3 Stock Update

Written by GSCR Staff   
Tuesday, 12 March 2013 08:25

Is this momentum going to slow down, speed up, or hold?  If we knew whether or not the upward trend would continue with absolute 100% certainty we would all own islands in the Caribbean. The perpetual Federal Reserve quantitative easing policy, one of the major factors for the run, is more than likely not going away anytime soon.  Uncle Ben says he is targeting 6.5% unemployment as a benchmark to maybe start re-examining his position.

We thought we would look at three of our picks for 2013 and provide a brief status update.  We will examine the biggest winner, the biggest loser, and one of those that are stuck in neutral.  While we will not recommend more accumulation, holding, or selling, we hope to at least provide you with some insight to make an educated decision on a course of action.

Thompson Creek Metals Company, Inc. (NYSE – TC - $3.39): -18.5%

We may have whiffed on this one.  The company missed on total 4Q revenue by close to 5% and as well as having a -$2.87 EPS actual in 4Q, way off from $0.05 estimate.  The stock got hammered. The charts now have turned very bearish as well.  The decrease in price of relative commodities that TC is engaged in exploration for does not bode well.  Finally, operating and net margin are still in the red per 4Q results.

Magnum Hunter Resources Corporation (NYSE – MHR - $4.02): -1.23%

We recommended MHR back on January 11th as part of a special blog on possible covered call strategies.  The stock has been a yo-yo between $3.50 and $4.50 and now, as one might expect, there are mixed signals in the short term chart analysis.  Most indicators are bearish, with a very bearish signal on MACD, but in sharp contrast, a very bullish signal related to EMA.  To refresh your memory, Magnum Hunter Resources built its business on oil and gas, but has ventured into the natural gas shale prevalent in the Ohio, West Virginia, and Kentucky tri-state area.  Natural Gas prices remain relatively low, which has a definite impact pulling down total revenue.  The stock was recently highlighted in Jim Cramer’s Lightning Round getting a bearish call due to the issue of missing earnings for 4Q12, but its expanded Senior Bank Credit line pushing the company’s total liquidity to $115 million.  MHR may be worth keeping, particularly if you follow a Cramer Contrarian guideline.

Lannett Company, Inc. (NYSE – LCI - $9.54): +70.1%

Finally, LCI has just skyrocketed.  The charts are even better now than when we first blogged about it, and are very bullish relative to EMA and MACD and other indicators.  The stock was at $5.60 when we featured it on January 14th and has clobbered our now seemingly conservative $7.00 target.  After rocking the earnings call this season the company increased its guidance for the rest of the FY 2013, an incremental increase of 7% on net sales and 2-3 percentage points on gross margin.  With this forecast it may be difficult to take a haircut.

Have a great week! 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours. 

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