Category Archives: expd

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Watch List Summary

We’d like to address the first four companies on our list with a rating of AVOID or SELL for the following reasons:

• First Solar (FSLR):  We never believed in the attributes of the solar industry despite all the claimed benefits to the environment.  If a detailed examination of the solar industry was done for the period of 1970 to 1980, you would find that the reasons for the lack of success then is re-emerging today.  FSLR might be a great speculation, however, anyone wishing to buy the stock should be willing to accept 100% loss or avoid the stock altogether.  As was the case in the 1970’s, the “top tier” solar companies will probably get acquired by the major oil companies.  However, the timing of such an acquisition is too difficult for us to predict.  Therefore, the safest postures is to assume more downside risk with little sustainable upside opportunity.
• Green Mountain Coffee Roasters (GMCR):  We’ve had a history of calculating the downside risk associated with GMCR.  On October 25, 2011 (found here), we published Edson Gould’s Speed Resistance Lines [SRL] which indicated that the downside risk for the stock was between $59.93 and $37.21 (at the time GMCR was trading at $64.75).  In that same posting we said that if GMCR were to fall below $37.21, then the next downside target is the absurdly low level of $3.  Even if $3 is never achieved, falling from the current price of $24.05 to $12.02 is too much pain to accept.
• C.H. Robinson (CHRW) and Expeditors International of Washington (EXPD): Our recent Dow Theory (found here) indication pointing to an end to the bear market rally with the joint decline of the Dow Jones Industrial Average and Dow Jones Transportation Average means that large declines may lie ahead.  Since the Transportation Index has led the way up, it stand to reason, and experience, that the index will lead the way down.  We believe that CHRW and EXPD are in for more pain and faster than most other stocks because they are in the business of freight forwarding and logistics.

Companies that we’re excited to see on our watch list are as follows:

• Microchip Technology (MCHP):  Microchip Technology first appeared on our watch list on March 20, 2010 (found here) at the price of $28.25.  Afterwards, MCHP rose as high as $41 by May 10, 2011.  On July 15, 2011, after the stock declined nearly -22% from the high, we suggested that MCHP would be too hard to ignore at such a high dividend yield. This recommendation was within 9% of the current 1-year low.  We will become serial acquirers of MCHP as the stock price declines further.
• Applied Materials (AMAT), NVIDIA (NVDA), Altera (ALTR):   These chip stocks are runners-up in the chip stock sweepstakes.  We feels that accumulating of chip stocks with high ROA, ROE, profit margins, operating margins and low debt will prove highly profitable in both the intermediate and long term.

Watch List Performance Review

In our ongoing review of the NLO Nasdaq 100 Watch List, we have taken the top five stocks on our list from April 29, 2011 and have check their performance one year later. The top five companies on that list can be seen in the table below.

No two ways about it, the stocks on our watch list got hammered big time.  The Nasdaq 100 index gained 15.31% while our top five stocks went nowhere.  However, three of the five stocks our goal of at least 10% within a year.  TEVA gained 10% in the first month before declining –20%.  CSCO gained +10% in six months while AKAM gained +10% in 9 months.