What do you guys think about these picks?

These are what I currently hold as of 4PM, March 1, 2007.

LMT TM AMTD JBL MFLX ASFI WEX VBR IMOS MMM BJS

PICK LIST

OCN ($11.7) - Ocwen Financial Corporation, through its subsidiaries, engages in residential and commercial mortgage servicing, consumer unsecured debt collections, loan origination services, and business process outsourcing.

1-Year Estimate: $17.43, +49.01%
5-Year Estimate: $117.86, +907.35%

PITCH: This company profits from defaults and debt which grows when the housing market is bearish.
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JBL ($26.68) - Jabil Circuit, Inc. provides electronic manufacturing services and solutions worldwide. It provides electronics design, production, product management, and repair services to companies in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage, and telecommunications industries.

1-Year Estimate: $39.28, +47.22%
5-Year Estimate: $90.90, +240.7%

PITCH: This is a contrarian stock. It is undervalued with great fundamentals. I had to pick it up.
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BJS ($27.14) - BJ Services Company provides pressure pumping and other oilfield services for the petroleum industry worldwide. Its pressure pumping services consist of cementing and stimulation services used in the completion of new oil and natural gas wells, and in remedial work on existing wells both onshore and offshore.

1-Year Estimate: $38.60, +42.24%
5-Year Estimate: $94.90, +249.65%

PITCH: Oil prices are going up, another contrarian stock, undervalued, great fundamentals.
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APC ($40.37) - Anadarko Petroleum Corporation engages in the exploration, development, production, and marketing of natural gas, crude oil, condensate, and natural gas liquids primarily in the United States and internationally.

1-Year Estimate: $55.68, +37.92%
5-Year Estimate: $156.68, +288.11%

PITCH: Another oil stock with a little less desirable fundamentals than BJS, but still a good watch.
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Just going to speak from recent experience...

quote:

Originally posted by Krypton OCN ($11.7) - Ocwen Financial Corporation, through its subsidiaries, engages in residential and commercial mortgage servicing, consumer unsecured debt collections, loan origination services, and business process outsourcing. 1-Year Estimate: $17.43, +49.01% 5-Year Estimate: $117.86, +907.35% PITCH: This company profits from defaults and debt which grows when the housing market is bearish.

We made a lot of money on the short side of this one (and subprime mortgage finance in general). You might catch a dead cat bounce but if you're looking to go long this is a sector I'd avoid altogether unless you want to get caught in a value trap. I'm not really into making prognostications right now, the next quarter or two is going to be really interesting. Of course that's just me, but I'm not ready to sound the all-clear signal yet.

quote:

Originally posted by Shakka Just going to speak from recent experience... We made a lot of money on the short side of this one (and subprime mortgage finance in general). You might catch a dead cat bounce but if you're looking to go long this is a sector I'd avoid altogether unless you want to get caught in a value trap. I'm not really into making prognostications right now, the next quarter or two is going to be really interesting. Of course that's just me, but I'm not ready to sound the all-clear signal yet.

One of the reasons it is so highly undervalued is because of the collapse of the sub-prime mortgage market, and the price plummeted.

But you're right, sub-primes is really risky. They have an incrediable Return-on-Equity of 45.62%. The industry average is 10.7. But the trailing 5-yr. RoE for the industry is 12.1, while 11.2 for OCN. STRANGE!!

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quote:

Originally posted by Krypton But you're right, sub-primes is really risky. They have an incrediable Return-on-Equity of 45.62%. The industry average is 10.7. But the trailing 5-yr. RoE for the industry is 12.1, while 11.2 for OCN. STRANGE!!

Well, look at what happened over the last 5 years. Probably not a good proxy for normal operations, IMHO. Look at the yields on NFI and NEW given their falls (of course once investors realize that those dividends are no longer safe, I think they'll take another leg down). When all is said and done, there are going to be several companies in this space that have their funding pulled and will simply close their doors and go away, just like the late 90's. We've already seen several of these originators close down due to early payment defaults and whatnot. HRB is trying to sell Option One and it ain't gonna happen--at least not at a price anywhere near what they're hoping for. I think NFI is eventually going to be a zero.