Too many investors spend time looking at the S&P500, Small and MicroCap stocks and totally overlook the Mid-Cap 400 . Here is a long and short pick from that universe.

This week it was really hard to find a positive stock in the Mid-Cap universe but WGL Washington Gas Light Co got the green light. The company in a public utility that sells and delivers natural gas product in the Washington DC metro area. Very solid revenue, operating income, net earnings and a steady dividend make this company attractive on fundamentals. The fact that in this market it still has had 10 new highs in the last 65 trading sessions if great. Place a stop loss @31 to protect your position.

The short pick of the week (and there could have been many) goes to HNT Health Net Inc. a managed care organization that manages health care services. We have a bear market in the health care sector and this stock has made 27 new lows in the last 65 trading sessions. Place a stop buy to cover at 17.

Jim Van Meerten
The Amateur Msn.com Strategy Lab

Contributor on:
MSN.com Money Central
Marketocracy.com
SeekingAlpha.com
InvestorPlace.com
MoneyShow.com

Comments: View Comments |  Saturday November 22, 2008

Below is a reprint of a blog on Harley I wrote in July. I hate to see rehashed articles as much as you do but give this one a look-over. I've got a friend who keeps pushing a certain pharm stock because he thinks some day it will be a great turnaround candidate. For those of you who read my blogs you know I'm a momentum investor/trader who dumps a stock when the price reverses but here is a value stock that is not hard to like.

Harley HOG is not a turn around stock, in any sense of the word They have always had great revenue, they have always made a profit, they have always stayed above a 10% margin and they have always paid a dividend. The price just keeps going lower.

If you want to be like Warren Buffet here is your chance. Here is a company that always makes a profit and can presently be bought for book value and just 4 times earnings. In 2006 the stock sold as high as 73.64 on earnings of 3.93 that's 18.73 times earnings multiple, You can presently buy it for 12.04 on earnings of 3.23. If it returns to its previous 18.73 earnings multiple it could sell at 60.50. That could give you a 500% return on your money.

Harley has 3 major divisions: the manufacturing of motorcycles, the royalties from authorized merchandise and a finance division. People will always buy Hogs and even if you don't own one you have to buy the outfits. The finance division will turn around one the economy turns also.

Here is the July reprint:

When I was about 12 there was a crane operator across the street that rented a room from one of our neighbors. Wayne, I still remember his name, was a rough dude but he had a really pimped out DuoGlide. He rode with a motorcycle club and some nights when all his buddies came over to see him the street resonated with the sound of rollin' thunder. Most of them had lights in the spokes and the patterns of the lights and the sound that those big V-Twins made as they all rode down the street was unforgettable. I knew right then I had to have one.

I've read a lot about Hogs. I know they are expensive, undependable, not very economical and the Jap Crap is cheaper, runs better, longer but even when they try to duplicate it they can't sound like a Harley. I NEEEED a Hog.

All around the country there are guys like me that are reading articles that with gas prices on the rise thousands of grown commuters are looking for economical transportation alternative to their SUV and looking at Vespas, Tomos and all sorts of DUI scooters but do you really want to be seen on a pastel minibike? Real dudes stride HOGS. We will convince our wives that a Hog is a good, economical and dependable alternative to our SUV's. You can't ride your Ole Lady on the back of a kiddie scooter!

That's the mystic the bike has going for it and that's the mystic the stock has too.

Harley has a following for both the bike and accessories. It will be around. They have a marketing genius and there always will be a demand not only for the bikes but also for the gear and endorsement items. This is a company with stable sales, stable margins, stable earnings. The company isn't as exciting as the bike, so why buy it?

It's on sale for 50 cents on the dollar. In November of 2006 the prices was around $75 now it's on sale at less than $35. ( TODAY @ $12)

If you've always wanted a Harley, they are as good as ever and tell your wife; I mean Ole Lady it's on sale.

Jim Van Meerten
The Amateur Msn.com Strategy Lab

Contributor on:
MSN.com Money Central
Marketocracy.com
SeekingAlpha.com
InvestorPlacecom
MoneyShow.com

Comments: View Comments |  Saturday November 22, 2008

Too many investors spend time looking at the S&P500, Small and MicroCap stocks and totally overlook the Mid-Cap 400 . Here is a long and short pick from that universe.

Long Trade -
Aqua Water WTR with a stop loss @17
This is the largest publicly traded water utility. Increasing revenue, steady profit margins and steady net income. Technically it's trading above its 20,50&100 day moving average and has made 12 new highs in the last 65 trading sessions.

Short Trade -
Ann Taylor Stores Corp with a stop buy @ 15
This is an upscale woman's clothing chain that targets professional woman 25-35 who need business and casual attire. Although the company has had even sales for the last 3 years profit margins are taking a big squeeze. Technically it is trading below its 20,50 & 100 day moving averages and has made 26 new lows and lost 78% of its value in the last 65 trading sessions

I would enjoy hearing your comments at VanmeertenFund@aol.com

DISCLAIMER: The stocks selected should not be taken as buy/sell recommendations. They are the stocks that were selected by my stock screening process and then each was analyzed before adding or subtracting from the portfolio. Do not concentrate on the stocks but learn the selection process.

Jim Van Meerten
Strategy Lab Open Winner July 2008
VanMeerten The Amateur Strategy Lab 2008

Comments: View Comments |  Monday November 17, 2008

I like Hormel. They make the best marinated pork tenderloins around. The Garlic & Herb properly braised is to die for and who could resist the Hormel Tamales over rice. The Hawaiians know that SPAM is the best thing around even though MicroSoft spends millions on SPAM blockers.

This is a stock that just keeps on truckin'. Year over year earnings just keep climbing each and every year. The earnings from operations and the dividends also have increased year over year. The dividend payout rate has remained stable and the dividends have increased.

Fundamentally this is a great stock. They cater to the low end consumer market and as times get tougher their product will be more in demand to a broader market.

During the last six months the stock has been off around 27% but the market has fallen of 40% during the same period.

The stock price says it all. Here we have a stock that in all that's going on has increasing revenue, profits and dividends and is reacting to downward pressure slower than the market. They sell a product that is universally lower end and inexpensive has sell brands that have been the staple of middle American pantries for years.

If you've got to have a few core holdings both in your portfolio and in your pantry this should be one of them.

Jim Van Meerten
The Amateur Msn.com Strategy Lab

Contributor on:
MSN.com Money Central
Marketocracy.com
SeekingAlpha.com
InvestorPlacecom
MoneyShow.com

Comments: View Comments |  Sunday November 16, 2008

I had to read Mr. Dlugosch's article several times because I thought he was being very harsh on the Index Fund industry. It seemed like he was saying that the index funds had no place in any sane person's portfolio and that the only way to beat the market was with individual stocks. I was almost fooled into thinking it was "efficient market article".

Statements like: "Stop investing in index funds, please. Talk about an absolute fraud" and " Heck, using darts to select stocks may very well perform better than index investing" made me think he was saying index funds were a rip-off.

I have been using mutual funds, index funds and Exchange Traded Funds for years and made a considerable amount of money. About the 5th time I read it, I'm a little slow and thick headed, I realized he was really saying "buying and holding" index funds were a failed strategy.

He failed to mention that selectively trading index funds and ETF's could be as effective as trading individual stocks.

For years I have read Value Line and of course every year Forbes annual mutual fund review. I learned to know that there were always long major market cycles and if you could recognize those cycles and take advantage of their momentum you could make some change. I came to know that with knowledge and disciple an individual investor could add value and beat the Market.

Each year Forbes shows in the Annual Mutual Fund review that there are UP and DOWN cycles and rate how each fund did in each of those cycles. If you recognize the UP cycle and invest in funds that do well in that type of cycle and then recognize the DOWN cycle and switch to funds doing well in that cycle you would always invest on the right side of the market.

Mutual funds had such heavy sales loads, management and marketing fees that you had to be right all the time or the fees would erase any gains you'd make. Then low fee Exchange Traded Funds came along and saved the day. Now there is not only every imaginable sector ETF but there are long and short and leveraged ETF's of all kinds, almost 1000 different angles to investing.

I decided to see if I could use the same selection and management techniques I use in stock portfolio management with an ETF portfolio. I use BarChart.com to select stocks so I thought I'd use BarChart to also select and manage ETF's


I wanted to find ETF's that were trading above their 20, 50 & 100 day moving averages and moving faster than the market. I tried to cull them when they began trading below their 50 day moving average and replace them with new ETFs that met my criteria. On June 26, 2006 I opened a fund on Marketocracy.com to test my theory and I've attached the results below:

RETURNS
Last Week 17.89%
Last Month 21.43%
Last 3 Months 15.73%
Last 6 Months 17.64%
Last 12 Months 32.17%
Last 2 Years 48.71%
Last 3 Years N/A
Last 5 Years N/A
Since Inception 43.01%
(Annualized) 16.17%

S&P500 RETURNS
Last Week -10.44%
Last Month -14.83%
Last 3 Months -33.66%
Last 6 Months -39.51%
Last 12 Months -41.15%
Last 2 Years -35.85%
Last 3 Years N/A
Last 5 Years N/A
Since Inception -28.47%
(Annualized) -13.10%

RETURNS VS S&P500
Last Week 28.33%
Last Month 36.26%
Last 3 Months 49.38%
Last 6 Months 57.15%
Last 12 Months 73.32%
Last 2 Years 84.57%
Last 3 Years N/A
Last 5 Years N/A
Since Inception 71.48%
(Annualized) 29.27%

You can see that with proper selection of ETF's on the right side of the market and proper management of them superior results can be obtained. Not only did I have positive returns for each period measured but I also beat the S&P 500 by an extremely wide margin.

So now I'll concede to Mr. Dlugosch's premise that you shouldn't buy and hold index funds if he'll agree that they can be bought and traded effectively.

I would enjoy hearing your comments at VanmeertenFund@aol.com

DISCLAIMER: The stocks selected should not be taken as buy/sell recommendations. They are the stocks that were selected by my stock screening process and then each was analyzed before adding or subtracting from the portfolio. Do not concentrate on the stocks but learn the selection process.

Jim Van Meerten
Strategy Lab Open Winner July 2008
VanMeerten The Amateur Strategy Lab 2008

Comments: View Comments |  Saturday November 15, 2008

Every week I'd like to share 2 new long ideas and 2 new short ideas. I will use BarChart.com to find ideas that you can use and maybe you pick up some spare change.

This weeks long ideas are:

EBS Emergent Biosolutions - this company has made 21 new highs in the last 65 trading session and is presently up 65% for that period. They are a biomedical company that specializes in vaccines. At the present time they claim to be the only FDA approved provider of Anthrax vaccines. Place a stop loss at 15 to protect against this roller coaster market.

AFAM Almost Family Inc - An leading owner of adult day care centers that provides pickup and delivery of your aged loved ones. They have made 9 new highs in the last 65 trading session and since they are up over 75% for that period you'd better use a stop loss at 40 for protection.

There are so many short positions screaming at me that its hard to decide but I did pick 2:

HTCH Hutchinson Technologies is a leading provider of products that are produced using chemical, mechanical and electronic technologies. I think they will have a hard time for the next quarter and the market thinks so too. They have sunk to 34 new lows in the last 65 days and right now is down 72% for the period. With a recent bounce they have had I'd put a pretty tight stop to cover at around 8 on this one.

DIOD Diodes Inc is my other short for the week. With 30 new lows for the 65 day period and down almost 76% they seem to be fading. They are a leading provider of semi conductor products and that whole industry look like it will take it on the chin for another quarter. Put a 15 stop loss on this for protection also.

Please give me your honest feedback and keep me honest if these stock don't pan out.

Jim Van Meerten
The Amateur Msn.com Strategy Lab

Contributor on:
MSN.com Money Central
Marketocracy.com
SeekingAlpha.com
InvestorPlacecom
MoneyShow.com

Comments: View Comments |  Sunday November 9, 2008  |  Stocks: AFAM, DIOD, EBS, HTCH,

At the beginning of the month we were asked to comment on MOS. I made a blog and said MOS & POT were lemons and that AGA was a better choice. I got no coverage, no love at all.

When I go to the quotes for the monthly action on these stocks today:

MOS down 42.06%
POT down 35.37%

AGA UP! 31.11%

How about some recognition on that call.


By the way, we were asked in late August to comment on Big Lots BIG
Look at the action on Big Lots BIG against my call to buy 99c Only Stores NDN instead.

NDN 9/1 8.77 on 10/31 12.20 that's UP 39%

BIG 9/1 30.03 on 10/31 24.23 that's down 19%

Where is the love??

Jim Van Meerten
The Amateur Msn.com Strategy Lab

Contributor on:
MSN.com Money Central
Marketocracy.com
SeekingAlpha.com
InvestorPlacecom
MoneyShow.com

Comments: View Comments |  Sunday November 2, 2008

The general market is still in a range where all the major indexes appear to still be trading lower at the end of the month than they traded on the first day of the month. The downward spiral is still there but slowing at a very cautious pace. I'm not sure we are at the bottom but it may be close.

I'm not worried about calling the turn, I am willing to give up the top and bottom 10% of each bull and bear market if I can ride the bull up for 80% of the up market and short the bear down for 80% of the bear drop. If I could accomplish that I will be an extremely happy camper.

Now the bad news. I know you guys are tired of seeing the headlines that say " The next shoe to drop will be.....". How many more shoes can be dropped? How many feet does this market have. When will all this bad news end?

There is one more shoe to drop and it is a biggy! You all have seen your portfolios, IRAs and 401Ks take dives. The S&P 500 is down 35% since January first and most of your portfolios are too. There is one more very major component of this country's wealth that will not be reported till late February or early March and that is the Unfunded Liability on Defined Benefit Pension Plans.

According to the Pension Benefit Guaranty Corporation's web-site 44 million people are counting on collecting retirement payments from DBPPs. The maximum payment you can get from them if your corporation cannot meet its obligation to you is $51,744. If you are an airline pilot, engineer, Senior VP or CFO thinking you will get a $75k - $150k pension you may be in for a rude awakening.

The Market is down 35% year to date and there is no reason to think that your pension plan hasn't had the same losses. From the estimates I've been reading by year end there will be a $200 - $250 BILLION dollar unfunded pension benefit liability that will have to be made up. That will be $250 billion that will be sucked from net earnings of those companies that last and recover and smaller pensions for the employees that work for a company that won't make it through this recession (OOPS! I used the "R" word and you will hear more of that word in the coming months).

Do not look for the economy to recover till this $250 billion problem has been solved and you begin to see increases in GDP and corporate earnings. The worst may be over but I don't look for meaningful recovery till at least the end of the second quarter next year.

Last bit of advice I can give you is to do what I have done. I have used stop losses in my self directed IRAs and will probably stay in cash (as I have for some time) until I see the Value Line Index trading above its 100 day moving averages. I will then move into broad based leveraged ETFs. In my 401K since I have limited investment choices I have also been into the fixed investment options for some time and will plot the equity investment choices and not move from my fixed rate choice back into equities until I see those equity options trading again above their 100 day moving averages.


I can't predict the market reversals but I will follow it close enough to ride the bull up the middle 80% when it returns.


I would enjoy hearing your comments at VanmeertenFund@aol.com

DISCLAIMER: The stocks selected should not be taken as buy/sell recommendations. They are the stocks that were selected by my stock screening process and then each was analyzed before adding or subtracting from the portfolio. Do not concentrate on the stocks but learn the selection process.

Jim Van Meerten
Strategy Lab Open Winner July 2008
VanMeerten The Amateur Strategy Lab 2008

Comments: View Comments |  Saturday November 1, 2008