Portable Alpha Daily

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Monday, January 08, 2007

Ceradyne and Aeroflex

President Bush is scheduled to address the nation this week and spell out a new strategy for the war in Iraq, which might include a surge in troop deployment of 20,000. This might be an opportunity for investors looking for long positions to allocate into companies specializing in armor / military equipment.

One of my favorite companies is Ceradyne Inc. (CRDN 11/1/06), which is listed below as one of our top “buy” recommended companies. Ceradyne, Inc. specializes in the development, manufacturing, and marketing of technical ceramic products, powders, and components for defense, industrial, automotive/diesel, and commercial applications in the United States. Aside from the domestic operations, the company’s products are used to in lightweight ceramic armor for soldiers and other military applications.

I first listed Ceradyne as a "buy" recommended stock back on November 8th, one week after its initial “buy” recommendation on November 1st. An anonymous viewer questioned the sustainability of Ceradyne assuming a reduction in U.S. troop deployment. In and of itself, the question is valid, but the viewer was a bit pre-mature in his time frame and didn’t appreciate the diversity of operations at Ceradyne. In fact, the stock is up 24.61% since our initial “buy” recommendation and 15.07% since the post.

Aside from Ceradyne, another “buy” recommended company worthy of examination is Aeroflex Inc. (ARXX 1/3/07). The company engages in the design, engineering, and manufacture of microelectronic and test solutions to the broadband communications, aerospace, and defense markets. It was recently upgraded to “buy” recommendation status, and well below levels seen last spring, similar to CRDN back in November. It’s also fairly diversified, with operations spanning both the telecom sector, which I like for 2007, and aerospace / defense.

Short-Term Technical Indicators

Investor Sentiment

Long-Term Market Model – Bearish since December 8th.

Asset Allocation – 50% to 75% long within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or “Short/Sell” Recommendation

Top Rated Major Market Derivative – No “Buy” Recommended Major Market Derivatives

Top Rated Style-Box Derivative – No ”Buy” Recommended Style-Box Derivatives

Top Rated Sector Derivative – No “Buy” Recommended Sector Derivatives

Today’s Top “Buy” Recommended Stocks

NBTY, Inc. (NTY 12/5/06)

The Goodyear Tire & Rubber Co. (GT 8/23/06)

Par Pharmaceutical Companies Inc. (PRX 12/20/06)

Volt Information Sciences, Inc. (VOL 11/6/06)

F5 Networks Inc. (FFIV 9/20/06)

Precision Castparts Corp. (PCP 9/20/06)

Ceradyne Inc. (CRDN 11/1/06)

Polo Ralph Lauren Corp. (RL 8/28/06)

Angelica Corp. (AGL 10/12/06)

Rock-Tenn Co. (RKT 4/27/06)

Today’s Top “Sell” Recommended Stocks

CONSOL Energy Inc. (CNX 12/15/06)

Peabody Energy Corp. (BTU 12/14/06)

Carpenter Technology Corp. (CRS 10/26/06)

Lenox Group Inc. (LNX 12/22/06)

Intuitive Surgical Inc. (ISRG 12/19/06)


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