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Top 5 Stocks for October 2008
The tumultuous market has continued to beat down stocks of all shapes and sizes.
This is great news for those of us waiting on the sidelines to put new capital to work.
This month I have a broad range of stocks that I am looking at for possible inclusion into the PeakStocks.com portfolio.
These stocks enter and exit my Top 5 as constant fluctuations in both price, market conditions, and business fundamentals constantly alter the investment thesis.
Today I wanted to give you a heads up on some of the stocks that I was watching for possible inclusion into my portfolio, specifically ones that are high on my list, and most likely to be added as formal recommendations in the weeks to come as they reach desirable price points, and present wonderful opportunities for long term investors.
Please note that my Top 5 Stocks for October aren’t yet formal recommendations.
I have more due diligence that I have to perform on them, but they are compelling enough with the research that I have done to be at the absolute top of my list, at least as of this writing.
uWink Signs Software Licensing Deal with Chili’s, Also Opens 3rd Restaurant
On Monday September 22, uWink (NASDAQ: UWKI.OB) announced their second software licensing deal to install 4 of their touch-screen terminals in a Chili’s Too Margarita Bar at the Fort Lauderdale Hollywood International Airport as a pilot program for possible expansion into many more locations.
The deal was made with the owner/operator of the Chili’s location, Delaware North Companies, a global hospitality, food service and retail provider, and with the approval of Brinker International Inc. (NYSE: EAT), which owns, develops, operates, and franchises 1,888 various restaurant brands under the Chili’s Grill & Bar, On The Border Mexican Grill & Cantina, Maggiano’s Little Italy, and Romano’s Macaroni Grill brand names.
So what does this deal mean for uWink, who is Delaware North, and more importantly, will this yield entrance of uWink’s terminals on a much larger scale to other Chili’s restaurants and other locations within the airport industry that are run by Delaware North?
U.S. Government Can’t Leave Well Enough Alone
In a move that pertains directly to PeakStocks.com portfolio recommendation GeoEye, Inc. (NASDAQ: GEOY), and their only U.S. rival DigitalGlobe (NYSE: DGI), the Pentagon and the head of U.S. intelligence signed an agreement on August 15th to buy and jointly manage two imagery satellites, a move Pentagon acquisition chief John Young last month warned was inconsistent with a presidential directive to maximize commercial imagery.
The two commercial satellites would cost about $1.7 billion and would be launched around 2012.
According to a Reuters news report, the satellites, launch vehicles and associated ground-based command and control equipment would be purchased by the National Reconnaissance Office (NRO) using military intelligence funds.
So what does this mean for GeoEye and DigitalGlobe? How will the government’s entrance into the commercial satellite imagery space impact this already nascent field?
AAR Corp. Still Solid: Reports Record Q1/2009 Sales
On a day that the markets were absolutely crushed, AAR Corp. (NYSE: AIR) survived the maelstrom to finish the day up modestly (+.57 to $16.24) as a result of their continued stellar results even in the face of severe weakness and cutbacks in the airline industry.
As I predicted when reviewing AAR’s quarter and what to expect, the results were absolutely wonderful across the board especially when taking into account all the headwinds that AAR is facing in their various business segments.
Will this continue? Can AAR keep weathering these shifts in the market to keep their dominant position atop the industry?
In this post I’ll be breaking down AAR’s full earnings release, as well as their analyst conference call, and round out my post with what you should do with AAR’s stock.
Is Chipotle Mexican Grill Too Hot To Handle?
Restaurant stocks have been getting hammered lately, and for good reason.
Whether their results have flat lined or deteriorated, Wall Street has not taken any prisoners, for better or worse.
One of the last shoes to drop finally happened on Friday September 12 when Chipotle Mexican Grill (NYSE: CMG) (NYSE: CMG-B) had one of those nice little “Business Updates” that we’ve all come to love so much around here, whereby the company lowered Q3 guidance, and all but admitted that they are starting to really struggle as a result of outside forces.
The good news this time around was that with deteriorating macroeconomic conditions and company-specific issues, I knew we would be getting a better entry point somewhere down the line on shares of Chipotle’s stock.
So is Chipotle, a well-run, dynamic restaurant company that operationally is best-in-class, a good candidate for a rebound from here?
Does the 20% stock price plunge on Friday, and the further decline from $150 a share earlier this year to the now more reasonable $57 per share ($53.50 for the “B” shares, more below) present a great buying opportunity, or could this be just the beginning of Chipotle finally joining the recession party?
How Will the Recent Airline Cutbacks Affect AAR?
It’s about that time again when earnings season is upon us with some companies reporting their earnings mid-stream.
PeakStocks.com portfolio recommendation AAR Corp. (NYSE: AIR), which provides products and services to the aviation, aerospace, and defense industries worldwide, will be reporting earnings for their Q1/2009 fiscal year Tuesday September 16, 2008 after the market closes.
What will be interesting to see is how the recent slowdown and cutbacks by the airline industry, and specifically certain customers that used AAR for their maintenance, repair and overhaul (MRO), affected AAR’s business prospects and earnings outlook.
Analysts still feel very strongly about this stock, with not one analyst downgrading it ever since I’ve been following the company for over a year now, and even today, William Blair started AAR at an outperform.
In this post I’ll go over the important aspects that we need to be aware of before AAR announces earnings and then break them down into the following parameters:
- What went right in the quarter: What were some of the positive developments that occurred within the company in the last 3 months.
- What went wrong in the quarter: What were some of the negative developments that occurred within the company in the last 3 months.
- What I want to see: All things considered, what I realistically want to see from the company as it relates to their business.
- What we need to see: At the minimum, what we need to see for our investing thesis to still hold and an investment in this company to be prudent.
- What we’ll probably see: After weighing what’s been going on for the last 3 months, what we can realistically expect when they do announce their earnings.
- Bottom Line: What it all means, and what you should do.
AuthenTec - Downgrade to HOLD: Significant Customer Loss, Disturbing Business Trends
They say that good things come in small packages.
While that might be true of AuthenTec’s fingerprint sensors, it sure wasn’t true with the nice little “Business Update” that AuthenTec provided on Sunday evening or their nice little share price after the close of today’s market.
AuthenTec (NASDAQ: AUTH), the world’s leading provider of fingerprint sensors and solutions to the PC, Wireless and Access Control markets, dropped a bombshell on all of us late Sunday night in announcing that they were lowering Q3/2008 and full year revenue and earnings forecasts, as well as announcing the loss of a customer that will represent over 35% of their revenue in 2008 and 2009.
In addition, AuthenTec held a conference all with analysts on Monday morning before the market opened to discuss the lowered forecast as well as the customer loss, in what is a highly unusual occurrence, which shows the severity of the situation.
Needless to say, Wall Street was none too pleased sending shares down over 60%, and frankly, neither am I.
What this calls into question now is our investment thesis.
Has it changed such that an investment in AuthenTec is no longer warranted?
What follows is a summary of AuthenTec’s “Business Update”, conference call highlights, and my take on the company’s future prospects, and my investing thesis.
BUY ALERT: uWink (Nasdaq: UWKI.OB) BUY 1/4 Position 9/8/08 Around $0.55
I’ve been biding my time with uWink (NASDAQ: UWKI.OB) for the last few months or so as the price has plummeted from around $1.40 per share to the now bargain basement price of $0.55 per share.
There has been little news coming out of uWink other than their last quarterly earnings release that I wrote about extensively, which was not a pretty picture.
As I explained in my breakdown, the results need to be taken into context, and not overblown or exaggerated in their nature.
Chief among those observations is the fact that uWink is not really a restaurant company, although to this point, that’s the only way we’ve had to value them.
It seems that valued in that context alone, some out there, and for sure the culprits of the recent stock decline, have taken it upon themselves to bail on the company right at the cusp of their acceleration as a software development company.
That, I believe, is a big mistake.
In fact, the recent stock price provides us with such a compelling risk/reward scenario that it is simply too good to pass up, and needless to say, uWink definitely qualifies for my Double Thesis.
Apparently I’m not the only one that feels this way as the CFO has just purchased more shares on the open market, and both the CFO and CEO have received a generous amount of new preferred stock in exchange for some of their underwater options.
There are other reasons why I feel this is a great time to purchase shares of uWink or further cost average your position if you already have one, and I’ll go into those in detail further below.
I am initiating the Fourth (4) BUY recommendation of uWink at or around $0.55 per share.
GeoEye-1 Launch Successful!
Up, up and away!
GeoEye-1 launched successfully today, September 6, 2008 from Vandenberg Air Force Base (VAFB), at about 11:51 A.M. Pacific time.
GeoEye’s ground station in Norway relayed the downlink signal it received from GeoEye-1 confirming that the satellite successfully separated from the second stage of the launch vehicle and began automatically initializing its onboard systems.
The launch of GeoEye-1 marks the 83rd consecutive successful launch of the Delta II rocket.
I must admit that watching the launch was one of the coolest things I’ve ever seen because of the vested interest that I had in the launch, and actually wanting it to succeed.
GeoEye-1 on Delta II Rocket Booster
It was a little nerve-racking watching the Delta II rocket jettison different parts after they were used up, and thinking to myself: “was that supposed to happen?”
You can see a full replay of the launch here:
http://launch.geoeye.com/LaunchSite/
There is only video for the first 5 min. or so, and then it crosses over to a real-time simulation that shows what’s going on with the satellite and 2nd stage booster that we can’t see, to give us an idea of what’s going on.
GeoEye, Inc. (NASDAQ: GEOY) provides space-based, and aerial imagery and geospatial information through high-resolution and low-resolution imagery, imagery-derived products, and image processing services to customers worldwide.
This capability benefits a broad array of industries including national defense and intelligence, online mapping, state and local governments, environmental monitoring and land use management, oil and gas, utilities, disaster management, insurance and others.
GeoEye-1 Launch Unexpectedly Moved Up to This Saturday, September 6th
I can’t believe I am even typing this sentence: GeoEye-1 will be launching in 2 days!
That’s right, after the market closed tonight, GeoEye, Inc. (NASDAQ: GEOY), a provider of space-based and aerial imagery and geospatial information, announced that because Hurricane Hanna has changed course, they were able to meet their needs for additional personnel from the east coast, and as a result, will be launching this Saturday, September 6th from Vandenberg Air Force Base (VAFB).
This all comes after GeoEye confirmed on Friday August 29, 2008 that the final checks have been made and that all systems were a go for the previous September 4th, 2008 launch of GeoEye-1, which was delayed from August 22nd.
