The past several months have not been kind to Panera Bread (NASDAQ: PNRA). The stock was trading near $70 last fall after several years of steady growth, then it started dropping early in October, made up some of that lost ground, and then took a real hit in June when the company lowered its expectations for the second quarter. Then, last week it lowered its expectations for the third quarter, which sent the stock down another 9%.

The main reason for these woes is decreased profitability. Analysts like Jeffrey Bernstein at Lehman Brothers have blamed rising commodity prices, while John Gloss of CIBC attributes it to commodities as well as labor costs. The company has looked to customer shifts from home-baked bread and muffins to outsourced products like scones and soufflés. Others have blamed rising fuel costs that have led to more customers staying home rather than driving to eat. Whatever the reason, PNRA's results have not been good, and investors have understandably been selling shares.

For years, General Electric (NYSE: GE) has suffered from perceptions of mediocrity, and its stock price has stayed relatively flat. But its revenues and margins have been growing steadily, and its second-quarter results showed revenues up 12% over the second quarter of 2006, 8% of which came organically, and investors are paying attention again. The stock is now trading at a long-time high of $40, and a Goldman Sachs analyst report this week predicted the stock would reach as high as $45.

GE's success has resulted in large part from a continuing boom in global infrastructure needs, and all its divisions have been doing well of late except NBC and its health-care sector. The company has benefited from global trends, but CEO Jeffrey Immelt continues to make improvements, from investing in a major buyback program of $14 billion to getting out of the plastics business to, most recently, announcing GE would exit the subprime mortgage industry. GE's subprime division, WMC Mortgage, was a tiny part of the company, but Immelt was smart to avoid losing any more money, and to avoid the kind of negative publicity that has hit firms, like Bear Stearns, that are deeply involved in that failing industry.

That is the question many investors and analysts are asking after Google Inc. (NASDAQ: GOOG) missed its second-quarter earnings estimates by a mere $0.03. Google's shares dropped 7% on the news, and of course the rumors started flying.

It seems to me the concern is misplaced. Google's sales came in at $3.87 billion, which is 58% higher than they were a year ago. The stock price is up 20% on the year. Profits may have been down a bit, but that's a natural result of the kind of growth that Google has been pursuing. This is a company that will continue to grow as online advertising revenues grow, through its acquisition of DoubleClick, and through the management's continuing efforts to find new markets. I believe its profits will return over the long term. The company clearly suffers from high expectations, and that, more than anything, drove the small panic over the earnings report. For many investors, the dip in the share price will be a way to get in at a 7% discount.

I'm not the only one who feels this way. Lehman Brothers issued a report on July 13 predicting the share price would hit $610 in the next year. The report based this, in part, on overly optimistic expectations for earnings for the second quarter, but the prediction did factor in the higher operating expenses that helped cause Google to miss its earnings forecast. In other words, this latest report from Google shouldn't have been the shock it was given that analysts knew some of the costs of growth would come home to roost in the short term.

I am always keeping an eye on what is happening on Capitol Hill. In 2002, the Farm Security and Rural Investment Act was passed to provide a boost to many different companies with interests in agriculture. This bill is due to expire this September, but analysts on the Hill predict that the renewed legislation will likely resemble the current farm bill.

This is good news for biofuel interests, fertilizer producers, and farm equipment providers (like Archer Daniels Midland Co. (NYSE: ADM)). The agriculture bill will also give a boost to manufacturers of rail car and rail equipment, whose products are needed to carry the agricultural products. For this reason, I think it might be a good time to pick up American Railcar Industries (NASDAQ: ARII).

American Railcar is easily considered one of the leading manufacturers of covered hopper and tank rail cars in the United States. The company also repairs and refurbishes rail cars and provides fleet management services for businesses using rail transportation. In addition to carrying grains and dry foods in its covered hopper rail cars, the tank rail cars transport the liquid products such as vegetable oil, corn syrup, and ethanol.

The 2007 Farm Bill is likely to bring big gains in particular to agriculture-based renewable fuels, like bioethanol -- which in turn will bring gains to the carriers of such commodities. Further, American Railcar is relatively undervalued versus its competitors. The P/E is 16 compared to the industry average of 27.3. In short, I like this company now -- and into the future.

Type of stock: A cyclical stock in the industrial materials sector, ARII makes and repairs rail cars.

Price target: I think that the upcoming farm legislation will likely help push this stock back to its 52-week high of
$41. Currently, ARII is hovering at $30.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

Flamel Technologies SA (ADR) (NASDAQ:FLML) is in the business of making drugs that are already on the market work better. This company, based in France, creates biotechnology. Its two products in use right now are Medusa and Micropump -- both are controlled release mechanisms, allowing patients to take a drug less times a day, and without as many side effects.

Flamel makes deals with other big pharmaceutical companies to team with its technology, receiving a royalty in exchange. For a recent and exciting example, Flamel recently struck a deal with GlaxoSmithKline plc (ADR) (NYSE:GSK) to create a controlled-release version of GlaxoSmithKline's heart-helper, the beta-blocker Coreg. The new product is called Coreg CR. Users only need to take one dose a day, which is going to draw consumers like flies to the product.

Detractors of Flamel point to the fact that while Coreg is wildly successful right now, with roughly $1.3 billion in sales in 2006, it will lose its patent protection this year. But other analysts point to this deal as establishing Flamel's strong position in the field, prompting other Big Pharma firms to take it seriously as well. Also, its technology works well, so people may not switch to the generic version of Coreg as quickly.

There is a problem inherent in the general Flamel business model, however. While the company is clearly strong in technology development, it relies on partners to get that tech into the marketplace. It simply isn't a big enough company to do it on its own. But I love what it's creating, and teaming with heavy-hitters like GlaxoSmithKline points to its ascendancy in the field.

Additionally, there are great products in the Flamel pipeline; among others, it has an insulin product in Phase II clinical trials called Basulin that awaits approval by Food and Drug Administration. For me, if the product is novel and works, the big companies will come to Flamel as partners. As royalty income grows, operating margins have a chance to fall.

Type of stock: A small player in the biotech field who teams with Big Pharma to license its innovative products.

Price target: Currently trading at $29, I'd wait for Flamel to dips to the $25 level and then buy. This is one to
hold onto for a few years as I think it's going to continue to make strides as a smart new bio-technology.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

As you might have noticed, I have been focusing on Chinese companies over the past few days, seeking to highlight some sectors where the massive influx of tourism and business and money into China is having a positive effect.

What is more natural in a booming economy than advertising? As people's spending power increases, so too does the need for companies to market products for them to buy. And let's not forget: 2008 Olympics are being hosted in Beijing. This is going to bring a boost to the already growing arena of new media advertising.

Enter Focus Media Holding Limited (ADR) (NASDAQ:FMCN), China's largest publicly-traded advertising firm. This company specializes in "out-of-home advertising" -- in other words, it uses in-store, commercial location, outside light emitting diode (LED), and mobile handset networks to broadcast advertisements. In 2003, Focus Media went from being a traditional ad agency to focusing on the out-of-home market, and it was smart to jump into the game that early. After many acquisitions, it staked out the market terrain and are now the leader in the outdoor ad market, directly operating in 50 cities and indirectly in 36 more cities. It's flying along. Net income for 4th quarter 2006 was $30.1 million compared to the previous year's $9.4 million, and sales tripled to $68.3 million. This market is particularly important in China, where ads can capture bored people in long lines!

It seems like yesterday that CMGI Inc. (NASDAQ:CMGI) was one of the hottest stocks to own. These were the Internet days -- now seven years ago. The stock prices of companies that were internet -based went to the moon and "incubator" companies that invested in internet companies went even farther into the galaxy. CMGI was one of those stocks. The good news is that CMGI stayed alive and looks like it may finally be ready for a comeback.

CMGI consists of two divisions. One is ModusLink which, according to the company's website, "provides industry-leading global supply chain management services and solutions that help businesses market, sell and distribute their products around the world." CMGI's other business, @Ventures, founded in 1995, focuses on identifying, financing and fostering new companies -- especially those engaged in developing cutting-edge technologies.

CMGI announced this week that it invested in an alternative energy company, Earthanol, Inc., which builds and operates waste-to-ethanol production plants. Earthanol's website explains that the "most logical feedstocks to turn to (to produce ethanol) are the millions of tons per year of waste residuals from agricultural, industrial, and urban activities. Earthanol believes that the conversion of these feedstocks through acid or enzymatic hydrolysis and thermal conversion/syngas catalysis is the next big wave in renewable fuels development."

Although @Ventures' total investment is only $2 million, the investment did catch the eye of Wall Street last Friday. The investment consortium was one area of interest to all who saw this press release. The team of investors also includes Nth Power, Sail Venture Partners, and Calvert Funds. The total investment is approximately $7 million.

More importantly, this is not the first investment in clean energies. In February, CMGI invested in "H2Oil," a Utah-based cleantech company that specializes in the "reclamation of valuable hydrocarbons and fresh water from oil and gas exploration and production processes." To me, this is an even more significant venture. I believe that the future, in the near term, for clean technologies and alternative energy will be finding ways to assist traditional fossil fuel production in a way that is cleaner and safer for the environment -- until the day comes when we rely only on renewable fuels from the sun and wind and our agricultural production. CMGI has also invested in solar. Last year, the company invested in Advent Solar, a solar operation that develops photovoltaic technology to convert sunlight into electricity. The company's solar cells are focused on cheaper technology to achieve the same effective result as the more expensive competitors.

Type of Company: A well-managed and tenacious publicly-traded company that has a portfolio of investments in start-up technologies (originally internet-focused, and now cleantech, alternative energy and diversified technologies) and another division which works to help businesses sell, market and deliver their products and services throughout the entire order-to-supply-to-delivery process.

Stock Price Target: Don't be surprised if this $1.70 stock more than doubles and hits $4 in the very near future. I have seen many companies enjoy a second life and this management team is smart and committed. The former CEO, David S. Wetherell, brought in a top notch team to rebuild the business and hit profitability and receive shareholder return by making the right investments at the right time.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

Overhill Farms, Inc. (AMEX:OFI) is a smartly-positioned California company that manufactures frozen foods and packaged frozen meals. Its products include frozen soups, sauces, and entrees for retail sale under the Chicago Brothers label. The company also provides private label and co-packing agreements with such retailers as Costco, Sam's Club, and Safeway; as well as Jenny Craig, the weight loss company. Overhill Farms also serves several domestic airlines. The company has two manufacturing facilities in Vernon, California.

Overhill Farms reported record net income of $1.6 million for the first quarter ended December 31, 2006, on revenues for the quarter of $40.5 million. This is a 156% increase in net income from the $607,000 for the first quarter of last year, and a 2.4% increase in net revenues from the $39.6 million reported a year earlier. What I really like here is year-over-year quarterly earnings growth of 156%.

Also, Lehman Brothers is the biggest institutional shareholder with Wellington a close second. Even CALPERS, California's huge state pension fund, has a piece. Why would they invest in such a small business?

The answer is easy and goes beyond being the supplier of meals for Jenny Craig. Overhill Farms has a broad array of clients and will be able to survive food and transportation inflationary pressures because of the high quality nature of its food and its varied customer base, which includes high-end supermarkets, the airlines, and the ever growing ranks of American dieters. Quality is the key here along with an image of organic-like quality and freshness in frozen food.

James Rudis, Chairman and CEO of Overhill Farms, believes the company will have a revenue run rate of $200 million by the third quarter of this year. Overhill Farms recently signed a three-year agreement to produce meals for a major national food brand which is expected to generate first year sales of approximately The company is also scheduled to being production, late in the second quarter, of 24 new private label food items being introduced by a major West Coast grocery chain.

Type of Company: A small cap gem that has the chance to be acquired or grow rapidly with accounts ranging from high end restaurants, to discount grocers and the airlines.

Stock Target: Overhill's stock price has room to keep growing from its already lofty $5.80 to at least $10 by the end of 2007.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

On January 31, I was on PBS's Nightly Business Report and highly recommended the stock of Big Lots, Inc. (NYSE:BIG.) On that date, the stock was $25.93 (the stock is hovering around $30 today). I was very bullish because of the surprise upside I predicted would come in the year-end earnings announcement.

Until the end of 2005, Big Lots' earnings often disappointed and had been a painful position to hold for many a hedge fund and long investor that sat through the bankruptcy of KB Toys (it spun off the business in 2000 but the ramifications of the bankruptcy still hurt its bottom line) and numerous disappointing quarters. In fact, Big Lots is an example of a company that has truly turned itself around. By the end of 2005, the company had shuttered more than 600 of its stores in order to execute a retail turn-around fairy tale. According to the company's press release, the company's net income for the year (ended February 3) was $124 million versus a net loss of the previous year of $10 million. Comparable same store sales increased 4.6%.

Why am I writing today? Because I noticed that KeyBanc's Jeffrey Stein, who covers the company, raised his rating on the stock to a buy from hold last week. Stein's research report excerpts (as picked up in MarketWatch) note that the company's "transformation has been dramatic over the past 12 months, far surpassing expectations....Despite operating in a highly populated and competitive space, we believe that Big Lots has been able to distinguish itself by improving costs and providing a more compelling value proposition to the consumer."

On January 31 I wrote about a small cap company that had attracted my attention on the recommendation of some really smart biotech specialists. The stock closed on January 30 at $13.70 and is now $18.30.

I still maintain that, if you're risk-averse, stay away from Medivation, Inc. (AMEX:MDV) -- it isn't for you. The company has yet to bring in any revenues, and it will be operating at a loss for at least another couple of years. Given all of this, you might be surprised to hear that the stock price rose more than 400% in 2006, and is still trading well above its 52-week low of $2.75. Lately, there have been some new developments with Medivation. On March 8, the company announced that it will be moving from the American Stock Exchange to the NASDAQ on March 20. In the press release, David Hung, M.D., President and Chief Executive Officer of Medivation states, "We believe this is a significant step in Medivation's growth that reflects our financial and clinical accomplishments to date."

Given NASDAQ's tough standards, I can agree that Medivation seems to have some nice upward momentum. Dr. Hung is also doing the rounds. He will be speaking on March 12 at the Cowen & Company Annual Healthcare Conference and has been invited to a number of important conferences in the past weeks. Investors have been buying this company because of Dimebon, which recently finished very promising Phase II testing for
Alzheimer's. Patients taking Dimebon had improved memory and cognitive abilities, and if the drug continues to do well in its testing, it could become one of the most successful new drugs in a very long time.

Right now the other Alzheimer's drugs can only slow down deterioration; a drug that reverses these symptoms would be very popular, especially with a Baby Boom generation getting closer to its dotage. According to the company's press release, the results of Phase II trials will be presented for the first time on March 18 at a scientific meeting at the 8th International Conference on Alzheimer's and Parkinson's Diseases in Salzburg, Austria. Shareholders, and more importantly those struggling with the devastations of the disease (and we all know someone who is suffering), will be awaiting the results.

MDV is planning a global Phase III round of testing in 2008, and it hopes to have the drug up for marketing approval by 2010. Some investors are frustrated with this rather long schedule and the stock lost some value after MDV announced its plans. Some people feel that Dr. Hung over-hypes his products, while others think he is a visionary scientist who could revolutionize the treatment of Alzheimer's.

This is still a very risky stock and you are going to have to hold it for a while before MDV starts making money (Medivation's other main drug, which treats prostate cancer, is also in early stages of testing). But the upside is
tremendous if things go well, and if you have some money to risk, this might be an interesting bet. I have taken the bet but I have been careful to only buy a relatively small amount of the stock for my own portfolio This is more like going to Las Vegas because of what is known as the binary nature of biotechs: It's all about a pass or fail grade through the testing phases.

Type of stock: A very risky small-cap pharmaceutical company with a potential blockbuster Alzheimer's drug.

Price target: At $18.30, you may have already made your money if you bought when I first recommended the stock at $13.70. If so, no harm in taking your gains. If you haven't been in yet, there is still real upside left, but the risks remain. If the drug works, then this stock is going to the moon -- upwards of $50. If not, you are looking at zero. Tread carefully.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

When Vonage Holdings Corp. (NYSE:VG) was started in 2000, it seemed an exciting new company: a way to use the internet to supply cheaper phone service with all kinds of neat possibilities, like linking your phone to your email account. The technology was rough in the beginning, with echoes and delays, but people felt there was real potential here. Vonage ultimately went public in May 2006 at a price of $17. By then the company had moved from a new, niche technology to a mainstream company.

Yet, the stock dropped immediately after the IPO and, as of this writing, hasn't even come close to recovering. The fact is, this stock is done and it wouldn't surprise me if Vonage went out of business.

Many Vonage investors are probably scratching their heads and wondering what happened. Demand is only increasing for internet phone, and many people think it's the way all phone calls will be made in the future. The problem is, by the time it went public, Vonage had far too much competition from other internet telephone services. Traditional phone companies like Verizon offer their own plans, as do cable companies like Time Warner. There are also many other smaller internet phone companies offering their own inexpensive plans, often as low as $19.95 per month.

It's not that Vonage has necessarily done anything wrong; while it's still operating at a loss, its revenues have been increasing at more than 10% every single quarter since the last quarter of 2004. The problem is that it's operating in a ruthlessly competitive market and it doesn't have the muscle to compete with companies like Verizon Communications (NYSE:VZ) and Time Warner Inc. (NYSE:TWX), especially since those companies already have reliable customers for their other services and can offer them deals for bundled services that are much more appealing than what Vonage has to offer.

To make matters worse, Vonage is now being sued by Verizon for allegedly infringing on Verizon's voiceover internet (VOIP) protocols! While I respect what this company tried to achieve, I'm sorry to say there's just no hope for this stock.

Type of stock: An exciting new company that blended telecom and the internet to offer a new type of phone service.

Price target: None. If you don't own this stock now, don't buy it. You might see it climb a dollar or two (it's currently just above $5), but you'd be better off taking the loss and trying to make up for it elsewhere. It is a possible acquisition candidate -- another company could certainly make use of Vonage's subscriber base -- but any acquisition price isn't likely to be much higher than the stock is now.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

Anyone who has been awake over the past couple weeks witnessed JetBlue Airways Corp. (NASDAQ:JBLU) suffer one of the worst PR fiascoes in recent memory. The airline tried to keep its planes flying despite terrible storms, leading to passengers spending hours on the tarmac, and then days in the terminals when JetBlue then had to cancel many of its flights. CEO David Neeleman was quick to apologize and promise compensation, but the stock took quite a tumble anyway.

But JetBlue, known for having smart, responsible management (several top executives declined their bonuses in 2005 when results were bad), learned its lesson quickly. On Monday it canceled a number of flights due to another major storm -- simply to make sure it had all its planes in place to resume business as soon as possible. This enabled JetBlue to take some short, fixed losses to avoid the extensive costs and bad press from the previous storm.

It also offered a new "Passenger Bill of Rights," which offers specific monetary compensation to customers who get stuck because of "controllable" delays. Neeleman also promised to update the company's flight-tracking and planning systems, which haven't kept up with the company's rapid growth.

So far, so good. Now we'll see if customers start coming back. Even if they do, JetBlue has to compete in a ruthless industry with high fixed costs and unstable fuel costs. Other airlines are dropping their prices to compete with JetBlue's. It can't keep adding routes at the same rapid pace we've seen over the past few years, and so will need to find new ways to grow profits.

So much of business is about inventory management; in the case of airlines, it's about making sure your planes are there when they're supposed to be. JetBlue's model is based on very quick turnarounds to keep costs down, which means they cut things very close and are probably more susceptible to delays than other companies. This is compounded by the complexity of managing a company that has grown extremely rapidly. Not surprisingly, JetBlue's track record with delays is only moderate. Other airlines do better.

If JetBlue can learn to improve its inventory management and still manage to keep its low unit costs, this stock could rebound, but I'm not sure it has a huge upside anyway given the competition. It's too bad that recent trouble came just as JetBlue was coming off an excellent 2006 that saw operating income grow nearly 300% after a very rough 2005. Nevertheless, I think this is a company that can get itself back on track.

Type of stock: A low-fare airline that is coming off a disastrous month. This may be an opportunity stock, in fact.

Price target: This stock was rising steadily from a low of about $9 in October, and it got up above $17 in January. I don't see it climbing above $15 again for at least a year, so I wouldn't buy unless you see a dip below $10. Even then, I'd be leery; I wrote in June that I thought it could drop as low as $5 (it did dip, but only to $9), and I still think this is a company with a tough row to hoe.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

Back in June of last year, I wrote a blog pick recommending Hovnanian Enterprises, Inc. (NYSE:HOV) despite all the fears about rising interest rates, falling real estate values, and the general sense that the bubble had burst. At the time, I wrote that HOV was a more savvy, more diversified homebuilder than most of its competition and that a downswing was a good time to get a stock at a discount.

If you followed my advice then and bought around $30, you would have seen the stock drop to around $25 over the summer, and then climb its way back above $35 and toward $40. It's now around $35.

I still think HOV is a very smart company and I like the fact that it has a large number of orders in the pipeline and land options that decrease its risk and capital costs. It has been acquiring lots of companies to give it better economies of scale. My guess is it won't be hit as hard by real estate woes as its competitors will be.

But I wouldn't get into this stock right now. Recent real estate reports have looked quite glum, with new construction down 14% in January to the lowest levels since August 1997. Existing home sales have dropped in 40 states. Most urban markets are having a tough time. While we may not see any catastrophic collapse in real estate, the market is clearly going to take a while to come out of its funk, and with interest rates remaining high because of a strong economy, it doesn't look like we'll see any growth driven by falling mortgage costs.

But keep your eye on this one; it's a great company if you can grab it at a discount.

Type of stock: A diversified and well-managed homebuilder that is being brought down by industry-wide doldrums.

Price target: I still think this is a good buy around $30, and certainly if it gets into the $20s, as long as you can be patient and hold the company until the sector rebounds. It might be a year or two, but it will grow again.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

I've long admired investor and billionaire Sam Zell, and when he likes a company like American Commercial Lines Inc. (NASDAQ: ACLI), I'm tempted to follow him. This company, which manufactures and operates barges, saw its price drop more than 8% when it announced its fourth-quarter results, but within a couple days ACLI had made back most of the difference, in large part because the results were good even if they didn't meet investor expectations.

According to the company's press release, profits were nearly four times as high as the fourth quarter of 2005, and revenues were up 18%. Results for the year were even better, with 2006 showing revenues up 32% and net income up 681% over 2005. So if the price tumbled because the results for the fourth quarter weren't exactly what was expected, it's no surprise that investors saw the dip as nothing more than a chance to get the stock at a discount, rather than as anything to worry about.

I think these strong results are only going to continue for the next year or two; ACLI has been able to raise rates on many of its customers, and its production division, Jeffboat, has contracts that will take it through 2008. Of course, if oil keeps going up in price, this could dampen profits. The business is known for being cyclical and highly competitive. But, luckily, barge shipping is much less reliant on fuel than other types of shipping, and ACLI's management has shown itself more than capable of maximizing profitability. But for now, I think this looks like yet another winner for the brilliant Sam Zell.

Type of stock: A barge manufacturer and operator with terrific profits and a bright outlook for the next year or
two.

Price target: As of February 20, a split will take place, so I'd wait until then and buy soon after the split takes
place. This stock doubled over the last year, and I think it' s going to go up as investors who'd been hesitating at $70 take advantage of the lowered stock price. I project that the stock could reach $80 by the end of 2007.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

The recent departure of The Home Depot, Inc. (NYSE:HD) CEO Robert Nardelli has to be one of the more dramatic resignations in recent memory. Then, in the beginning of February, two more executives, a high-level human resources exec and the general counsel, both of whom were close to Nardelli, announced they, too, would be leaving the company. These changes could be good for HD and might encourage investors to jump in, but I'd still stay away from this company for now.

Last May, when HD was at $37.70, I predicted the stock would drop, and soon after the price started dipping, eventually reaching as low as $32.75 after trading near $45 in April. My objections to HD were its terrible customer service -- I can never find anyone to help me when I shop there, and everyone I know has had the same problem -- and the fact that the slowing housing market would mean lesser demand for HD's wares. The third quarter was indeed a tough one for The Home Depot, with profits dropping 3%. The fourth quarter results aren't in yet, but the stock has regained some ground since last autumn and is trading just above $40.

I don't think Home Depot is going to get much higher, and a poor fourth quarter could send it down below $40. Mortgage rates jumped again this year, and they are now at their highest since October; with the economy still growing steadily, it doesn't seem likely we'll see any dip in rates for a little while. The housing bubble may pick up again, but high mortgage rates will dampen growth, and I don't think the housing market will grow in any serious way that will really help Home Depot. If you really must buy a home-retailer, I'd go with Lowe's Companies, Inc. (NYSE:LOW). It's simply a better run store, and while it's smaller, I think it's going to see superior growth to The Home Depot. Lowe's also had a rough third quarter, but its stock is on the rise. It split in July 2006, and then had a rough August, but its stock has gained about 33% compared to HD's 25% since September.

Type of stock: The largest home repair retailer in the country, which has just undergone major personnel shifts, but will continue to struggle with a soft housing market.

Price Target: During 2007, I don't think HD is going to grow much above $40 unless the housing market takes off. If you see mortgage rates drop or see the real estate market recovering, you might want to take a chance on this, but even then I think Lowe's is the better bet.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.