The short term investing stock picks blog

Ok, I know that there is no such thing as a sure bet, but this tough days for the market, the days where even the best stocks get a beat down, can be some of the most profitable for swing traders. 

Today, I am feeling that way about Atwood Oceanics (NYSE: ATW).  I understand that other than Grant Prideco, Inc (NYSE: GRP), it is a miserable day for the Oil Services Companies (ETF, AMEX: OIH) so it is best to sit on the sidelines … for now. 

But ATW will return.  This is a company that everyone wanted into after it reported its latest quarter of earnings, when it jumped over 10% on over a 100% increase in income.  It’s forward earnings sit somewhere above 8 and its PEG ratio is around 0.2.  The company will not be able to sustain such impressive growth, or surprise analysts as much, but even assuming some slow down in earnings and day rates, there is significant value where this stock is trading today.  The volume on the recent sell offs has been tepid, especially relative to the large volume the week of and after earnings. 

We are seeing major technical weakness at the moment, with the P&F chart breaking-out of a double bottom.  I believe that if you can get this one anywhere near its close after it reported earnings (around $84), you are in good shape long term.  Shorter term traders will want to wait for volume to return or the stock to trade up on an anomaly day (say when the market, sector, and/or crude futures are lower).  My forecast is for this one to swing to $90 pretty quickly after a turn around.

I do not hold any stake in ATW

In my opinion you should have completed or in the processing of completing a sector rotation that includes and overweight movement into the Healthcare sector.  There are a variety of strong plays in this sector, one of my favorites is Gilead Sciences, Inc (NASDAQ: GILD) and I would put a conviction buy on Kinetic Concepts, Inc (NYSE: KCI) — even though it is facing strong distribution at the moment, just simply wait for your preferred buy signal to appear before dipping into it.
With those two already before me, I decided to write today about Mindray Medical International Limited (NYSE: MR).  Mindray is a Chinese medical device operator and marketing company.  This company has a strong pipeline of approved devices, in markets throughout the world, and expects a strong 2008 with 9 approvals in the United States alone.  The company is doing a great job leveraging the cost benefits of working in the People’s Republic of China with a whopping 34 percent return on equity (MR).  Five of six brokers have a strong buy or buy on the stock.

Technically, Mindray has bounced around between $35 and $40 for the past few months, but is looking to break out anew and make a run back toward $45 where it was before the markets turned ugly.  During the past 8 trading days, 5 have been up on above average or average volume and 3 have been down on below average volume.  During that period MR is up 12.8% compared to 5.35% for the S&P 500.

Disclosure here is that I actually held this stock down through its double bottom base and continue to hold long.