Sunday, January 07, 2007

Barron's Summary

Medifast (MED) shares now look vulnerable to investors worried about the rejection of a positive dietary study and the authorship of some supportive Internet messages (article speculates that co’s CEO pushes the stock at Yahoo! Message Boards).

Notablecalls: The co’s CEO Bradley T. MacDonald quit on Friday. While the stock already got hit somewhat on Friday, I believe it will be down more... much more on Monday.
Example of Mr. MacDonald in action can be
seen here.

It wasn’t easy for a telecom co to have a lousy 2006, but SprintNextel (S) managed it, shares down 11% with the sector up 30%, missing earnings forecasts 3 straight qrtrs, a messy merger integration in a year when the AT&T-BellSouth deal was acclaimed as a masterstroke. All this was more than enough to lose friends on Wall St., where only a 1/3 of the analysts now recommend Sprint stock, as opposed to 70% of them pushing AT&T. But turnaround seekers should take heart in the sour sentiment, as well as the stock's cheapness v. the industry, based on cash flow. Sprint, with a $56bn mkt value and less debt than its peers, is buying back $6bn in stock while investing $3bn in local WiMax. If it pays off, great. If not, and the core business keeps struggling, the stock's not expensive, and Sprint as an acquisition tgt is already being bandied. All of which shifts the risk/reward bargain in investors' favor.

Fund manager likes BEN, AB and JNC, dislikes JNS, TROW, FII, CNS and LM.

Bed Bath & Beyond (BBBY) trades for 39, or a relatively inexpensive 16x F08 ests. The stock could rise into the high 40s if the co can top its '08 earnings guidance.

One Origin Agritech (SEED) fan, Maxim Group, believes it is worth $21 a share. And the co says it is still focused on acquisitions. But litigation could well drag the stock price still lower.

Tyco International (TYC) shareholders may hit the trifecta: Shares could be worth 50% more than Tyco's current stock, thanks to higher price-earnings ratios.

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