The Market Direction…

Like everyone else, I too have enjoyed the stock market rally since the March-2009 lows. However, I insist upon cautiously pacing myself at the punchbowl or keg as personal experiences and observations of others’ at college fraternity parties have taught me all too well the pitfalls of overconsumption and its impact upon one’s judgment.

Despite it being almost 28 years since my animal house daze as a member of Tau Kappa Epsilon (TKE), the instincts towards fraternal love and stewardship remain with me and are partially why I write Hillbent.com’s Market Direction Blog.

Those already familiar with my work and approach to the markets know that I prefer to use both fundamental and technical analysis in my investment decision making process, but give more weight to the latter for the purposes of market timing and risk management.

Given the fact that this rally is approaching End-of-the-World or Burning Man dimensions, I decided to step back, check out the lay of the land, and share my observations with anyone (and to dispel any notions of chauvinism or sexism on my part, "anyone" includes both males and females) who may be in danger of wearing beer goggles.

The following is a list of stocks you might want to avoid, lest you find yourself having to chew off an arm or leg just to save your portfolio:

Intraday analysis as of  Dec-14-2009

On the other hand, for those of you who are still on the hunt for some Wall Street love and wanting to stay clear of momentum traps, then here are some names to consider for relatively attractive upside potential:

Intraday analysis as of  Dec-14-2009

Needless to say, I strongly encourage readers to perform their own due diligence before determining if any of the companies on these lists are suitable for long and/or short investments.

If you have any positive or negative comments on any of these stocks, please feel free to share them in a constructive manner for the benefit of other readers.

Meanwhile, I hope that I have saved you both time and remorseful afterthoughts of making a bad decision while under the influences of another one of Wall Street’s euphoric orgies.

*Disclosures: Hillbent does not provide individualized market advice. The information we publish regards companies in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification.

Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements.

Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

Adam Johnson, reporter analyst with Bloomberg Markets Desk, shares a summary of his conversation with Laszlo Birinyi and provides 4 common stock investment ideas that correlate highly to natural gas prices and are simple alternatives to trading natural gas futures or paying a high premium price associated with the natural gas exchange traded fund, UNG.

This video is just under two minutes in length and hopefully, it will point investors who are bullish on natural gas in the right direction. Of course, this list is not a specific recommendation or endorsement of the names mentioned in this report and readers are strongly encouraged to do their own due diligence, i.e. homework.
 

Source: Sling.com

Related Securities: EOG, XTO, PXD, RRC

*Disclosures: Hillbent does not provide individualized market advice. The information we publish regards companies in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification.

Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements.

Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

>>>Market Values>>> Advanced Auto Parts (AAP) broke above resistance levels to attain a new 52 week high in Tuesday’s trading session. As Hillbent.com has assigned the stock an overall fundamental rating of "B", with "A" being the strongest on a scale of "A" to "E", my curiosity led me to take a look underneath its hood and kick the tires.

Here is what I found:

1. As a member of the auto parts industry group, AAP is not only a good stock, but it also resides in a pretty nice neighborhood. Its industry group ranks in the 83rd percentile in terms of relative strength performance year-to-date and remains in strong primary, intermediate, and short-term uptrends.

2. Fundamentally, the auto parts industry and AAP both face a tough economic environment and the prospect of declining sales. AAP faces some uphill challenges since @ 75% of its business is derived from "do-it-yourself" customers. However, with tighter credit conditions and thrifty consumers, both by-products of the current economic recession, replacement of older auto parts and increased maintenance are still preferred to new vehicles.

3. Under such conditions, one should not be surprised to see AAP still firing on all cylinders. For the past 3 quarters, it has averaged 20% earnings growth and its 3 year earnings growth rate averages @ 10%. Management is effective and delivers @ 25% return on equity and already intends to close down some of its less profitable outlets.  It is one of few companies out there still capable of delivering top line growth, in addtion to the bottom line.

4. Technically, AAP remains in a bullish trend across it daily, weekly, and monthly time-frames, with the caveat that the stock is approaching overbought levels (see chart below). Institutions own @ 98% and have been increasing their purchases for the past 8 quarters. Given the run-up in the stock, a pull-back or consolidation could be imminent.

5. From a valuation perspective, the stock trades at a discount to its industry average with a PE @ 15.8 vs. @ 24.3 for the industry mean. Its PEG ratio is @ 1.28 and also provides a nice GARP (growth at a reasonable price) opportunity.

In summary, AAP offers good value for investors shopping the market for a growth vehicle to get them thru this recession. Going forward, the stock might be in for a bumpy ride as the industry deals with potentially softer sales, but pullbacks or market corrections should be considered buying opportunities. Otherwise, an out-of- the-money bull put credit spread @ 40 strike price range at least 3-4 months out seems like a safe strategy.

*Disclosures: Hillbent does not provide individualized market advice. The information we publish regards companies in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification.

Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements.

Regarding guest commentaries and contributing authors, note that Hillbent.com does not officially endorse the commentaries of any contributors and the sole purpose of providing such content of for the convenience of our readers and to further assist their research efforts.

Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

>>>Market Values>>> Bloomberg reporter, Eric Martin, comments on energy stocks and their tendency to outperform coming out of a recession as well as their prospects in developed and emerging markets. The video interview is @ 3 minutes.

Source: Sling.com

*Disclosures: Hillbent does not provide individualized market advice. The information we publish regards companies in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification.

Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements.

Regarding guest commentaries and contributing authors, note that Hillbent.com does not officially endorse the commentaries of any contributors and the sole purpose of providing such content of for the convenience of our readers and to further assist their research efforts.

Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

>>>Market Values>>> Research analyst, Alexia Howard of Sanford Bernstein, discusses a portolio feast of food stocks with Bloomberg’s Pim Fox. This is probably not a bad idea, given how far commodity prices have contracted.

Source: Sling.com and Bloomberg.com

*Disclosures: Hillbent does not provide individualized market advice. The information we publish regards companies in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification.

Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements.

Regarding guest commentaries and contributing authors, note that Hillbent.com does not officially endorse the commentaries of any contributors and the sole purpose of providing such content of for the convenience of our readers and to further assist their research efforts.

Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.