I follow quite a lot of companies -- some more closely than others -- so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and what's really moving the market. Even worse, without my watchlist, I'd be lost when it came time to choose what stock I'm buying or shorting next.
What I intend to do as an experiment is to make every Wednesday "Watchlist Wednesday," where I'll discuss three companies that have crossed my radar in the past week and at what point I may consider taking action on these calls with my own money. Keep in mind these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile, and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
With the stock market trading at multiyear highs, this week's watchlist is skewed toward short-selling opportunities.
US Airways (NYSE: LCC )
First up is US Airways, which is, in my opinion, the next worst national carrier on the list now that American Airlines has filed for bankruptcy protection.
US Airways, no stranger to seeking bankruptcy protection itself, is the nation's fifth-largest airline, and rumors have been flying recently that it may make a bid to merge with AMR. Let me assure you that this would be a merger out of weakness, not of equals. Despite controlling 20% of the domestic market, this merger would intertwine two of the weakest route combinations into what I suspect would be one really bad, highly levered company -- even after AMR's restructuring. Investing in the airline sector is already a losing battle most of the time, so I'd consider betting against US Airways as it attempts to fly to a new 52-week high.
Green Mountain Coffee Roasters (Nasdaq: GMCR )
Green Mountain did its best last week to bury pessimists under a hill of beans – metaphorically, of course. The name behind the Keurig K-Cup single-brew coffee system crushed Wall Street's EPS expectations by $0.24 and roughly $100 million in sales. So much for increased competition, right?
Well, I for one am still concerned about Green Mountain's valuation. Later this year, two of the company's K-Cup patents are set to expire -- an invitation that could allow competitors to move in on the single-cup craze. I actually feel investors are underestimating just how much impact the patent expiration could have. Green Mountain has built a relationship with Starbucks (Nasdaq: SBUX ) to co-brand its K-Cups, but that may not be enough to save it if competitors begin popping out of the woodwork, as I anticipate. I'd use this earnings pop as an opportunity to sell, as the valuation is once again looking very frothy.
Tudou Holdings (Nasdaq: TUDO )
C'mon, you knew there'd at least be one company on this list that had received the "Facebook bump." Tudou Holdings, a company that specializes both in the online video market and in losing money, saw its shares jump dramatically following the announcement of Facebook's IPO. Needless to say, I don't think the move is warranted.
Tudou has yet to prove it can turn a profit despite rapid revenue growth -- sound like 1999 all over again? Tudou also relies on advertising for 85% of its sales. Advertising-heavy Internet-based companies largely perished in the early 2000s because of a lack of true revenue generation. If the global economy were to hiccup, a company like Tudou would feel it much harder than rival SINA (Nasdaq: SINA ) , which has a stronger balance sheet, is turning a profit, and has more diversified business segments. My advice is to say Tudou-loo to this stock.
Foolish roundup
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider following my cue by adding these three companies to your free and personalized watchlist to keep up on the latest news with each company.
Also, to avoid the pitfalls described above, consider getting your copy of our latest special report, "The Motley Fool's Top Stock for 2012." This report details a company that our chief investment officer has described as the "Costco of Latin America," and it's yours for the low, low, price of free -- so don't miss out!
RSS Headlines
Fool UK