On Jim Cramer's Mad Money today he picked buying some of the hot growth stocks this past week like Apple AAPL, RIMM, and Under Armor UA! Come on Jim you can find better stocks than that in the universe of thousands of companies you follow, all of them probably in the charitable trust you run. It's not 1997.
These aren't safe long-term investments at current prices. Apple at an all-time high and 37 PE multiple, RIMM which could grow at 25% a year, but they won't keep it up still doesn't look attractive. Under Armor at 57 times this years earnings is insane. These companies can't grow like this forever and aren't smart long-term investments here. Great expectations are already baked in the stock prices and one slip-up and they tank.

The show is called Mad Money and it really is a little beyond logic. I hope these stock picks were part of the speculation Friday segment. How can books and shows that approve of speculation be good for the the lamen investor? You don't have to speculate to accumulate. I think with Jim Cramers picks sends the wrong message to the average unknowledgable investor. I remember watching Louis Rukeyser's Wallstreet Week years back. I liked that show more because Lou wasn't trying to sell me his books and and was more to the points and less about entertaining and stock picks.




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I am not much for playing with Mr. Market and his short-term volatility game. Having said that, shorting stocks seems more like an art than a science. However, If there was one company I would feel confident shorting this year it would be Movie Galllery (MOVI). I think a fair value of the stock is about zero. Lets look at the competition. Blockbuster, Netflix, countless online vehicles, no not Hollywood video, they bought them awhile back and took on a big debt burden from buying Hollywood.

Blockbuster and Netflix are the big online players and they have a small price war going on which Netflix will come out victorious longer-term as I wrote about here. Movie Gallery, which used to have a niche by staying out of most of Blockbuster's markets in more rural locations has lost any competitive edge along with Blockbuster in its brick and mortar stores. Innovation in technology like video on demand should harm all of them longer-term.

Movie Gallery used to have great cash flow and better profitability than Blockbuster but they have not been profitable and won't be anytime soon. Management was looking for a buyer months ago and there were no takers and I doubt any smart company would buy them, though with private equity who knows. If the stock goes higher I would be comfortable shorting.


Disclosure: author is long MOVI
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I found this company when I was looking in the Pharmacy industry awhile back. It was up 12% today on about triple usual volume. Nothing particular jumped out when I found them weeks ago looking at some basic figures except that it was reasonably priced and I was looking for a small-capper rather than a giant like CVS,WAG,RAD,WMT.

NYER has been paying long-term debt down all of 06' and 07.' EBITDA 8 times enterprise value, insiders have 30% stake. On that note about insider ownership, many acclaimed and smart investors take it into account. But who cares? Many investors pay close attention to insider ownership along with their buying and selling and try to size up the company as a worse or better investment because of it. First, on the buying and selling, it is trivial unless one knows for a fact what reason management sold or bought. Maybe they sold to pay their kids tuition. Would that effect the decision to buy the company? Maybe management is blinded by their own vision of the company even if it has no chance of success and they pick up a huge block of shares.

Isn't it a messed up society if we assume that only the managers with large stakes in the companies they manage will look out for shareholders? How about integrity, work ethic and honesty? Where has it gone? I still believe there are great management even if they don't have a large ownership or any at all for that matter.

Disclosure: no position in NYER
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Biomed just increased their dividend recently and just began work on a 84,000 square foot lab and office complex in San Diego that it will lease to biotechnology firm Illumina Inc. They started out in 2004 and have done pretty well in their lab and office space for health care and biotech companies. They have properties in 13 states and have made lots of acquisitions in recent years, 16 in 2006. They lease to the biggest names in bio tech like Amgen, Biogen, Millennium Pharmaceuticals, Medimmune, Inc, Cephalon etc. What attracted my attention was they had approximately 1.1 mil of undeveloped land. A couple value funds have been buying in March.

4.9% dividend yield with more increases likely.
Forward PE of 13

Management says debt isn't a problem. I suspect they can grow organically with their current properties. At the end of 2006 they had $2.69 billion in assets, $85 mil in land under development,$497 million in construction in progress. They have a lot of room to grow and cheaper valuation compared to my second best reit I was looking at Ventas VTR in senior housing.

disclosure: I don't have a position in any stocks mentioned above
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To sharpen my skills in money management and just for fun I have managed a simulated portfolio since February of this year in addition to my own online discount broker at Tradeking and Sharebuilder. I've tried to keep turnover low. Here are the current holdings and portfolio at Virtual Stock Exchange by Dow Jones' Marketwatch.com The entire portfolio is up over 8% since I started it in February even with an error.The site has an error for the Petro Brasileiro (PBR) position. It doesn't reflect the 2 for 1 stock split they had at around $121. I bought it at $90 and it went to $121 but the right amount of shares aren't there. I've sold all of some positions like Fortune Brands I bought at $83 then sold at $83 after I ran a discounted cash flow and it didn't look cheap enough. Here is more of my commentary on Fortune Brands

I sold all of Fremont General that I picked up right after the subprime fallout when fear shot it below intrinsic value for about a 100% gain after the fear subsided and the value in the company was realized again.

Looking at what happened with Opteum Inc.(OPX) I bought it at a low in March 27th and sold just in time on April 26th before it started spiraling downward. I bought it because it was cheap and just took the profit at a lucky time.

I took a profit on Allion Healthcare, Inc. (ALLI) and in retrospect I could have held on a little longer. I'm happy with the sell though because I'd like to hold most stocks for years and if I'm not comfortable with the long-term outlook I don't want to hold it for a quarter because I like to hold and let the stock price reflect the company's performance. The reasoning behind the sell was government/universal healthcare is looking more and more imminent especially with many Democrats now.
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Best Buy's share price has been going lower and lower over the last year. I don't think that is a bad thing though for the long-term investor. The stock is low because investors care about the short-term and want gains this year. Mister Market is the long-term investors friend. Business isn't great this year for most financials and retailers but 3,4,5 years from now things should pick up. As cheap as it looks there are some good bearish points that could make it a value trap. That isn't likely. Occam's razor, Best Buy will be doing fine years from now.

Compared to its rivals like Circuit City and Radioshack it is doing fantastic. When your a retail company and your competitor fires its most loyal, best employees your in a good spot. Best Buy was in such a position earlier this year when Circuit City layed off thousands of its highest paid employees. It was round eight of this heavy weight fight and Circuit City taking to many punches decided to throw in the towel. Best Buy's valuation speaks for itself, say they have a couple more bad quarters and only earn $2.90 per share for the year. That is a 6% earnings yield at its current price of $46, better than a low risk opportunity cost, the treasury yield.

So, Best Buy is better than its competition. So what. The bear for Best Buy says Walmart,Sam's Club,Costco have more buying power and can sell cheaper electronics. It is a valid point but it isn't comparing grapefruit to grapefruit. Those stores aren't one stop, all your electronics needs destinations. Even if they have the lower prices on a handful of merchandise Best Buy has competitive advantages like knowledgeable staff, The Geek Squad and more variety. Management is innovative. They are putting in Apple mini stores in a handful of Best Buy's. The bear says they might not do so well in China. So what. Yeah, they aren't going to grow as fast anyway but they are going to use the robust cash flow for dividend increases which they already have.

At a PE multiple of 14,15 this year and modest growth in earnings and cash flow which they will have,combined with a highly likely, happy Mister Market future PE down the road of 20 to 25 the shares are a steal in the low 40's and lower.

Disclosure: author has no position in BBY




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