Monday, December 10, 2007

True Believer Stocks

We call it love only one, our contest pitting 17 financial pros against the S&P 500 on a single stock call. We have a dozen bulls and five bears.

The 12 months ended Oct. 31 were great for both sets. Our 12 long picks delivered an average price increase of 30%, 18 percentage points ahead of the S&P 500. Four of the five short recommendations finished the period deep in the red; the five averaged a 21% loss.

Paul Noglows, research director at Lazard (nyse: LAZ - news - people ) Capital Markets, smacked a home run for last year's bulls. A Love Only One newcomer in 2006, he went for Deckers Outdoor (nasdaq: DECK - news - people ), an idea supplied to Noglows by Lazard retail analyst Todd Slater. Deckers, which makes footwear (Teva, Ugg) and keeps beating earnings forecasts, rose 163%.

For 2008 Noglows goes with another Slater recommendation and picks Endeavor Acquisition (amex: EDA - news - people ), a holding company poised to acquire American Apparel of Los Angeles. Noglows believes the deal will close and that American Apparel, whose name Endeavor will assume once the acquisition is complete, is a company worth buying. A vertically integrated purveyor of casual wear like T shirts and underwear, American Apparel had 2006 sales of $265 million. Noglows expects revenues to hit $340 million this year and $1 billion by 2010.

Full story at Forbes.com