Today’s Daily Alert brings the first of your subscriber-only updates on the Top Picks for 2012, including the advisors’ current advice on the stocks wherever possible. There are a lot of updates, so I’ve broken them down into more digestible segments that will be spread over the next few days of Daily Alerts. The updates are in alphabetical order by stock name, so you can easily find updates on the picks you own or are interested in. Today we begin with updates on picks beginning with A-D.
A
Acacia Research Corp. (ACTG, $24) was picked by The Oberweis Report. Earlier this month, Editor Jim Oberweis gave this update on ACTG: “Acacia shares have had a rough year but the company is still one of our favorite long-term investment ideas. Acacia has become a leading aggregator of patents, accumulating directly or through joint venture the rights to over 250 patent portfolios related to 3G and 4G wireless technology, semiconductor technology, software, video-on-demand and medical devices and technologies. Over the last three years, Acacia has struck major licensing deals with the likes of Oracle, Microsoft, Samsung, and Cisco. While year-to-date revenues and earnings are up 21% and 100%, respectively, over last year, the stock has struggled over hints of regulatory scrutiny and sour sentiment toward patent aggregators. Despite the short-term noise, Acacia’s patent portfolios under management have increased by 30% over last year, which portends strong future revenue growth. Also of note, the company has a major patent litigation action against Apple that is scheduled to go to trial next year. Based on the actions of several of Apple’s competitors, we expect a sizable settlement before the trial begins. We believe revenue in 2013 could exceed $300 million and EPS could exceed $3 per share. On November 16, the firm announced a $100 million stock buyback. Even with Republicans in a weaker position, we don’t expect major patent law reform and believe shares to be significantly undervalued.” The Oberweis Report still rates ACTG a BUY.
Accelrys, Inc. (ACCL, $9), picked by Tom Byrne of The Periscope Report, has gained about 26% since the 2012 Top Picks issue was published. ACCL is now Byrne’s second-favorite current recommendation. In an update last month, he wrote: “Accelrys makes simulation and modeling software, along with data mining capability. The company has a ton of cash (30% of the stock price), no debt, positive cash flow, a growing market opportunity and few competitors. Plus, the technological barriers to entry are very high. A new CEO has doubled the size of this company in two years and it will probably double again over the next three years. So will the stock price.”
The AES Corp. (AES, $11) was picked by Utility Forecaster Editor Roger Conrad. In a November update, Conrad wrote, “AES reported a 28.6% increase in third-quarter earnings excluding items, thanks to successful business expansion, cost cutting and share buybacks. Management also affirmed its full-year 2012 guidance and indicated it would raise the dividend next year, while boosting its organization-wide cost-cutting target to $145 million a year by 2014, from a previous $100 million. That was enough to earn the stock an upgrade to buy at one of the research houses covering it, boosting the bullish analyst count to seven buys versus two holds and no sells. Many investors, however, seemed more interested in the reduction of its Ohio utility unit’s credit rating, and a $1.8 billion non-cash charge for asset impairment there. The company’s coal-fired power plants have been rendered less competitive by lower natural gas prices, and it faces some regulatory issues as well. Some may have been concerned about Brazilian operations in the wake of that country’s push for lower power rates, though management said the company has limited exposure to that issue. Global power production is a more volatile business than operating a regulated utility. But the reaction to this news looks overdone to me. I’m keeping my buy target at 15 for aggressive investors who don’t already own AES.”
Affymetrix, Inc. (AFFX, $3) was picked by Nate’s Notes Editor Nate Pile. In the December Nate’s Notes, Pile wrote: “The good news is that Affymetrix’s stock seems to have finally found some support; the bad news is that the company is continuing to struggle to keep up with its competitors — and I have to admit that as the stock gets cheaper and more time goes by without management generating some meaningful momentum for the company, the more difficult their challenge is going to become. That being said, with a current market cap of just a little over $200 million, I believe the stock represents one of the best risk-reward ratios among the stocks being recommended in the newsletter. But please do be careful about being too overweight in the stock ‘just because it is cheap.’ AFFX is a strong buy under $2.50 and a buy under $4.”
AirTouch Communications, Inc. (ATCH, $0.25) was recommended by The KonLin Letter. Editor Konrad Kuhn wrote last month: “AirTouch received a capital infusion of $2 million from investors to fund production of SmartLinx orders. Add/Buy.”
Alcatel-Lucent (ALU, $1.45) was recommended by Leo Rishty, Editor of Unique Situations. ALU has lost 18% of its value since the recommendation.
Appliance Recycling Centers of America (ARCI, $1.36) was recommended by The Quiet Investor editor John Gay. ARCI has lost 75% of its value.
Arcos Dorados Holdings, Inc. (ARCO, $12) was chosen as a replacement pick at mid-year by Cabot China & Emerging Markets Report Editor Paul Goodwin. ARCO is down 16%, not including the contribution from dividends, which yield 1.9% annually (1.6% on the price at recommendation).
Art’s Way Manufacturing Co., Inc. (ARTW, $6), picked by LSGI Technology Market Letter, is down 33%.
Asia Pacific Wire & Cable (APWC, $3.30), recommended by S.A. Advisory, is up about 6% so far this year. Earlier this month, S.A. Advisory Editor William Velmer wrote, “We still believe that APWC is the CHEAPEST stock in the world.”
B
Baidu.com, Inc. (BIDU, $99), recommended by Pearson Investment Letter Editor Donald E. Pearson, is down about 22% since the recommendation.
Berkshire Hathaway, Inc. (BRK-B, $90), recommended by The Blue Chip Investor Editor Steven Check, is up about 15% since the recommendation. As of December 3, Check is still holding with a target sell price of $115.39. He also rates BRK-B a buy below $84.43.
C
Chesapeake Energy Corp. (CHK, $17) was picked by Joseph Cotton for Cotton’s Technically Speaking and was also chosen as a mid-year Top Pick by Sound Advice Editor Gray Cardiff (to replace Transocean, RIG). Cardiff still rates CHK a BUY under $20 and wrote earlier this month, “Chesapeake Energy is up slightly since it was included in the portfolio earlier this year and we expect a large profit. We added it because it has natural gas assets worth in excess of $27 a share. The shares were cheap for three reasons: low natural gas prices, poor corporate governance, and a cash shortfall. There has been substantial progress on all of these aspects. Since our recommendation, natural gas prices have climbed significantly. Regarding corporate governance, Carl Icahn bought a 7.5% stake in September and has been instrumental in removing the founder, Aubrey McClendon, as chairman of the board and replacing several other board members. Mr. Icahn and his related entities added about 9.6 million shares ($951 million) last week to increase his portion to 8.98%. There is now pressure on the board to maximize shareholder value. To straighten out its cash squeeze, CHK has sold $11.6 billion of $14 billion in targeted divestments.”
Clearfield, Inc. (CLFD, $5) was recommended by OTC Growth Stock Watch Editor Geoffrey Eiten. Eiten currently rates CLFD a Strong Buy under $5.25 (his Strong Buy rating indicates that he expects up to 100% gains in the next 12 months). In his latest update on the stock, he wrote, “Clearfield announced the release of two new fiber management products designed to improve density and ease of fiber access, enabling customers to scale operations along with growing subscriber revenues. Clearview Blue, the latest generation Clearview Cassette, and FieldSmart FxHD, the highest density fiber distribution system in the industry, extend Clearfield’s commitment to maximizing all product designs for modularity and scalability.”
D
DeVry University, Inc. (DV, $24), recommended by Heartland Adviser, is down about 43%, not including dividend payments.
DLH Holdings Corp. (DLHC, $0.70), formerly TeamStaff (TSTF), was picked by Contra the Heard as a turnaround play. DLHC is down about 72% since the recommendation.