Focus Media (FMCN) and NetEase (NTES) are two of the best-performing stocks in the Chinese Internet and New Media sector year-to-date. My research suggests these two stocks are now attractive trading opportunities: Focus Media represents a buying opportunity, while NetEase represents a shorting opportunity.

Focus Media's turnaround story has not been fully recognized by the market. With the Chinese advertising market continuing its recovery and Focus Media increasingly refocusing on its core businesses, I forecast Focus Media will grow non-GAAP EPS by 54%-62% year-over-year to $1.05-$1.10 in 2010. According to my calculations, currently investors on average are estimating around 30% Y/Y EPS growth in 2010, much lower than my forecast range. I believe the market's conservative stance on Focus Media is due to the uncertainty regarding whether the U.S. economy is heading toward a double-dip recession, which could have a negative ripple effect on global economic growth and advertising spending. In my opinion, even in the worst-case "double-dip" scenario, Focus Media is still a turnaround story mainly because of the steps it has taken to refocus on its core businesses (Commercial, In-Store, Poster Frame networks). I believe the market will eventually become more optimistic and raise its 2010 EPS growth estimate to at least 55% for Focus Media, which implies significant upside to current stock price.

Education Stocks: Is Worst Over?

Mercenary Trader submits:

By Mike McDermott

For-profit education companies have taken a pounding over the last few months. While bullish investors point to stable earnings and a growing need for vocational education, regulatory concerns have given the bears the upper hand.

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East West Bancorp: How to Profit from Failing Banks

StreetAuthority submits:

By Melvin Pasternak

As the economy continues to slide, regional banks are failing at an alarming rate. So far, in 2010, 109 banks have failed. This brings the total number of bank failures since 2007 to 277. As a result, many regional banks provide excellent shorting opportunities.

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Looking to Short Recreational Boating

Kevin Parker submits:

If you attempt to describe the economy in the last couple years (and where I believe we're heading), you could call it the crumbling of the American dream. Big homes, fun lifestyles and easy money have been the cornerstone of the American dream in recent decades. Sadly, this is changing dramatically.

An industry that has been pummeled in the midst of this shift is leisure and recreational boating. There are two companies here that I'd like to briefly look at: Brunswick Corporation (BC) and MarineMax (HZO).

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As Summer Closes, We're Loving the Shorts

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China-Biotics vs. Spreadtrum Communications: Why AIC Filings Matter

Chinese Company Analyst submits:

Over the past few months, the topic of financial filings with China’s State Administration for Industry and Commerce (SAIC) has made frequent appearances within the U.S.-listed Chinese RTO (“reverse takeover”) sector. I and other critics have advocated that AIC filings are important data points in determining whether certain Chinese RTOs are falsifying their SEC financial statements. In cases where AIC-reported revenue, profit and assets are substantially lower than SEC-reported financial figures, we’ve claimed that this provides material evidence that the companies in question are fabricating their SEC financials.

Our arguments have made sense to many investors, but some remain unconvinced. Misleading responses by certain of the alleged frauds that AIC filings don’t matter have muddled the debate. These companies, such as CMFO, LIWA or CSKI, have claimed that AIC filings are unimportant and are not taken seriously in China, and that investors should not use these filings as data points when analyzing U.S.-listed RTOs. I strongly disagree.

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Momentum Book Update: Please Stop Trying to Short the Long Bond

Wow, what a week. It’s taken a little while for it all to sink in, there were a lot of moving parts over the last five trading days. Just a short warning, this week’s momentum book update will be quite long, so if you’d like to skip to the position and performance section, scroll down to the bottom, I’m about to rant a bit on several market topics.

Let’s take this in chronological order here. The talk coming into this week was all about bonds. You couldn’t escape the headlines of huge in flows to bond mutual funds, financial bloggers throwing their two cents out there about why that was taking place, and everyone trying to call a top in the treasury market. The market whipped around last Monday, but the ugly close mixed with a late rally in the long bond put me on notice.

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Donaldson Company and CSG Systems: 2 Plays for a Slow Monday

MAN). The company looks poised to grow as the employment market continues to grow.

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Why I'm Long Aeropostale and Short Abercrombie & Fitch

Michael Allen submits:

One of the worst mistakes that an investor can make when trading retailers, in my experience, is to buy a bad retailer on good comparable store sales data. The second worst would be to sell a good retailer on weak numbers. When the entire market makes the both mistakes at the same time, as seems to be the case with Aeropostale (ARO) and Abercrombie & Fitch (ANF), it sets up a nice pair trade.

Neither company sports particularly demanding multiples. However, I hope to show in this piece that ARO is clearly the stronger retailer with more attractive growth prospects, yet it remains considerably cheaper and technically more attractive. Based on projections to 2/11, ARO’s P/E is only 7.2x, compared to ANF’s 15.3x. Price to cash flow is only 6x, compared to ANF’s 7x. These projections have a wide margin of error, but this is why we hedge: any downside risk would fall completely to ARO’s advantage, since it has the better value proposition from a consumer ‘s point of view, stronger financial flexibility, and an insurmountable advantage created by its nearly 5x faster inventory turns.

ANF has outperformed ARO by 54% since July 6, but has lost enough momentum to trip the relative MACD trading signal. I believe the outperformance stemmed from a widespread misreading of recent revenue and margin trends.

If one looks at the raw sales data alone, it is easy to think that ANF has recovered, and that ARO might be in trouble. After declining more than 15% in the later months of 2009, ANF’s monthly comps have become far more correlated with the apparel chain average. In the most recent two months, ANF handily exceeded the average. Meanwhile, ARO’s monthly comps took a nose-dive in July, that has some analysts concerned about its ability to keep market share. Unfortunately, this is just the wrong way to look at the data because it doesn’t tell us what caused these abrupt changes and more importantly, it doesn’t tell us what will happen next.

If we index the sales to 2008 data, we get a much better picture of the trend. What we see now is that ANF’s comparable stores sales are hovering at less than 80% of peak levels. ARO’s revenues are hovering at a level about 15% higher than 08 levels and remain on a gradual incline. ARO’s sales frequently drop to this level as part of the normal volatility, and they always recover. It is always better to buy a strong retailer like this when the most recent month’s sales are below trend because the company reliably recovers and goes on to reach new highs in sales, usually within one or two months.

While ANF seems to have stabilized at the current level, all we can gather from the chart about the most recent two months is that they were slightly above trend. If August returns to trend, ANF’s sales comparisons will be flat in August and slightly negative for the remaining months of the year. Management would argue that they have turned the corner. ANF cut its average retail unit price by 15%, and the company demonstrated during its recent earnings call that these promotions were successful in driving gross margin dollars. Moreover, management is prepared for a sustained aggressive promotional environment. Promotional pricing, however is a dicey way to drive traffic – it usually does not lead to sustained increases in traffic and can easily backfire– just look what happened to the federal homebuyer tax credit schemes and its total lack of long-term impact on home sales.

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TiVo Is Quickly Becoming Irrelevant

StreetAuthority submits:

By David Sterman

Investors that look to short stocks seek out two kinds of investments: those that are simply overvalued, and those that may go out of business. The latter are known as a "terminal short" (as in terminally ill), and though they are rare, they can be very profitable.

Parsing TiVo's (Nasdaq: TIVO) fiscal second quarter results that were released Wednesday evening, you'll find a company that is beginning to lose altitude. And as you look out into the future of TV and Internet programming, it's hard to see how the company will remain a compelling choice for either consumers or its media partners.

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Overstock.com: A Potential Torpedo Stock

Value Expectations submits:

Overstock.com, Inc. (OSTK) is an online retailer offering closeout and discount brand and non-brand name merchandise, including bed-and-bath goods, home décor, electronics and computers, and apparel, among other products. Overstock is organized into two segments including Fulfillment Partner Business Segment (80% of revenue), which functions as a liaison between value-conscious consumers and retailers and manufacturers looking to liquidate surplus inventory, and Direct Segment (20% of revenue) which sells directly to individuals and businesses.

We believe OSTK will underperform the market for the following reasons:

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This Week's Shorts: Symantec, Burger King, Toll Brothers

Trader Mark submits:

My non-index shorts have not been much of a help the past few weeks; I've either been stopped out for quick 1-3% losses, or my gains have been of a similar nature. I am intermediate term bearish until/unless the S&P 500 can regain a lot of lost ground, but am hesitant to do much with the indexes here except on an intraday basis AFTER the morning knee jerk reaction to the data series we will have coming our way.

Hence, shorting bad individual charts remains preferable. I just need to find some that will work this time around. Time to try a new basket.

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Abercrombie & Fitch CEO Is Selling Stock and So Should You

Ockham Research submits:

This morning Bloomberg reported that Abercrombie & Fitch (ANF) CEO Michael Jefferies—who has led the retailer for nearly two decades—has announced that he intends to sell as much as 1.79 million of his shares. At current market value, a sale of that magnitude would net him nearly $63 million pre tax. This appears to be a similar move to Ralph Lauren’s recent announcement of a major share sale in Polo Ralph Lauren (RL), and with capital gains taxes likely on the rise, these sales could potentially save millions in capital gains taxes.

Apparently, Mr. Jefferies is undeterred by an investigation by an executive compensation watchdog group, The Shareholders Foundation, on behalf of long term shareholders. They claim that ANF’s management compensation has been excessive and has breached their fiduciary responsibilities. At Ockham, we are not shareholders of ANF nor do we know whether or not the investigation has merit or will lead to legal action, but it does at least demonstrate some level of dissatisfaction between shareholders and management performance. Their press release states,

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6 Dividend Aristocrats to Consider

Scott's Investments submits:

In a continued effort to expand the focus of my site's screens and hypothetical portfolios, this article is a fourth follow-up to an article written in early April focusing on the S&P 500 Dividend Aristocrats. The S&P 500 Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years. The current list has 43 constituents.

If an investor wanted to replicate the list the best option is probably SDY, the SPDR Dividend ETF, which is a variation of the Aristocrats - it seeks to replicate the “High Yield” Dividend Aristocrats Index. An alternative is to start with the Aristocrat list and then reduce the list of candidates through screens and/or fundamental analysis. I screened for Aristocrats which had a sustainable payout ratio, a high dividend yield, reasonable debt/equity ratio, and moderately positive return on assets and equity.

Using Finviz, I screened the Aristocrat list for:

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