Sunday, April 24, 2005

Stock Talk

Someone asked me if I planned to bet on any of the NBA series, and I don't think I will. The playoffs just started and there have been a few upsets. I would bet if I could bet on who will win the entire series, and not just the individual games. I checked sportsbook, and it looks like I can't do that but I'll check again later.

Stocks: NCC was upgraded last week based on valuation and I'll think about a sell price if it reaches the $36-38 range. I'm still sitting on a good amount of cash, and I'm carefully watching LB and NTE. Stocks on my watch list: TAXI, JSDA.OB, GPS, LTD, ARO, SRT, PFE, PLT, and SGTL.
I haven't had too much time to look into any, although I've been in ARO before so I know that one a little. The one that I might look into first is SGTL. They had a good earnings report a little while ago but got destroyed on Friday (down 10.66%) mainly because they said next Q's earnings will be lower than expected based on a forseen softness in the mp3 market (they supply some parts for the Ipod). It might be an interesting stock, but for more of a momentum play. I'm always on the look out for a stock that gets trashed from news that really isn't too bad.
When Adobe announced they were buying Macromedia the shares traded down from the $60 range to the $54 range. A tad bit oversold in my opinion, and as you can see Adobe has risen back up to the $60 range.

One more stock I'm looking into: ELAB. In earlier posts I mentioned that I bought this at $23 and sold a little over $30. I sold because Novartis announced they would buy out ELAB at $31 (I, and others, were disappointed and were hoping something north of $35).
Anyways, so I would then hold the stock for 9 or 10 months to get an extra 70 cents per share.
That return wasn't worth it, so I sold. Now the market has been tanking and ELAB is trading at $30. Maybe now it might be worth a buy? This is what I'm thinking: the deal will close by the end of the year so let's say in 8 months NVS will buy it out for $31. This is about a 3.33% return and annualized it's a 5.04% return (not taking into account commissions). In a market like this, that 5% return is looking nice (and it beats ING). Is this riskless? Of course not because the deal might not go through. But if I had to put a probability on the deal closing at $31, I would say it's north of 85%. Why? It looks like the deal will go through after U.S. reviews and NVS is getting ELAB fairly cheap. Most talk on the street (from what I've read in articles) says it's a done deal. Another downside: I commit a maximum of $3000 to make $100 and in this time frame (8 months or so) I might miss out on a market rebound. It's not all my money of course, but it's a nice chunk.
I haven't made a decision on this one, but if I do I'll post about it.