3 Watchlist Stocks

This article is part of our Rising Star Portfolios series.

Most investors don't keep tabs on their companies' fundamental value. That's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home run stocks that provide the market's best returns.

We can help you keep tabs on your companies with MyWatchlist.com, our free, personalized stock tracking service. Here are three stocks from my watchlist.

1. CAPS Weekly Top Stock Idea: Baltic Trading (NYSE: BALT  )
Each week, I cull a top stock idea from the pitches made on CAPS, The Motley Fool's 170,000-member free investing community. Baltic Trading, a pick from October, caught my eye since its shares had fallen from where it was picked. Baltic Trading, a spinoff of Genco Shipping & Trading (NYSE: GNK  ) , has a new fleet purchased with cash from its IPO and a cash infusion from Genco, which retained 26% of the company. The best part is that Baltic Trading had only around $70 million in long-term debt as of Sept. 30, 2010, a far cry from shippers such as DryShips (Nasdaq: DRYS  ) and Eagle Bulk Shipping (Nasdaq: EGLE  ) whose balance sheets are stuffed with billions in debt.

To see the pitch selected for CAPS' Weekly Top Stock Idea, click here. If you want to follow my weekly picks, you can subscribe to the series' RSS feed or follow on Twitter: @CAPSTopStocks.

2. Sirius XM (Nasdaq: SIRI  )
After having risen more than 30 times since its lows in 2009, it's hard to ignore Sirius XM, the nation's only satellite radio company. I have gone as far as to call the company unbeatable, with its moat coming from its huge network of 20 million subscribers and no direct competitors. At this price I'm not willing to jump in, as there's no margin of safety, but with a pullback I'd be tempted.

3. Jos. A. Bank Clothiers (Nasdaq: JOSB  )
Jos. A. Bank sells men's clothing around the U.S. and is a top-notch retailer with CEO Neal Black at the helm. The company has been earning roughly 20% returns on equity for the past seven years -- no small feat. The company has no debt and roughly $6.45 per share in cash. Netting out the cash, you have a company trading at just over 12 times earnings. For a top-notch retailer, that's a pretty great price.

My Foolish bottom line
If you're looking for more information on these companies, keep checking in on my Rising Star portfolio in the coming weeks as I look further into each of them.

This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. Click here to see all of our Rising Star analysts (and their portfolios).

Dan Dzombak's musings and articles he finds interesting can be found on his Twitter account:@DanDzombak. He does not own shares in any of the companies mentioned here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (7)

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  • Report this Comment On February 01, 2011, at 12:34 PM, siriuslyrick wrote:

    Dan: Can you please explain what you mean by "no margin of safety" with Sirius XM? Is that based solely upon recent performance, or are you using some sort of fundamentals criteria, or...?

    Thanks.

  • Report this Comment On February 01, 2011, at 1:53 PM, ThongLover854 wrote:

    With all due respect, my belief is the author, like many other authors, analysts, etc., didn't get in when they should have 1-2 years ago. I got in at $7.00 and was frustrated...BUT...then I backed up the truck at .06 and .15 and bought 10's of thousands of shares for just a few bucks because i believed in the service. It was a gamble, but even just a year ago, bankruptcy fears had subsided. You could have purchased in 2010, but now people still wait.

    Here's my take at today's price of $1.64. Do you think it's more likely for SIRI to go to $5.00 in the next two years or Apple to $1000/share in the next three years? Apple is the darling, but I would bet my left ARM that SIRI will be at $3.00 within 18 months and $5.00 within 2 to 2.5 years. Why? Well there are a bunch or reasons that most analysts never seem to mention...

    1. Subs steadily climbing - 20 million plus right now...could easily hit 22-24 million in next 2-3 years.

    2. Auto sales climbing...now forecast over 13 million for this year. At peak, 15-16 million a few year ago. This bodes VERY WELL for SIRI. With Sirius radios in 60% or more of new autos...almost 50% become subscribers...that's easily 3 million plus a year before churn. That's substantial to say the least.

    3. CAPEX reduction...expenses have dropped to record low levels after full merger synergies have taken place. With another satellite launched late last year, the most significant costs for SIRI have already taken place. This means a better bottom line and a more smoothly flowing operation...right now and into the future.

    4. NOL Carryforwards...how many? Like $8 billion in net operating loss carryforwards to enjoy in the future...reduced taxes...increased profits...good stuff...

    5. SIRI 2.0 - A gamechanger...imagine Audio DVR for your AUTO...I have been a XM and Sirius subscriber for years and I cannot wait. To have my favorite shows and music waiting for me so I can listen when I begin my drive...now that's cool...Pandora who? Pandora is a big zero in my book and this is the big tech story coming this holiday season...

    SIRI 2.0 means way more than an Audio DVR for your AUTO. The management and techs at Sirius are coming up with some amazing services that will change SATRAD. I for one would not wait around to find out what services will be available. At that point, it will be too late.

    6. There are plenty more positives and very, very few negatives. With debt restructuring at more favorable rates and S&P upgrades likely again soon, this stock is set to bash through $2 and head up at a very rapid rate. From .02/share to .05 to .10, SIRI is on it's way to even more greatness.

    For those of you sitting around waiting...enjoy your seats on the sideline. I, for one, have already played an exciting 1st half of a great game for this stock...Long Siri...

  • Report this Comment On February 01, 2011, at 2:49 PM, ThongLover854 wrote:

    Haha...hey Rick...i tried to respond to your post, but apparently it wasn't a "proper" post...let me try again...

    -Dan is absolutely correct in everything that he wrote...

    There...let's see if this one makes it through...

  • Report this Comment On February 01, 2011, at 2:50 PM, ThongLover854 wrote:

    -My apologies...please disregard my last comment...it had been over 30 minutes and i thought i had been censored. I commend you from letting my post stand...thank you.

  • Report this Comment On February 01, 2011, at 3:01 PM, siriuslyrick wrote:

    ThongLover854, that does nothing at all to answer the question. So, Dan,...?

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