Free Lunch
Find December bargain stocks and track performance.
23 December 2007
Investors tend to get rid of their losers near year-end for tax purposes, often hammering these stocks down to bargain levels. Over the years the Almanac has shown that NYSE stocks selling at their lows on December 15 will usually outperform the market by February 15 in the following year.
We have come to the conclusion that the most opportune time to compile our list is on the Friday before Christmas. This allows us to capitalize on the Santa Claus Rally and it also comes immediately after quadruple witching which further depresses already distressed equities. It also gives us the weekend to evaluate the issues in greater depth and weed out any glaringly problematic stocks.
Preferred stocks, funds, splits and new issues are eliminated. In addition, we eliminated all small banks, thrifts and mortgage concerns as we have reason to be concerned about their survivability. Moreover, a significant near-term pop is highly unlikely.
Our basic parameters are that the stock set a 52-week low on Friday December 21. The second parameter is that the stock must be down at least 50% from its 52-week high. Finally, the stock must be relatively liquid.
This “Free Lunch” strategy is only a short-term strategy reserved for the nimblest traders. It has performed better after market corrections and when there are more new lows to choose from. We just experienced a significant correction, and even in the face of a healthy rally last Friday, there are a plethora of viable candidates this year.
If you buy these stocks, sell them as soon as you have a significant gain. The stocks all behave differently and there is no automatic trigger point to sell at. Standard trading rules do not apply for these trades. You should be out of all of these stocks between the middle of January and the middle of February. Advice a la G.M Loeb, never forget why you bought a stock. Also, be careful not to chase these stocks if they have already run away.
DISCLOSURE NOTE: Officers of the Hirsch Organization do not currently own any of the shares mentioned. However, this year we will be participating in the Free Lunch Strategy.
As a reminder, this will be our last email Alert for 2007. Barring any extraordinary events that warrant and interim Alert, the next Alert will be the Santa Claus Rally Alert on January 3, 2008.Happy New Year & we wish you all health & prosperity in 2008!
| 2007 FREE Lunch Menu of Bargain Stocks | |||||
| 71 Friday-Before-Christmas New Lows | |||||
| 52 Week | 52 Week | % Down | 12/21/2007 | ||
| Low | High | From High | Close | ||
| NYSE | |||||
| CC | Circuit City Stores | 4.75 | 22.02 | - 78.4% | 4.75 |
| EEE | Evergreen Energy | 2.40 | 10.60 | - 77.4% | 2.68 |
| JNY | Jones Apparel | 16.13 | 35.54 | - 54.6% | 16.34 |
| ODP | Office Depot | 13.08 | 39.70 | - 67.1% | 13.09 |
| OMX | OfficeMax | 20.88 | 55.40 | - 62.3% | 21.01 |
| RT | Ruby Tuesday | 9.71 | 30.80 | - 68.5% | 10.01 |
| SLM | SLM Corp | 18.68 | 58.00 | - 67.8% | 19.85 |
| WMG | Warner Music Group | 5.97 | 23.93 | - 75.1% | 6.17 |
| WM | Washington Mutual | 13.76 | 46.38 | - 70.3% | 14.10 |
| NASDAQ | |||||
| ACUS | Acusphere | 0.58 | 4.21 | - 86.2% | 0.58 |
| AHCI | Allied Healthcare Intl | 1.86 | 3.75 | - 50.4% | 2.45 |
| AMWD | American Woodmark | 18.00 | 46.10 | - 61.0% | 18.46 |
| ANDS | Anadys Pharmaceuticals | 1.65 | 5.30 | - 68.9% | 1.72 |
| BLTI | Biolase Technology | 2.31 | 10.50 | - 78.0% | 2.31 |
| BWLD | Buffalo Wild Wings | 22.88 | 47.75 | - 52.1% | 23.03 |
| CLZR | Candela | 5.57 | 13.11 | - 57.5% | 5.61 |
| CBOU | Caribou Coffee | 3.30 | 9.07 | - 63.6% | 3.94 |
| CMRG | Casual Male Retail Group | 5.34 | 13.82 | - 61.4% | 5.39 |
| CTLM | Centillium Comm | 1.01 | 2.30 | - 56.1% | 1.06 |
| FVRL | Favrille | 1.59 | 4.30 | - 63.0% | 1.59 |
| FINL | Finish Line | 2.75 | 14.75 | - 81.4% | 2.83 |
| GTOP | Genitope | 0.75 | 4.93 | - 84.8% | 0.82 |
| HNAB | Hana Biosciences | 0.96 | 6.70 | - 85.7% | 1.02 |
| ITWO | i2 Technologies | 12.35 | 27.46 | - 55.0% | 12.50 |
| ICOP | ICOP Digital | 3.75 | 9.33 | - 59.8% | 3.91 |
| IDMI | IDM Pharma | 0.96 | 10.75 | - 91.1% | 1.01 |
| INFS | InFocus | 1.35 | 2.94 | - 54.1% | 1.43 |
| INHX | Inhibitex | 0.77 | 1.84 | - 58.2% | 0.77 |
| INGN | Introgen Therapeutics | 3.00 | 6.35 | - 52.8% | 3.20 |
| LCCI | LCC International | 1.90 | 5.07 | - 62.5% | 1.97 |
| MSSR | McCormick & Schmick''s | 10.74 | 30.98 | - 65.3% | 12.49 |
| MFRI | MFRI Inc | 10.16 | 31.59 | - 67.8% | 10.61 |
| NGEN | Nanogen | 0.37 | 2.07 | - 82.1% | 0.39 |
| NRMX | Neurochem | 1.61 | 23.70 | - 93.2% | 1.80 |
| NBIX | Neurocrine Biosciences | 4.31 | 14.88 | - 71.0% | 4.40 |
| PMTI | Palomar Medical | 16.82 | 55.02 | - 69.4% | 18.77 |
| PGTI | PGT Inc | 4.92 | 13.42 | - 63.3% | 5.01 |
| Qiao Xing Universal Tel | 7.15 | 19.94 | - 64.1% | 7.16 | |
| RGCI | Regent Communications | 1.40 | 3.60 | - 61.1% | 1.45 |
| RECN | Resources Connection | 17.26 | 36.21 | - 52.3% | 18.28 |
| RCKY | Rocky Brands | 6.14 | 19.23 | - 68.1% | 6.31 |
| SOFO | Sonic Foundry | 1.20 | 4.87 | - 75.4% | 1.27 |
| SPSN | Spansion | 3.96 | 15.10 | - 73.8% | 4.08 |
| STAK | Staktek Holdings | 1.75 | 5.53 | - 68.4% | 1.84 |
| STEM | StemCells | 1.49 | 3.63 | - 59.0% | 1.54 |
| ELOS | Syneron Medical | 13.93 | 28.12 | - 50.5% | 14.00 |
| SYNM | Syntroleum | 0.86 | 4.08 | - 78.9% | 0.89 |
| VYYO | Vyyo | 3.22 | 9.17 | - 64.9% | 3.46 |
| AMEX | |||||
| LCI | Lannett | 2.90 | 7.25 | - 60.0% | 3.10 |
| TKO | Telkonet | 0.85 | 4.00 | - 78.8% | 0.89 |
| TGC | Tengasco | 0.49 | 0.91 | - 46.2% | 0.52 |
| UUU | Universal Security Instr | 6.70 | 36.29 | - 81.5% | 6.89 |
| OTCBB | |||||
| COGC | California Oil & Gas | 0.24 | 0.84 | - 71.4% | 0.25 |
| CTHH | Catcher Holdings | 0.57 | 1.75 | - 67.4% | 0.57 |
| CVDT | China VoIP & Digital | 0.45 | 5.13 | - 91.2% | 0.60 |
| DKAM | Drinks Americas Holdings | 0.27 | 3.58 | - 92.5% | 0.28 |
| EVCC | Environmental Control | 0.31 | 7.74 | - 96.0% | 0.31 |
| GACF | Global Aircraft Solutions | 0.38 | 1.20 | - 68.3% | 0.38 |
| GZGT | Guangzhou Global Tel | 0.38 | 2.97 | - 87.2% | 0.39 |
| GDTI | Guardian Tech Intl | 0.48 | 1.83 | - 73.8% | 0.55 |
| HPLF | HepaLife Technologies | 0.40 | 1.76 | - 77.3% | 0.41 |
| HYBT | Hybrid Technologies | 0.47 | 4.95 | - 90.5% | 0.70 |
| HYEG | Hydrogen Engine | 0.65 | 3.55 | - 81.7% | 0.75 |
| INKS | Inksure Technologies | 0.42 | 3.50 | - 88.0% | 0.45 |
| KRBF | Kreido Biofuels | 0.28 | 5.00 | - 94.4% | 0.30 |
| MDTV | MDU Communications | 0.38 | 1.02 | - 62.7% | 0.42 |
| EMED | Medcom USA | 0.23 | 0.72 | - 68.1% | 0.25 |
| NIMU | Non-Invasive Monitoring | 0.44 | 2.08 | - 78.8% | 0.47 |
| PRPL | Park Place Energy | 0.22 | 1.44 | - 84.7% | 0.25 |
| PDEP | PureDepth | 0.51 | 3.18 | - 84.0% | 0.55 |
| UBHI | ubid.Com | 0.55 | 2.80 | - 80.4% | 0.62 |
STANDARD TRADING GUIDELINES - DO NOT APPLY!
YOU ARE ON YOUR OWN TO DETERMINE YOUR ENTRY & EXIT POINTS.WE WILL NOT BE UPDATING INDIVIDUAL FREE LUNCH STOCKS.
Please Trade Carefully. Bon Appetit!
Jeffrey A. Hirsch, Editor
J. Taylor Brown, Director of Research
The next issue will be available after the close on January 11, 2007.
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Stock Trader's Almanac® Almanac Investor © Copyright 2007 by John Wiley & Sons, Inc. 111 River Street, Hoboken, NJ 07030. Tel: 800-762-2974 Fax: 800-597-3299.
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Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, readers should recognize that not all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this Email issue.
The information presented in this Almanac Investor has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of the editor, its employees, or affiliated companies may, in some instances,
include securities mentioned in this Almanac Investor Alert.