Calling the Buying Opportunity?
By
Ann Sosnowski
There was great bullish sentiment on small- and micro-cap stocks this week!
For the first time ever, the Russell 2000 (RUT), which houses 2,000 of the best-performing small-cap stocks, beat its historic high and glided above $800 with little problem.
Since January 26, the RUT has gained 4.17%, hitting a high of $816.90 yesterday. While daily RSI looks a bit overbought, and the RUT should correct slightly after its recent sharp upturn, I anticipate a good year for this index.
I placed a target of $900 for the RUT back on Dec. 26, 2006 right here in TFN’s daily Market Report. I stand by this target.
Not to be outpaced, the iShares Russell Microcap Index (IWC) beat its historic high as well. During the same period as the RUT, the IWC has gained 3.81% in value, hitting a high of $60.19. Again, anticipate a slight correction, but a longer-term continuing cycle toward higher highs on this index.
Earlier this year, I put a target of $80 on the IWC by the end of 2007 and I still stand by that target as well.
But not only are small-cap stocks doing well… a particular mid-cap stock I love to love is doing really well!
I may have very well called the buying opportunity on The New York Times Company (NYT:NYSE) when no one else was listening… but now everyone else is buying and my subscribers are reaping the reward!
Today, NYT is trading for $25.48 per share after hitting a high this week of $26.90 on speculation that Warren Buffett may be mulling over a stake in the company.
It’s not Warren Buffett’s buying potential that made me bullish on this stock months ago… it’s the company’s wise owl ability to know where its assets lay and take advantage of the online environment before other newspaper companies do.
Not only did I call NYT as a good buy, but I’ve called Tribune Company (TRB:NYSE) as a suicide stock.
The company is still parsing out what it wants to do as far as bids are concerned on parts of the company, and whether it even wants to go private or not. The company surprised everyone when it reported fourth-quarter profit gains of 81%.
While that may seem like good news, the increase was due to a one-time gain of $69 million, “including $33 million in income-tax adjustments and $28 million from the sale of derivative investments. The company also netted $7 million from selling its corporate airplane.”
Right. Not much of a turnaround, huh?
That’s why shareholders continue to beat the stock down, taking it below its 10-day Moving Average today, losing all hope of support.
Again, Tribune Company (TRB:NYSE) is a lost cause. Even if you feel emotionally tied to it, I would make the smart decision and drop it from your portfolio.
And speaking of portfolios, let me update you on Sonic Solutions Inc. (SNIC:NASDAQ).
This stock has corrected slightly following a gap down in price due to news that the company is undergoing a voluntary review of its stock option grant practices and accounting related to those practices.
The company will most likely have to restate finances from years’ prior.
I’ve watched the stock closely for the past five days, and don’t like what I see, although it is at an important juncture at its 200-day Moving Average.
The company does state earnings on Feb. 15, 2007, but I’m not sure it will be strong enough to combat future restating of financials.
We’re showing a slight loss of 6.23%. I say we exit this one before events can spin out of control. We couldn’t foresee options review on this stock, but we can take our slight losses and call it a day.
Monday morning, sell shares of Sonic Solutions Inc. (SNIC:NASDAQ) at market.
That’s all for today. Enjoy your weekend!