"Street Critique"-Hilary Kramer, Market Strategist & Personal Finance Editor at AOL
Wednesday, August 22, 2007PAUL KANGAS: Tonight's "street critique" guest is doing some bargain hunting and has a list of stocks she says have been beaten down unfairly. She's Hilary Kramer, market strategist and personal finance editor at AOL. And Hilary, welcome back to NIGHTLY BUSINESS REPORT. HILARY KRAMER, PERSONAL FINANCE EDITOR, AOL: Thank you, Paul.
KANGAS: The last time you were with us, you wrapped up the segment saying cash is king. Sounds like you might be changing your mind a bit and starting to dip in on the buy side, true?
KRAMER: It would only be with the stocks that have really been beaten down and there are opportunities that fit into the future, which might be a recessionary environment.
KANGAS: Elaborate a little bit more on the fundamentals that have to be in place for you to do a little buying.
KRAMER: We would have to have revenue growth, real revenue growth potential. And we would have to have a strong management team and a company that is a killer in its space. You want the top player in each sector.
KANGAS: All right. Let's cut to the chase. Tell me about your first selection.
KRAMER: OK, Metalico (MEA), Metalico was a stock that was thrown in the scrap metal heap. This is a recycling company, metal recycling and the stock came all the way off because some hedge fund had to unwind their positions at $7. Metalico is really a bargain and I see it going to $12.
KANGAS: We see the weakness on that chart. I also know you like Comverge (COMV), which just went public on April 13 at $18 a share, a little above that now. What do they do?
KRAMER: Comverge is a company that helps prevent blackouts. What they do is they provide efficiency to electric utility companies, grid upgrades we call it and also metering. Comverge, COMV, is a bargain at $24. It's been as high as $39. Again, the baby was thrown out with the bath water.
KANGAS: How about another selection?
KRAMER: Tetra Tech (TTEK). This is a water company, a water utility based in Pasadena, California. I know this company, strong management, amazing contract with municipalities, governments and yet Tetra Tech came all the way down because again hedge funds had to sale. They had margin calls. You will see Tetra Tech go from $20 all the way up to $24 probably even in the next six months.
KANGAS: I understand your last pick is a semiconductor testing firm.
KRAMER: That`s right, that's right. ASE Test (ASTSF), they test semiconductors and you can see how this company just came crashing down. The expectation is that we're going to see ASE be acquired by its parent company and I still think it`s going to happen, so we are going to see ASE come back. At $11, it certainly could go back at 15.
KANGAS: All these charts have a similar pattern of recent weakness so you`re picking out bargains according to what your thoughts are.
KRAMER: That`s right. It's all about bargains and companies that will go for the long term.
KANGAS: Do you own any of the stock you mentioned or have any other disclosure to make Hilary?
KRAMER: Yes, Metalico and Comverge, I'm betting on those with money.
KANGAS: OK. Any final thoughts on today`s market comeback? Is it laying the foundation for a run back up to record highs?
KRAMER: Paul, it's all about expectation. We`re not going to have record highs just yet, long term, yes. We have the best stock market, but short term, it's a head fake. It`s about expectations. It's about people thinking that we`re finally secure and that the Fed is going to come and rescue us. It's expectations, don't be fooled.
KANGAS: That's why you like these defensive selections.
KRAMER: That's right.
KANGAS: It`s great to have you on again. We'll see you once more on September 5.
KRAMER: Thank you, Paul.
KANGAS: My guest, Hilary Kramer, personal finance editor at AOL.
