Portable Alpha Daily

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Sunday, January 28, 2007

Leadership in Telecom?

Here’s a look at how our analytic ranked the following sectors for alpha generation through Friday’s close. I’m still not seeing many clearly-defined buying opportunities on a sector level, which along with no buy recommended major markets and no buy recommended style-box investments continues to support my bearish stature. I’m just not comfortable with the dynamics at the moment; I’m seeing conflicting economic analysis, conflicting technical analysis; and conflicting earnings reports. Sure there are winners out there, but trying to chase returns in a range-bound environment is a recipe for disaster.

Aside from the Real Estate (IYR) sector, which has quietly generated alpha for a few weeks now, the Telecom (IYZ) sector had a very impressive week in light of the volatility experienced in the tech arena. With the QQQQ’s down 1.36% and the S&P 500 down .58% for the week, the AAS buy recommended Telecom stocks listed below generated significant alpha.

I’m still partial to ADC Telecom Inc. (ADCT), which is up nearly 5% since I mentioned it in last Monday’s post (most of that happened on Friday though).

But I also like Andrew Corp. (ANDW) whose products according to Google, “are used in the infrastructure for traditional wireless networks, third-generation (3G) technologies, voice, data, video and Internet services, as well as applications for microwave and satellite communications, and other specialized applications.”

Its trend is more established than ADC Telecom, but it’s still trading-well below it’s 52-week high. Another interesting note is the recent expansion of Andrew Corp. into the Indian telecom market, which along with China is the fastest growing in the world.

Short-Term Technical Indicators

Investor Sentiment

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

Asset Allocation – AAS Model Portfolios are between 56.25% and 75% long currently.

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 investments

Top Rated Style-Box Derivative – No buy recommended style-box investments

Top Rated Sector Derivative – iShares Dow Jones U.S. Telecom (IYZ 1/26/07)

Today’s Top “Buy” Recommended Stocks

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

CPI Corp. (CPY 1/23/07)

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

MEMC Electronic Materials, Inc (WFR 1/8/07)

Energizer Holdings Inc. (ENR 1/26/07)

Martin Marietta Materials, Inc. (MLM 11/6/06)

Savient Pharmaceuticals Inc. (SVNT 8/9/06)

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

Navistar International Corp. (NAV 9/12/06)

CarMax Inc. (KMX 7/25/06)

Today’s Top “Sell” Recommended Stocks

Plexus Corp. (PLXS 12/29/06)

Advanced Micro Devices Inc. (AMD 9/27/06)

Whole Foods Market Inc. (WFMI 11/2/06)

StarTek, Inc. (SRT 11/28/06)

Children’s Place Retail Stores Inc. (PLCE 11/17/06)


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