Stock Du Jour

It was perhaps the best candy bar I've ever had. It's end was met on Thursday as I was dropping off a friend at the airport, following a grueling trip we had taken. We were both tired, worn out, and of course, tremendously hungry. While removing his luggage from the trunk, I noticed a small plastic bag left over from a few days prior, containing the melting remains of a Snickers bar. My girth indicates I'm not terribly picky about what I eat, so ... shortly after I marveled how one finds value in the most unlikely places. Actually that's not what I was thinking, but it's a good segue to the important topic: where the money is.

The Snickers in the trunk of your portfolio might just be Cellstar (NASDAQ: CLST). The stock has had an impressive run this year from the low twenties to a high of 36. I consider this increase merited, since the company has posted impressive growth on the bottom line and their field, cellular products, obviously has a high growth future. But, evidently Wall Street does not agree: a major firm cut its rating on it from "Buy" to "Neutral" causing a selloff. The stock dropped like Tyson was in the ring, losing five points. Yet after the close Cellstar posted a healthy earnings increase of 38%, one penny above estimates. Coincidentally, the same firm two weeks ago issued a "Buy" recommendation on a stock which also lost $5 1/2 the same day as Cellstar. If they continue to sell the performers and buy the losers, the next time I need a good "Buy" I'll go shop their "Sell" recommendations.

If Cellstar truly is a performer, then I'm glad to have the opportunity to take advantage of a $5 discount. Be reminded that long term goals are comprised of a sequence of short term ones. If one angles for a 6-10% return every two months, my belief is Cellstar is a good buy below 32. It closed Friday at 31 1/4. Specifically, I see the short term 6-10% gain through appreciation in the stock and the possibility of selling options on it. For the long term the prospects are equally attractive, with earnings projected to grow 42% over last year and 28% next. If you have any questions, you can post them electronically to:

MDekom@aol.com

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