SABRIENT'S BAKER'S DOZEN

SABRIENT'S BAKER'S DOZEN

(From Stock World Weekly, January 8, 2011.  Read the Week Ahead section here.)

If you missed Sabrient's Baker's Dozen webcast, we have Sabrient's stock picks for next year here. Steven Russolillo at the Wall Street Journal covered the Baker's Dozen in “Stock Picks From a Group That Has Beaten the Market for Three Years Running.” He wrote, “Classic Wall Street strategies like the ‘Dogs of the Dow’ or ‘sell in May and go away’ have been around for years and have produced mixed results. A relatively new approach with a strong track record is hoping to gain some traction.

"Market research firm Sabrient Systems last night unveiled its ‘Baker’s Dozen’ list of top stock picks for 2012. The firm combines a fundamental and quantitative approach that combs through thousands of stocks before selecting what it believes will be 13 top picks of the year...”

Chuck Jaffe at MarketWatch also reported on the Baker's Dozen in “13 stocks for 2012.” Reviewing the results over the last three years, Chuck noted, “In 2011, Sabrient’s list averaged a gain of 7.3% — hurt by a loss of 73% in Trina Solar TSL — with its best stock up 105%.” (Trina may be an example of why considering a stop loss with this strategy may be reasonable.) In 2010, the Baker’s Dozen stocks gained an average of 21%, and in 2009, they gained an average of 36%. 

Sabrient's top stocks are selected because they score high on Sabrient's “growth at a reasonable price” (GARP) scale. Phil's buy-write strategy is well-suited for these stocks, as these companies have solid fundamentals but are selling at reasonable prices according to Sabrient's formula.

Sabrient's Baker's Dozen list for 2012:

Seagate Technology (STX) - Currently $18.30

Western Refining (WNR) - Currently $14.83

Ocwen Financial Corp. (OCN) - Currently $14.47

Watson Pharmaceuticals (WPI) - Currently $63.21

United Therapeutics (UTHR) - Currently $48.52

Cloud Peak Energy (CLD) - Currently $19.86

Globe Specialty Metals (GSM) - Currently $12.71

Dana Holding (DAN) - Currently $13.16

AGCO Corp. (AGCO) - Currently $47.64

DXP Enterprises (DXPE) - Currently $33.95

Kronos Worldwide (KRO) - Currently $21.70

United Rentals (URI) - Currently $29.63

Ameristar Casinos (ASCA) - Currently $17.35

Stock World Weekly editor Ilene asked Scott Brown at Sabrient to give us some buy-write ideas, designed so that one could enter some of these picks with a 10-20% discount. Scott sent in several ideas. Using the buy-write strategy, one would buy 100 shares of stock and sell 1 call and 1 put to complete the position. 

WNR: Sell the Mar $15 call at $1.40 and sell the Mar $15 put at $1.65.

STX: Sell the Mar $18 call at $1.50 and sell the Mar $18 put at $1.35.

GSM: Sell the Mar $12.50 call at $1.20 and sell the Mar $12.50 put at $0.95.

DAN: Sell the Mar $13 call at $1.20 and sell the Mar $13 put $1.00.