by Sam Collins | February 25, 2013 11:54 pm
The stock market’s outlook has changed with the near-term trend reversing down. But the bull market is still intact, and any pullback of 5%-8% will provide both traders and investors with excellent buying opportunities.
The downturn has been accompanied by gaps down, increased volume and bearish breadth, along with a big jump in volatility. Traders should pursue short-term bear market strategies. But longer-term investors should focus on “buy under” prices and refrain from new positions purchased “at the market” until the current decline’s force is more clearly defined. Expect more volatility since daily price movements are, like last fall, being influenced by daily economic and political developments in the United States, Europe, and Asia.
Here are your top stocks to buy for March:
Small-cap telecommunications company, 8×8 Inc. (NASDAQ:EGHT), develops services for Internet protocol (IP), telephony and video applications. It also offers Web-based conferencing and cloud computing services. In February, the company agreed to provide its virtual desktop interface to customers in Japan and throughout the world.
Gross profits margins, at 72.1%, are very high; cash flow in the last quarter has increased; and its return on equity far surpasses that of the industry average and the S&P 500. On Jan. 24, the company reported fiscal Q3 earnings of $0.05, which was in line with analysts’ estimates and 25% higher than the year-ago period. Consensus earnings estimates are for $0.20 in fiscal year (FY) 2013, ending in March, and $0.28 in FY 2014.
The Trade of the Day first recommended EGHT on Nov.15, 2011, at $3.84. Buy EGHT under $6.25 for a trade to $8 or as a key cloud computing holding.
Major international insurance company AIG (NYSE:AIG) has paid back $182.3 billion in government aid that was provided to bail out its mortgage obligations and credit default problems in 2008-2009. Analysts now view AIG’s financial position as “stable.”
Earnings have climbed from deep losses in 2008 and 2009 to an estimated $3.34 per share in fiscal year (FY) 2013, ended in December, and the consensus average estimate is for earnings of $3.87 in FY 2013.
Following a correction after a new high at over $37 in October 2012, the stock established a bull channel and broke that high early in February. Our buy under price for traders is $38, and with accumulation building and MACD turning up, the stock could make a quick run to $45. Investors seeking long-term gains may be rewarded by purchasing the stock at the current price.
Small-cap maker of computer-aided design/computer-aided manufacturing (CAD/CAM) software products, Cimatron Ltd. (NASDAQ:CIMT), provides an integrated design-through-manufacturing process for small companies and large corporations worldwide.
The Israeli company recently reported record Q4 earnings and revenues, but management’s most interesting announcement was that “Cimatron is currently exploring new opportunities in the field of additive manufacturing, also known as 3D printing.” Management is confident that their knowledge of various manufacturing processes applied to 3D printing will enhance its overall appeal to customers. The company paid a dividend of over 5% in the last 12 months, but it does not state a firm payment since it is based on quarterly earnings.
The stock dramatically broke from under $5 to over $8 in January, and in mid-February, jumped to almost $13, a result of management’s recent announcements. Since then, it has retraced part of the gain and is currently below our buy under price of $7.25. Buyers should use caution since this is a highly speculative small-cap stock that could be subject to violent swings.
Small-cap medical equipment and supply company, Conceptus Inc. (NASDAQ:CPTS), focuses on women’s health care. Its well-known product, Essure, is a permanent birth-control procedure with a non-surgical insert. In 2011, approximately 600,000 women underwent the Essure procedure.
Q4 2012 earnings of $0.17 beat estimates of 13 analysts covering the company by 49%. The stock is among the top 100 recommended by Thomson/First Call.
Technically, CPTS is trading within a gradually increasing bull channel with a low under $21 and a high at over $24. This small-cap is long-term buy that could produce excellent results. The buy under price is $21.50.
Lennar Corp. (NYSE:LEN) is a homebuilder and provider of financial services, and through its Rialto Investment segment, is an investor in distressed real estate. Although the company has exposure to the uncertainties of the real estate market, analysts expect it to see a 32% increase in revenues in fiscal year (FY) 2013 following a 33% rise in FY 2012. Earnings improved to $3.11 in FY 2012, up from $0.48 in FY 2011.
The stock recently broke the bottom of a clearly defined bull channel but quickly turned, and thus, triggered a buy signal from our internal indicator, the Collins-Bollinger Reversal (CBR).
Buy LEN under $38 for a trading target of $45. LEN can also be bought by long-term investors as a key stock in the construction industry group.
Westport Innovations (NASDAQ:WPRT), a global leader in the manufacturing of natural gas engines, uses innovative alternative energy technology that allows diesel trucks to run on natural gas.
Management recently cut its 2012 revenue outlook from $400 million to $340 million, and the company has a string of losses. But those who believe, as I do, that a major change is about to occur in the use of natural gas vehicles (NGV) should consider this stock. On Nov. 15, Deutsche Bank (NYSE:DB) initiated coverage of WPRT with a “buy” rating, saying, “We believe risk-reward is attractive at current levels.”
On Nov. 26, the company announced a unique on-board storage solution. The company said that their newly developed LNG Tank System is expected to give the ability to fuel even the largest spark-ignited engines on a single tank of LNG and reduce the overall fuel costs and weight “dramatically.” On Dec. 3, it was announced that Westport would provide natural-gas-powered versions of the Ford F-450 and F-550 Super Duty trucks in mid-2013, and recently truckers in Canada have begun installing the system.
Technically, the stock reversed its long-term downtrend by breaking through its bearish resistance line at $28 and jumping to $32.89. Profit-taking could drive the stock under $30, which is our buy under price. The near-term trading target could be as high as $38, and long-term buyers could see substantially higher returns.
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