LiveRocket Week 8 Performance - Up 1.24%

Overall, nice support considering the market had 3 down days in a row.
From a timing point of view, we are starting the next earnings reporting cycle. With about 5 weeks left in the quarter, this is when companies will start giving some guidance. And when hedge funds and mutual funds make their moves. TRID and UCTT are examples of the impact on small cap stocks when a large company makes a sizeable investment.

Short squeezes look likely for the following companies
HOLX – 15% short
NUAN – 16% short

DIGE has 11% short but the recent pullback is not likely to lead to a short squeeze. Stock will race up if it goes back to $51, because then shorts are squeezed.
DO at 8% short is in the same bucket.
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AMX – Down 2%, but staying close to its recent high.

ATW – Interesting 4% jump while the market went down.

CLB – Flat. Not liking the weakness after the great earnings. It’s not as if they had a run-up pre-earnings. One thing that interests me: it started the week down and stayed up for the rest of the week

CSH – Down 1%. Nice $0.035 per share dividend

CTSH – Flat. Watch for an announcement of a split and then we’ll get ready for a sale.

DIGE – Trading sideways. I think that means consolidation. Interesting developments among the competition. First, Roche has fallen by the wayside with their rival test. Next, Merck has encountered problems with proposing pre-emptive vaccination for HPV. They actually were roundly booed in Texas. The Merck approach matters because it would have bypassed the entire testing represented by DIGE.

DO – Up 1%. After starting the week down, DO rose an impressive 4% during a down week. I think the problem here is that DO is outside the M&A universe. It isn’t going to acquire or be acquired, so it won’t enjoy the premium. At best, we’ll see a P/E comparable to lower end of peers.

ESV – Up 3%. Released earnings and what a phenomenal release.
Earnings up 67% (and beat expectations by 6%).
Sales up 51%
Utilization has hit 96% (2 rigs are out of production for retro-fitting) and dayrates are up 36%
Analysts keep focusing on the Gulf of Mexico slowdown. Two things: ESV has reduced its GOM rigs, moving them to higher paying sites. Second, natural gas is set to surge, driving GOM demand. Notice these tiny moves lately - looks like consolidation before rising again.

HOLX – Up 3.5%. Major breakout.

IMA – Flat. They re-scheduled earnings to this coming Monday. I wonder why.

INFY – Down 3%. Pulling back from recent high as well as a sudden drop in the SENSEX.

MDR – Flat. Won a $125M contract to build part of a terminal in Indonesia. Strange pullbacks recently, unless someone is trying to lock in gains after a 15% rise in the last 6 weeks. The stock keeps knocking on the $52 ceiling and getting pushed back. Maybe this quarter will allow them to break out. After the fabulous returns by competitors like Schlumberger, I am surprised at the disregard.

NUAN – Up 3.5% to $15. That was fast. NUAN is buying BeVocal, a small company that handles Cingular 411 traffic, among other things. NUAN is vertically integrating, and that is a big step as they go against Microsoft and IBM. The purchase is non-dilutive.

PCP – Up 4%. I smell stock split.

TIE – Up 9%. At last, we see some recognition of TIE’s returns.

Other noteworthy stocks
GRP – I’ve written about them. They regularly oscillate between $35 and $45, depending on where natural gas is. They are at $45 now, following great earnings.

KSU – We were in KSU and then out because of my concern regarding a slowdown in auto parts shipments. Indeed, that par of the business is down 10%. But it was more than offset by raw material shipments like coal. I think 2007 will be the year the Mexican connection plays a role. I could see some pullback in the short term, and they are getting closer to being fairly valued, but that does not take into account the disruptive aspect of a Mexican challenge to LA/Long Beach and KSU’s dominant role.

UCTT – Wow. Up 16% Friday due to a JP Morgan upgrade and 5X normal volume. Someone big just made a position. Wait for it to retreat again and get back in.

TRID – Up 6% Friday. What’s interesting is that from a technical standpoint, they are up but not signaling overbought (RSI<50).>

ILMN – I thought the recent moves have been closer to a dead cat bounce, and I may have been right. I’ll watch and see if they move below $35.

JBLU – These guys can’t catch a break. The recent cancellations clobbered them.

JOYG – Up 20%+ in 2 weeks ($10). Something is going on – buyout maybe. Worth buying some calls.

NTRI – They clobbered expectations and then sank just as fast as they rose. They are simply out of favor right now.

STX – They just hit $28. I bought a hard disc video recorder recently and I love it. Although PC sales may be slowing, HDD camcorders will make up the difference. My only concern is price pressure from flash memory, which is crashing hard.

ZOLT – What a volatile stock – up 50% in 1 month. Demand for carbon fiber is huge (windmills, airplanes) and ZOLT is king of the mountain. It’s a product that is stronger than steel, lighter than steel, and it doesn’t rust. That being said, I think the real reason for the rise is a short squeeze – 25% of the shares are shorted.

MRVL – made a decisive move above $20. Sorry, but I don’t see much upside for a quarter or two.

CRDN – they were on my semifinal list, and I hesitated because I expected lower military spending. I was wrong. Up a healthy 10% since December.

TEVA – It’s just a matter of time for this company. They recently moved up ~10%, and I expect some pullback. This is a longterm winner.

WFMI – They bought Wild Oats and the market liked it. Frankly, I think it was a waste of money. How does WFMI benefit?

* Expanded store footprint – I don’t think WFMI has an expansion issue. More to the point, most Wild Oat stores are too small to be instant WFMI stores. Some, yes. Most no. On the other hand, there is minimal geographical overlap.

* Remove the competition. That assumes that the shoppers are interchangeable (Albertsons vs Safeway, for example). They aren’t. Wild Oats is low end, WFMI is middle and high end. There is some upside in forcing the organic shopper to buy from WFMI. Oats does $1B annually = 15% of WFMI. But there are headaches as well.