April 07: Week 3 - Mathstar, Family Truckster, HLIT, BBI vs. NFLX, Michael Jackson's Pepsi Ad, BTU, Sirius, MVIS, MCD, GOOG


Monday - April 16th, 2007

Harmonic Inc. swims with the sharks
Harmonic Inc. (HLIT) is close to a new 52-week high today. In the last 6 months the stock price has jumped over 46% and today shares are trading around $11. There has been a bunch of buzz in blogger land on this stock and now that Harmonic is looking to be making a small profit (Net Income of $1M in 2006) its game on. Harmonic designs, manufactures and sells products that enable network operators to deliver broadcast and on-demand video services that include digital video, video-on-demand (VOD) and high definition television (HDTV) as well as high-speed Internet access and telephony. Sounds great right?
They sell their products to some big names including Charter Communications, Comcast, EchoStar, Time Warner Cable, Cablevision Systems, and Acatel to name a few. Net sales to their ten largest customers in 2006, 2005 and 2004 accounted for approximately 50%, 54% and 55% of net sales. Furthermore, Comcast (CMCSA) represented 12% of their sales last year alone.
But before you jump on the band wagon you should now Harmonic’s competitors in the fiber optics systems business include corporations such as Motorola, Cisco Systems and C-COR. In the digital video systems business they compete broadly with vertically integrated system suppliers including Motorola, Cisco Systems, Tandberg Television and Thomson Multimedia. These guys are the remora fish swimming with the big sharks and at any minute if an industry standard gets accepted by a large hammerhead, it's game over for Harmonic. That of course is the glum but realistic outlook on HLIT.
They have an earnings call coming up on April 25th, and if these guys are a winner on the call, just imagine what the stock will do? This is a crazy stock but for all you day traders and gamblers out there, this could be your lucky or un-lucky horse you've searching for. There are a ton of options being played on this stock so use extreme caution. Make the wrong move and you'll be feeling like this dude.

Doomsday in May approaches, think Cocaine
Well it’s almost that time of year again fellow investors – sell in May and walk away. So what can you expect from the market in the coming months, and do the next six months mean trouble?
The StockMasters Position: Your long-term holdings you should leave alone, but your shorter-term ones you may want to move. Where you ask? Cocaine is making a comeback in a major way, and with law enforcement cracking down on the borders, you may be able to make a good return. But that will just land you in jail. Jokes aside – we’ll give you 3 places that your money could make a decent return in the next months, ranked from lowest risk to highest and highlight three stocks that we think are going to fall down the stairs like Michael Jackson after his hair caught fire in that Pepsi Ad. Who's Bad?

Make money with coal? Try Peabody Energy (BTU)
Gotta love the Toddster. America's energy demand is anticipated to grow over 45% in the next 20 years. What is the main fuel for all this electricity? Coal, it fuels about 40% of the world's electricity and over half of America's electricity (this amount continues to climb annually), which is more than all other sources combined. So who can you make money off of? The answer is Peabody Energy (BTU) - the world's largest public coal company, their products fuel approximately 10% of America's and 3% of the world's electricity. Peabody dominates the coal market both nationally and internationally despite being named after a genius dog.
Since their initial public offering on May 22, 2001, at $28 per share, or $7 per share on a split-adjusted basis following the March 2005 and February 2006 two-for-one stock split, shares hit a high of $75 in May of 2006. So why mention all of this?
Because since May of 2006 shares have fallen steadily (40%) to their current level of $47 despite growing earnings last year 60%. Todd Sullivan brings us the analysis and proves why coal is money in the bank. Read the Article at ValuePlays...

Tuesday - April 17h, 2007

Sirius (SIRI) hits a new 52-week low today, shares are now trading under $3. Haven't we heard enough about this stock already? Howard Stern, merging with XM, Satellite Radio is the future, Tom Lykis - blah, blah, blah. CEO Mel Karmazin has been on a wild ride with Sirius and despite the company's faults, Mel is on a mission to get the U.S. Senate to approve the Sirius-XM Merger. Today on capital hill Mel was driving home his selling points, which include:

- The combined company will offer consumers more choice at lower prices

- The key to getting more subscribers will not be to widen the price gap between free and what satellite radio charges. Instead, it will be to offer consumers a better value.

- The merger will allow them to lower prices. Consumers who want fewer channels than currently offered will be able to select one or more packages of channels for less than $12.95 per month

Can Mel make the merger happen, will Sirius finally become profitable and when will SIRI shares finally show some value? These are all questions investors are eager to know and with a new 52-week low today, the future is looking very uncertain. Will Sirius Hold $3.00?
Jon Ogg at 247WallSt. says "right now it is all about the merger as that is becoming a do or die scenario.  Both companies need the merger to succeed"...read his take. Just imagine what the share price could do if the merger goes through? Big bucks people, no whammies.

Microvision (MVIS) hits new 52-week high today
Microvision's shares have been gaining steady since last month and if they can land a potential big buyer for their PicoP technology, it's going even higher.

We told you about MVIS back in February when it was at $3.45 a share, today it's trading around $4.62. It's no question that their PicoP technology is downright amazing, but when is a buyer coming? Wouldn't it be nice to just have an impromptu meeting anywhere from your BlackBerry and not have to worry about using a projector? You bet it would. As much as we love the technology and the 34% gain since recommending the stock, it is a crap shoot. However you know that all the major cell phone and hand-held device players are talking to MVIS - so who's gonna buy first? They did announce on March 27th an agreement with an unnamed automotive partner, so what's coming next? Read our previous MVIS article....

Wednesday - April 18th, 2007

Mathstar Inc. to start selling the Wagon Queen Family Truckster to raise cash
Once again appearing like that annoying car salesman the minute you step onto the Toyota dealership, Mathstar Inc. (MATH) yet again pops up with a new 52-week low. We questioned Mathstar and what can they really offer investors in our in-depth look at their FPOA technology (that all seven of you read).
Until these guys can say anything positive, announce a huge contact or just say they can make or get some cash, the stock is going to stay near it's 52-week low of around $2.40 a share.
You get that feeling that if you were to step into the Mathstar corporate headquarters that the sales guys would come running at you talking up their FPOA chips like they are the greatest thing since the "Wagon Queen Family Truckster", that beaut' Eugene Levy sold the Griswolds back in the day. I wonder if they even use the line:
"You think you hate it now, but wait till you drive it"

Of course I'm sure Mathstar sales guys aren't that bad, and it's not their fault the stock price is falling, they just need something to sell. Maybe Mathstar could get some revenue going if they did start selling used cars, it could help? Just think of the lines they could use:
Now, I owe it to myself to tell you, Mr. Griswold, that if you are thinking of taking the tribe cross country, this is your automobile.
Sure thing guys, and I'll take 100 shares of MATH to go.

Today Todd S. talks up Sears Holdings (SHLD) and show us why - In Eddie We Trust and Sears Holdings proves, patience pays. After getting hammered along with the rest of the stock universe on Feb. 27, SHLD, like the S&P has steadily recovered. Read Todd's take...

Yahoo! blows it, so will Google?
Piper Jaffray comments on Google (GOOG) in light on Yahoo's Q1 results saying that due to the opinions of SEMs and the positive results coming from Comscore, they believed that Yahoo's Panama search monetization engine would drive upside in Q1. They were wrong, and now are slightly more cautious coming into Google's quarter. We know Google wants to take over the world but their announced reduction in ad coverage is making everyone cautious coming in to Q1 results. How much more powerful can Google become and will the stock price really keep climbing? Some say Google is going to have a great quarter, but how can you be sure? Can Google do it again - read more by Bryan White...

Thursday - April 19th, 2007

Blockbuster and Netflix get downgraded, does it really matter?
In an interesting coincidence rivals Netflix (NFLX) and Blockbuster (BBI) both received downgrades today.

First Albany cut Netflix Inc. to "Neutral" from "Buy" to reflect weak industry subscriber additions.
Blockbuster was downgraded to "Hold" from "Buy" at Soleil. They think BBI's Total Access program is going to cut into their profit and cash flow. Soleil said:
"We believe Blockbuster is positioning itself for the future evolution of the video rental business to downloading. However, the expansion of this program (Total Access) can be costly, particularly with customers who are aggressive users of the free coupon benefit."
NFLX is trading around $21 a share with a P/E of 29.
BBI is trading around $6.30 a share with a P/E of 27.
So who's the better bet?
Yesterday NFLX more than doubled it's Q1 profit to $9.9M but it reduced its fiscal-year outlook, warning investors of looming competitors like ol' Blockbuster. Blockbuster wants Netflix's market share and when you've got a hungry dog just around the corner, you can count on increased pressure and dog-like tactics to take the No. 1 seat back. Keep in mind BBI also has Carl Icahn's millions poured into it and that guy is ruthless at getting his investment back. So which one to buy? The Masters pick BBI this round, but how about forget both stocks and stick with oil. Better yet, just short the market, doomsday is coming. Don't believe it, the DOW hit an all-time high of 12,803.84. A correction is coming people.

Friday - April 20th, 2007

What a magical day Wall Street is pushing the Dow Jones almost to the 13,000 mark. So if anything, smoke em if you got em and cash out anything you can while the Street is so happy and joyous. Overreaction by the Stock Masters, maybe paranoia?
More like realistic and defensive investing so that you aren't a victim to any panic selling or surprises that may pop-up next week. McDonalds (MCD) and Google (GOOG) are both having great days and they are both stocks we have written about in the past.
MCD - We told you to buy back in January after they starting selling the Mega Mac.
GOOG - That was part of our Tao of N.W.A. when we talked to you about investing like a gangsta back in December.
So does the StockMasters think they have all the answers and are they too cool for school?
Not at all, we are just useless bloggers, but still, the track record and articles speak for themselves.
We have inflation to worry about America and that is what the Federal Reserve Bank is concerned about so Interest Rate hikes could happen. Among other things, when the market is happy you should take some of those gains. If by chance next week sucks, you won't actually have that money until you sell those stocks or mutual funds, so sell away today.
So with everything moving up what's not? Good ol' Stampy, Stamps.com (STMP) who we called the "worst stock ever" hits a new 52-week low today. The PROShares Short funds are having a field day with the market on fire so due stay tuned. However we will mention one stock that has caught our fancy, recent IPO Comverge, Inc. (COMV) is down almost 5% today. We'll do some more homework on them but their software and wireless systems that reduce electric utility consumption during peak times is a promising game plan. Here's a decent review of them for your reading pleasure , Happy Friday Masters.