down on company news that earnings for the next two quarters and the full year would be down a few cents per share below analysts estimates and earlier company forecasts.
The 2009 clock is ticking loudly. The year has started off with a lot of continued turbulence. We have a new president, Barack Obama, who will boldly lead us where no man has gone before -- two trillion further in debt, most likely.
Not that this is his doing, but it is his chosen calling, and right now he is calling out to the Senate minority to compromise, and get yet another federal stimulus package off the shelf and out the door.
This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
"EZCORP (NASDAQ: EZPW) -- our top pick for 2009 -- is poised to benefit from an economy that will probably see more tough times before improving," says Alex Kolb.
The editor of Zacks Breakout Letter explains, "The company operates pawnshops that provide the type of lending and credit services many turn to during rough economic conditions."
"EZCORP is expanding through acquisitions. It recently acquired the assets of 11 pawnshops located in Las Vegas and Henderson, Nevada. The opening of more stores in U.S. and Mexico is on the horizon for 2009.
"Furthermore, the company's earnings per share are expected to grow 18% over the next 3 to 5 years, which is also ahead of the industry average.
"The pawnshop play has a solid record of matching or beating analyst estimates. Dating back to 2004, EZPW missed consensus forecasts only 2 times, was in-line with estimates 4 times and was ahead of projections during the other quarters.
Anybody have capital gains to show this year? I didn't think so. Not unless you were shorting the market, and in particular financials. I got clobbered with everyone else. There were not many places to hide. Picking winners was like guessing where each piece of debris would land after the tornado moved through town.
The average crystal ball is looking quite foggy about now, nevertheless I have rummaged throughout the stock market to select nine stocks that I think offer more reward than risk. The market is priced for the worst in so many cases that I think the list could have included 50 companies without too much trouble.
In 2007 and 2008 I owned some but not all of the picks for the year. This year I own all of the stocks and they were all acquired in the latter part of the fourth quarter for a new portfolio.
"The credit crisis on Wall Street is headed for Main Street," says Mark Skousen, economist, professor, financial author and investment advisor.
In his The Hedge Fund Trader, he explains, "This means business is likely to jump at the nation's pawnbrokers." Here, he looks at EZCorp (NASDAQ: EZPW).
"Both the economy and the financial markets need consumer confidence for things to go smoothly. That is sorely lacking right now. As a result, I'm expecting a bumpy ride during the next few quarters.
"Predictably, low-income earners and middle-class individuals will be particularly hard hit by the downturn. That means business is likely to jump at the nation's pawnbrokers.
"So now is an excellent time to pick up a few shares of EZCorp. Based in Austin, Texas, EZCorp is a leader in the 'specialty consumer finance industry,' better known as pawn broking.
EZCORP (NASDAQ: EZPW) is one of the largest pawnshop operators in the United States. The firm offers non-recourse loans collateralized by tangible personal property, commonly known as pawn loans, through 294 EZPAWN locations in the U.S. and 30 outlets in Mexico. It also sells merchandise at these locations, primarily collateral forfeited from its pawn lending operations. The company offers short-term non-collateralized loans, often referred to as payday loans, at 461 EZMONEY shops and 71 of its EZPAWN locations.
The stock popped earlier in the week, on word of upside guidance from competitor Cash America International (NYSE: CSH). Shares then kept rising, when EZCORP upped its own numbers the next day. Management said it expected fiscal Q3 EPS of 25 cents, a figure above previous guidance (21 cents) and the consensus Street view (21 cents). The CEO cited stronger than expected sales in the company's EZPAWN stores and lower than expected signature loan bad debt in its EZMONEY shops. The firm also boosted Q4 EPS guidance to 35 cents (35 cent consensus) and FY08 EPS guidance to $1.19 ($1.15 consensus). Roth Capital subsequently reiterated its "buy" rating on the shares and raised its price target to $19.
Flow International Corp. (NASDAQ: FLOW), which makes industrial waterjet equipment, swung to a better-than-expected fiscal fourth-quarter profit of $13.3 million, or 35 cents per share, helped by a boost in sales due to strong demand and an income tax benefit. Revenue rose 21% to $63.3 million. Shares are creeping up from a 52-week low of $6.81 a week ago.
Motor sports company International Speedway Corp.'s (NASDAQ: ISCA) second-quarter profit rose 41% to $26 million, or 52 cents per share. However, revenue slipped 3% to $174.9 million as admission and food and merchandise sales declined. Results fell short of Wall Street expectations, and shares fell to a 52-week low of $36.36.
Apparel and footwear company Wolverine World Wide Inc. (NYSE: WWW), second-quarter profit of $16.8 million, or 33 cents per share, topped Wall Street expectations, as strong international results linked to the weaker dollar largely offset increased product and freight costs. Revenue climbed 7% to $267.4 million. But shares fell $3.11 to $23.46 in morning trading.
EZCORP (NASDAQ: EZPW) is one of the largest operators of pawnshops in the United States. The firm offers non-recourse loans collateralized by tangible personal property, commonly known as pawn loans, through 294 EZPAWN locations in the U.S. and 25 outlets in Mexico. It also sells merchandise at these locations, primarily collateral forfeited from its pawn lending operations. The company offers short-term non-collateralized loans, often referred to as payday loans, at 448 EZMONEY shops and 74 of its EZPAWN locations.
The firm pleased investors least week, when it reported fiscal Q1 EPS of 29 cents and revenues of $112.3 million. Analysts had been looking for 28 cents and $111.4 million. Management also predicted Q2 EPS of 29 cents (29 cent consensus) and FY08 EPS of about $1.13 ($1.12 consensus). Roth Capital subsequently reiterated its "buy" rating on the issue and declared an $18 price target.
Most mergers are driven by the notion, sometimes wildly mistaken, that the combination will bring both a competitive advantage. Some pairs of companies, however, seem so intuitively right for one another, no bottom-line considerations should be allowed to interfere with their matrimony. Like a presidential candidate and a lobbyist's pocket, these two belong together.
I read recently that the average Las Vegas visitor leaves behind around $200 in gambling losses. However, in my flights back from Vegas I've noticed that many passengers still have their diamond rings, fine luggage and iPods, which tells me they haven't been wrung completely dry.
For companies such as Harrah's Entertainments (NYSE: HET), that's just opportunity lost, so I have a suggestion for how Harrah's could improve its take. Simply merge with EZCorp (NASDAQ: EZPW), operator of a chain of 82 EZPAWN pawn shops, which offer short-term credit to needy individuals based on personal property collateral, as well as 334 EZMoney stores offering pay advances.
Credit card debt has been soaring since the home equity loan market dried up, according to MacroMavens (subscription required). Leading companies in this space include America Advance (NYSE:AEA), Cash America (NYSE:CSH), Dollar Financial (NASDAQ:DLLR), EZCORP (NASDAQ:EZPW) and ACE Cash (NYSE:ACE). Many have seen revenues jump 50% during the past three years but could now be headed for trouble.
While credit card debt has been increasing, home equity loans have been declining and lending terms have become much more stringent, thereby reducing the risk exposure for these companies.
In the Alan Abelson Barron's column (subscription required) this past weekend, MacroMavens suggested shorting the subprime credit card companies and going long Fannie Mae (NYSE:FNM). MacroMavens also suggested shorting regional banks and mortgage brokers.
Fourteen stocks have been reviewed so far with eight of them potential contenders for 2010. These include some picks from 2009, some old dependables and a few more on the speculative side.
The clock is ticking away the time before the year ends and I have only begun to sort out the possibilities. In 
The market continues to befuddle the bears as the third quarter earnings and stock prices continued to move in a positive direction. 
This has been a good year for many stock pickers and my 
The 2009 clock is ticking loudly. The year has started off with a lot of continued turbulence. We have a new president, Barack Obama, who will boldly lead us where no man has gone before -- two trillion further in debt, most likely. 
"
Anybody have capital gains to show this year? I didn't think so. Not unless you were shorting the market, and in particular financials. I got clobbered with everyone else. There were not many places to hide. Picking winners was like guessing where each piece of debris would land after the tornado moved through town. 
Most mergers are driven by the notion, sometimes wildly mistaken, that the combination will bring both a competitive advantage. Some pairs of companies, however, seem so intuitively right for one another, no bottom-line considerations should be allowed to interfere with their matrimony. Like a presidential candidate and a lobbyist's pocket, these two belong together.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
