The Eight [Worst/Best] Stocks Of 2009?
Zero Hedge has compiled a list of the 8 worst/best [take your pick] stocks of 2009. The selection criteria include Russell 2000 stocks which have returned over 1,000% from their 52 week low, and which have a 10% or higher short interest. The last criteria is a function of our ongoing belief that this entire rally has been built on the backs of forced short covering action, in which those experiencing a squeeze are happy to lift any offers as long as they can get respective repo desks/margin call repo men off their backs. Another interesting observation is the 1 year growth in revenue and EBITDA. We use the term growth loosely as the median growth Year over Year for the universe of 8 has been -20% and -25% respectively: not exactly the stuff 1,000%+ rallies are made of. Lastly, of the eight companies, four have negative unlevered LTM free cash flows, which in this day and age of Fed sponsored moral hazard may in fact be a good thing.
For those who are [brave/stupid/risk tolerant/addicted to gambling] enough, one possible way to approach this grouping is to buy medium/long-term straddles on these names as there is likely no way in the world these 8 companies are priced to perfection assuming such a unique confluence of favorable technicals and adverse fundamentals. At some point, one of the two will win, and these stocks will either plummet or skyrocket (they still have substantial short interest). Buyer, of course, beware.