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Aeropostale (ARO) and EZCorp (EZPW): Quants' New 'Best Buys'

"Everybody on Wall Street is looking for an edge. Our Quadrix® rating system is our edge, and we're always looking for ways to enhance its effectiveness," says quantitative analyst Richard Moroney.

In his Upside newsletter, he explain, "Among the best enhancements we've discovered focuses on the volatility of Overall Quadrix scores. Stocks with a history of steady Overall scores tend to have steady scores going forward. Below we look at two such stocks with strong and stable Quadrix scores."

Continue reading Aeropostale (ARO) and EZCorp (EZPW): Quants' New 'Best Buys'

Gaming gains at GameStop (GME)

"Personally, I haven't played a video game since college; but I know the video game market is red hot," says Alex Green; here, the investment director for The Oxford Club takes a look at GameStop (NYSE: GME).

"With more than 5,100 stores throughout the United States and 15 other countries, GameStop is the world's largest video game retailer.

"Its stores include GameStop, EB Games and Electronics Boutique. It also publishes Game Informer, the industry's largest circulation video game magazine with more than 2.2 million paid subscribers.

Continue reading Gaming gains at GameStop (GME)

Costco: 'Best of breed' discount retailer

"Finding its way onto the short-term bullish list is discount retailer Costco Wholesale (NASDAQ: COST), our 'focus stock of the week'," says Chris Johnson in his contrarian advisor service, Insightful Investor.

"The warehouse giant is currently seeing a positive mix of technical strength along with growing pessimism that makes it a potential outperformer. Costco is one company that has maintained a level of demand not seen throughout the bulk of the retailing sector.

"COST's core business, which caters to small businesses and households willing to buy in bulk, has maintained strength despite the slowing economy. In fact, the company's latest earnings report, released March 5, beat analyst expectations by 23%.

"Reflective of its fundamental strength, COST's stock price has remained a relative strength leader by trading above its 50-day moving average. The equity has outperformed not only most of its peers in the retail group, but the overall market as well.

Continue reading Costco: 'Best of breed' discount retailer

Home Depot: A value play

Host of BizRadio and editor of TheMoneyMan Newsletter, Daniel Frishberg sees long-term value in Home Depot (NYSE: HD), noting that the stock is now at the same price that it was in 1998.

He explains, "There were several management issues which have been resolved and a slumping housing market which we believe is stabilizing and will recover the rest of this year and into next year."

He points out that back in 1998, Home Depot's sales per share were $13.65. Now he notes, "Sales are are projected for all of 2007 at $48 per share."

Likewise, Frishberg notes that in 1998, earnings were $.71 per share. Today, he notes, they are projected to be $2.85 per share for 2007. Meanwhile, he adds that their shares outstanding have decreased by over 15%.

Likewise, in 1998, the stock's P/E ratio was over 40. Now, he notes, it is around 14. And, he points out, return on equity averages in the mid to high teens. The advisor says, "Here are the three most compelling reasons we like this stock:

1) Based on its historic cash flow multiple, this company could trade at $60 per share

2) Private equity continues to take out large companies they believe are a value for big premiums and Home Depot has been rumored in these buyouts.

3) It owns most of the real estate its buildings sit on, which is probably undervalued by investors. Sears went through this as well a few years ago and the stock ran up tremendously once investors realized the value of all that real estate.

Frishberg emphasizes that this stock is not being recommended for trading gains. Rather, he says, "We want to be more patient with this stock. The big gains may be back-end loaded, meaning we believe the gains will be very large but may not come for several months."

For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free daily website, TheStockAdvisors.com.

Symbol Lookup
IndexesChangePrice
DJIA-74.9212,454.83
NASDAQ-1.852,837.53
S&P 500-2.861,317.82

Last updated: May 29, 2012: 01:13 AM

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