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Jelly Roll Capital Equity Research |
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Market Analysis, Education, and Wall Street-Quality Stock Reports |
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The First Jelly Roll Short 25 List |
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As promised yesterday, we will now unveil our list of the top 25 stocks to short - essentially, the worst businesses selling at the highest prices. This short portfolio is generated by the same quantitative model and methodology used to select the monthly “Top 25,” - which we should now designate as the “Long 25” - and this power ranking goes from stock #1 to stock #1533. Keep in mind, the #1 stock is the worst according to our model, so the #25 stock is marginally better, although still in the bottom 2% of our universe. In future updates of this list, we plan on tweaking the data gathering logic to increase our universe size of short plays and hopefully find even better leads. For now, we offer the following... The 25 stocks are: 1. Sonus Networks (SONS) The appearance of many large companies (GE, ERTS, BTU, TMO, CVS, and OMX) was interesting - especially Peabody (BTU), which is one of the larger coal companies in the country. Given my past enthusiasm for coal stocks, in particular Alliance Resource (ARLP), I found Peabody’s appearance here troubling. Upon further examination, it is apparent that is due more to valuation concerns than core business problems - so the source of the problem stems more from investors’ overenthusiasm, given Peabody’s overall solid results. Still, stocks on this list should be avoided, and I’m not willing to make a call to buck the trend here on BTU. I have been negative on GE and ERTS in the past (the article I originally mentioned that in also displayed my love for SUNW, which has since sufficiently corrected) and at these levels, I feel comfortable once again putting “sells” on those two stocks. Recently in an email exchange, I was asked about my opinion on Thermo Fisher Scientific (TMO). Instead of TMO (which I would be a seller of), I recommend Agilent (A), a similar company that also happens to be in the top 10% of all stocks according to the model. Admittedly, however, my insight into those stocks is purely financial, and I may have to check with my inside source at another similar company not yet mentioned. Sorry, gentlemen. Playboy (PLA) just doesn’t make the cut here. The lofty valuations and thin-to-nonexistent profitability just aren’t what I’m looking for in a business. If you want to dabble in adult entertainment stocks, New Frontier Media (NOOF) just missed the cut in making the Top 25 last month and is probably the better play. I hold absolutely no responsibility to those of you whose wives catch them “researching” these companies. |