The Proficient Investor

In observance of the passing of President Gerald Ford, U.S. equity markets will be closed on Tuesday, January 2nd, 2007.

Tuesday has also been considered a National Federal holiday and as such no mail will be delivered either.

I wanted to write about my picks for winners in 2007. With the holiday season now behind us and the new year just around the corner, it’s really time to think about what stocks are going to be winners next year. Oil is down, Tech is slowing, housing is slowing, and consumer spending in January is traditionally low compared to the months leading up to Christmas.

So what do you look for in 2007 to make some money?

You want to have a mix of large cap, growth stocks and a few small caps that could break out. Large caps help protect your position because they are tried and true in the face of slowing consumer spending. Stocks like Proctor & Gamble, Sears Holdings, Microsoft all do well even in a slowing economy. Financials like Wells Fargo, Bank of America and brokerage firms like Etrade and UBS are also good picks.

You will want to run the numbers on all these stocks to make sure they are in line with your investment style.

As for small caps, you are looking for something that could really break out and you want to stay away from OTC stocks. OTC stocks are fine if you understand the extreme risk due to the lack of volatility in those markets. Wall Street tendencies do not necessarily affect OTC stocks. They are also less regulated than NASDAQ or NYSE stocks so buyer beware.

My small cap picks for next year include Bluefly, ZQK, which I am re-iterating my buy position on both and updating my target of ZQK to $33. You can catch a double on Quicksilver(ZQK) based on their earnings potential.

So with the new year approaching fast and one more day left in 2006, you have a few ideas here to think about.

I know you are looking at this market and wondering what the heck is going on. After watching AMD bounce around like a kid in an inflatable bounce house, I got out of the stock at $22. It subsequently plummeted to 19 and change. Why? Have their profit margins changed? Did they announce something big? No. There’s just nobody trading. In situations like this market makers begin trading amongst themselves driving stock prices down. I see it with one of my OTC stocks, GOIH. The only traders doing any volume on this are market makers and they walk the price down bit by bit so they can buy it low and sell it high or if they have a big short position so they can cover at a lower cost.

Don’t fret the tape here. After the holiday we are going to see much more volume, and after the new year I think we start to see new money come into the market which is good for everyone.

Currently long: GOIH, TSCM, WAG, KRY, AMTD, RMKR, ZL, AANI, GBVS, CNXT, BFLY

With Penn National backed by Lehman Brothers and Wachovia making a bid for Harrah’s this might be a good time to buy a few shares.
The stock really hasn’t been moving much over the past 3 months, up only $5 in that period.

With two bidders now looking to purchase the entertainment giant, the winner here might be the shareholders. It could be a lengthy wait for the buyout, but I think it’s still a good bet because once acquired, they are going to be buying back stock like mad and turning around and paying out a dividend to shareholders.

Harrah’s (HET) is currently trading around $79.50. Penn National is at $38.20.

Jim Cramer mentioned on his mad money TV show that he would be a buyer of Global Sources (GSOL) on the basis that China can basically do what it wants in terms of buying and selling companies and based on its selling of web based advertising in the market. He recommends the stock based not on thinly traded shares but on China’s growth as an industry.

I would agree too. If you can invest a position here that isn’t going to break the bank, then go for it but by my calculations we are already looking at a fair value stock.

I say pick up some BFLY and watch it soar. But that’s just my opinion, it could be wrong

From Yahoo! Finance

Bluefly, a premiere online retailer of Women’s clothing and accessories which markets their products by contests, direct email, and online advertising as well as some TV spots announced their 8-K filing and full disclosure.

At a presentation at the Cowen and Company 2nd Annual Internet Conference on December 7, 2006, the Company will be providing the following information:

1. Net sales in September 2006 were up 49% over net sales in September 2005;

2. Net sales in October 2006 were up 48% over net sales in October 2005; and

3. Net sales in November 2006 were up 35% over net sales in November 2005.

I like the action today and the past few days with Walgreens (WAG). After being beaten down from 46, due to the PR Wal Mart put out regarding their drug offerings, WAG is now making a comeback in a big way. It’s up 4 straight points in less than a week. Momentum players are probably picking up the stock now as it just tears up this market.

Others in the sector include Saks Inc.,(SKS), up 1.9% at $17.49 with shares of Lowe’s Cos. (LOW) not far behind, climbing 1.2% to $31.61.

Hugo Chavez celebrated his re-election today, citing revolutionary democracy as the focus going into the future. From Yahoo! News:

“More than 60 percent voted for the socialist project,” a jubilant Chavez told cheering supporters, from a balcony of the presidential palace in Caracas on Monday, as salvoes of thunderous fireworks echoed in the night sky.

Venezuelans “voted for 21st century socialism, this new era of socialist democracy … the expansion of the revolution, of a revolutionary democracy.”

This is great news for Crystallex International (KRY), the canadian mining company that owns the Las Cristinas gold mine in Venezuela. Shares of the stock are up $.39 cents in intraday trading. Should Chavez decide the mine is fit to be opened, not only are thousands going to go to work in the area which will be a huge boost for the economy but also for the stock. This could go to 10 or even 12 dollars very quickly.