February 07: Week 5 - AVR, AMD, Digital Underground, RSH, China is fun, & John McEnroe


Monday - February 26th, 2007

Aventine Renewable Energy's Earnings more than Double
We've had our eye on this company since last year and ever since the Democrats got control of US Congress we've been preaching AVR left and right. On Friday Aventine Reweable Energy (AVR) reported Q4 profit more than doubled as the company offset higher corn costs with strong sales volume and pricing, their net income was $12.8M for the quarter and $54.9M for the full year 2006. Of course that announcement lead to JPMorgan analyst David Silver raising his rating on AVR shares to "Overweight," or "Buy," from "Neutral" this morning. Silver called the company's share price "depressed," saying it undervalues the company based on earnings, cash flow and growth potential. The Stockmasters couldn't agree more, with shares trading around $1.50 from its 52-week low, it doesn't take an "expert" to appreciate the current sale price. JPMorgan expects corn costs to retreat from record highs, while ethanol prices should escalate along with increased demand for gasoline during the summer driving season. We've seen this a thousand times America, every summer, higher gas prices, so what do you think will happen with the ethanol players? BMO Capital Markets analyst Kenneth Zaslow kept an "Outperform" rating on the stock with a $23 price target. Today shares of Aventine are trading around $16.50. The Masters are concerned with how much ethanol AVR can create and hold, but their new 57 million gallon dry mill facility began grinding corn on December 31st and began full operations at nameplate capacity last month. This pre-funded expansion was completed at a cost of approximately $1.22 per gallon. Aventine has begun to make capital expenditures for their planned capacity expansions in Pekin, Illinois, Aurora, Nebraska and Mt. Vernon, Indiana. The price tag of buying up land and making these expansion plans happen came to $4.6M as of December. Once again proving AVR are the Children of the Corn. Read their press release here...

I hate AMD. Whatever and Relax.
Advanced Micro Devices (AMD) is trading up +.81 or 6% today on LBO rumors. If you're in a gambling mood today like Chris "Jesus" Ferguson, check out the July '07 $17.50 calls, trading for about $100 per contract. The Masters think an LBO is laughable and the chances are slim that it could actually happen. AMD is trading near a 52 week low with shares trading just $1 above the year long low. Consider that AMD is working on new CPU's that will be integrated with ATI Video cards but that won't be ready until early 2009. By that time Ferguson should have 4 more WSOP bracelets. AMD will have the ante ready and ahead of Intel (INTC) at that point, similar to Sprint (S) with their Wi-Fi system. It's an ace up the sleeve and could make AMD the house leader with the most chips on the table.
If you want to read more about the LBO here are the stories, it's really the same stuff but it passes the time at work when you don't feel like working. Just so you know, LBO stands for Leveraged Buyout - a strategy involving the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition.
But back to Ferguson, the guy was playing poker before age 10. In college he honed his skill on IRC playing poker for play money in chat rooms. In 1994 he began playing in tournaments in California and in 1995 entered his first World Series of Poker. Ferguson beat T. J. Cloutier at the main event of the 2000 WSOP to win the $1.5 million prize. Since then, he's been walking on water and as of last year his career winnings exceed $5.7M. 1-2-shabadoo!

Taser International (TASR) wins back investors
Yesterday, Stun Gun maker Taser International (NASDAQ:TASR) reported “a great quarter, the best in our history," Chairman Tom Smith said in a conference call with investors. Net income grew to $2.3M, or 4 cents per share, in Q4 2006, from $179,126, or break even per share, in the year-ago period. Taser has had a love/hate relationship with investors - back in 2004, Wall Street could not get enough of the company. Shares rose and split a total of 3 times just that year. Everyone loved Taser, that is, until the lawsuits started rolling in. The Stockmasters break it all down, Van Damme style and even point out research done by the Motely Fool. Top 5 reasons why you need a Taser? Yes, we got that too. Don't miss this groundbreaking analysis. Article continued...

Vindication Thy Name is Howard Schultz
Todd Sullivan reaches out to Starbucks' (SBUX) CEO Howard Schultz in his own unique way. It's time for Schultz to get back to day to day operations and he's got a special message for Mr. Donald that you just have to read and click for yourself. Todd has got the attention of the Wall Street Journal, so even if you disagree with him, best listen up to the Hillbilly Deluxe Guru.

Is stock blogging the next Berkshire? Absolutely.
Enter the one, the only, mind of Henley Frey...After going through the six millionth SeekingAlpha.com post in the last hour, I realized the much like doing the Humpty, every stock blogger seems to innately understand the rules for financial blogging.  Even Shock G's vague suggestion that "ya got it down when ya appear to be in pain" makes perfect sense when thinking about stock blogging (take a good look at that picture Masters, find Waldo?).

So here's a few tips for doing the Financial Humpty... Article continued...

Tuesday - February 27th, 2007

Man what a bad day on the Market - it's fun watching your money go away isn't it? We know, it's terrible. Hang in the Masters and don't do anything crazy like this chick, you think you're having a bad day, you could have a crap haircut and that's just round one for this lady. We'll take away those blues so hang in there. Don't worry, we don't have one story on Britney Spears, just had to put that picture in there to make you feel better.

Check out the Shack Attack today! RadioShack (RSH) is up 13% today after announcing a Q4 profit increase of 65% on Job and Store cuts. Painful reminder but if you had bought the stock just three months ago, you would be up 44%. RadioShack also said it expects 2007 earnings to increase between 85% and 122%. You've remember all those dead RadioShack stores? So do they, RSH closed 505 company-operated stores last year. They now have 6,835 company and dealer locations down from 7,460 a year earlier. Congrats to the Shack that has saved a dying business and turned it around for share holders. Their CEO Julian Day is pulling a Sears Holding (SHLD) Eddie Lampert. Play on Player, Play on. Is RadioShack the Next Kmart? Maybe, but you can bet Henley hates it all.

Hansen Natural Corp. (HANS) said today its Q4 sales rose 54% to $151.1M from $98M a year ago, due to continued strong sales of its Monster energy drinks, as well as expanded distribution of Unbound energy drinks and Rumba energy juice. The stock is currently trading down -3%. Hansen's is just a killer company, after splitting shares 4 to 1 back in July the momentum has cooled, but today's drop could be a safe entry point. Then again, you could argue this sector is burnt out, old news, and HANS had its time at the top. You decide.

Horrible day on the Market, but keep your head up
Stocks are way down today due to growing concerns that the U.S. and Chinese economies are cooling and that U.S. stocks are about to embark on a major correction. Yesterday former Federal Reserve Chairman Alan Greenspan warned that a recession might be coming in the U.S. by year's end. Needless to say, everyone is panicking, stop, drop, and roll style. Greenspan had the following to say:
" For example in the U.S., profit margins ... have begun to stabilize, which is an early sign we are in the later stages of a cycle." He warned that the U.S. budget deficit, which for 2006 fell to $247.7B, the lowest in four years, remains a concern. "The American budget deficit is clearly a very significant concern for all of us that are trying to evaluate both the American economy's immediate future and that of the rest of the world."
Don't worry America, today's massive selling means buying yard sale bargains tomorrow, just listen to 2Pac, he told us to keep our heads up (more like "ya head up").

Days like this should make you think Dividend stocks
If you've read us before, you know what we think about managing your money with some safe bets. Again, not to cram this down your throat but a day like this should make you think Dividend stocks. A reminder of our article we released last month and just take a look at how those bad boys are performing. Today everyone is bailing out which means it's the perfect time to buy because in a few weeks everything will come right back. No it won't! Yes it will, be patient, fine a few months then...there are some good stocks out there so don't lose faith. Here's how those stocks we mentioned last month closed yesterday:

Dividend Article continued...

Wednesday - February 28th, 2007

Take a deep breath America, today is a new day. Be sure to read Article titles for the China Market Crash it will brighten up your day. Let U2 help out, it is a beautiful day. Okay maybe that's a bit much, still, it's a dope song.



Check out Sprint (S) today, they posted a higher profit and added subscriber growth - shares are trading up 5.5% today. Yes, Sir, not to self-advertise but our subscribers are enjoying that little ride today, so you are welcome.
The No. 3 U.S. wireless service provider has been losing customers in recent quarters, so investors were praising all that was holy when Sprint reiterated its forecast for a net gain in postpaid customers.
SurTerre Research analyst Todd Rethemeier said that while he would like to see more concrete signs that Sprint could turn the corner, some investors were glad the company had repeated the expectations it expressed in early January.
Tack on that 3 Cent dividend, Sprint's developing WiMax network (which will be the largest wireless network in history when complete sometime in 2008) and a great guidance. What more do you need?

Time to buy some Electronic Arts (ERTS) puts? EA's CEO Larry Probst has been replaced by former EA President John Riccitiello. We are passing along this great post about an opinion that Probst was forced out, no matter what EA might say publicly. Men with great power rarely cede that power voluntarily. The question, though, is what happened? The bigger picture for investors is what now, how will the stock perform and should you really still be playing the Sims? Come on people, if you are over 25 and playing the Sims, it's time to move on. You are basically playing dollies and you are better off playing with your old G.I. Joe's or Star Wars actions figures and talking to yourself. I love it when I line-up all my guys and put the guns in their hands, look how cool they look.

Thursday - March 1st, 2007

The Stock Market has been up and down worse than that on and off-again 11th grade girlfriend you had with a temperament to match. Makes you feel like John McEnroe did back when he would go on a rage back in the day (watch this clip). I'm sure most of you are now aware, this recent drop in the market is not the worst we have ever seen and we all knew it was coming. Today's slight comeback is due to an upbeat assessment of manufacturing activity and has eased some fears of the economy grinding to a halt. Ben Bernake knows what he's doing, and he's steering America on the right course with his forecast of the U.S. economy to continue to grow moderately. So if you are feeling like ol' Johnny Mac, take it easy, buy some dividend stocks, look for the fallen fruit stocks, and take a smoke break. U.S. Treasury Secretary Henry Paulson said today - The US economy is 'healthy' and transitioning to a soft landing after blockbuster growth in early part of last year. Smoke em' if you got em and just relax Masters.

New 52-week low for iRobot (IRBT) today. Don't forget that to consider iRobot's intellectual property - all their wonderful patents, brilliant inventions, and technology. Sure they haven't built R2-D2 or C-3PO but they have basically created their own Droid Factory that is generating revenue and constantly evolving new and better technologies. Read the insight and action figure perspective here at the Masters.


Friday - March 2nd, 2007

We finally wrapped up what turned out to be the worst week on Wall Street in the last 4 years. We think last week can be attributed to Alan Greenspan's loose lips. This quote says it all: The tone if not the substance of the comments seemed to conflict with, and even undermine, Bernanke's soothing message on Wednesday that the U.S. economy still seemed poised for "moderate" growth and perhaps even a slight acceleration later this year. Thanks a lot Greenspan, twice in one week you've come out of retirement to throw a wrench in the works. Why don't you go lie down, take a little nap, and get back to your cribbage game. The Market is still bad, blah, blah, blah, see you next week.