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A Six Pack of Stocks on the Radar

As we approach the end of the quarter, I finish updating all the charts for the stocks I keep an eye on. Here’s six names I keep track of and what I think of those stocks right now.

Devry (DV)

The big thing against this stock is government uncertainty — Obama is really after these companies and can change laws to put for-profit school stocks out of commission. When the Department of Education reviewed what percentage of ex-students were paying down principle for each school, Devry hit the 35% minimum on the head, and should still be eligible for federal funding.

DV is only really worth 12-15 times eaarnings, so the upside isn’t that great even though the P/E is low.

OK, Devry  is an education stock — and this sector got pummeled this summer. Profit growth looks solid in the future and this P/E of 10 is very low.

Home Inns (HMIN)

Home Inns really whipped estimates last quarter. The street expected $0.28 and the company made $0.52. Additionally, next quarter’s estimates jumped from $0.31 to $0.53. 2010’s estimates increased from a dollar to a dollar-thirty-eight — just since last quarter.

This stock looks great, I also love the Chinese lodging market, as there’s great growth opportunity ahead for the next 5-10 years.  Many middle class Chinese families have never taken a vacation. Flying is something we do often, most Chinese do not.

I might buy this stock within the next month.

American Public Education (APEI)

American Public Education is focused on serving those serving in the Armed Forces.

APEI warned after reporting last quarter and blamed it on troops being sent into service (instead of sitting at home studying). Also, moving troops from Iran to Afghanistan hurts APEI because there’s no Internet access in Afghanistan.

APEI does work with educating WalMart employees, and that should boost profits long term, but this isn’t a stock I like right now. Estimates look poor. At 21 times earnings APEI isn’t even on sale.

K12(LRN)

K12 is a for-profit education company that focuses on kids from kindergarten through 12th grade.

I’m really amazed at what this stock’s done during the last month, considering all the bad news surrounding the education companies.

I think LRN has a bright future ahead, I really like this stock but we already own Strayer (STRA) and Bridgepoint (BPI) and I shouldn’t be investing in three education stocks in a twenty stock (or so) portfolio. I may sell STRA to make room for LRN. Strayer fell below the 35% minimum and there’s uncertainty about the schools ability to provide loans.

Mindray Medical (MR)

Mindray is a manufacturer of medical devices in China and has had a tough couple of quarters.

I just sold Mindray last month and although I don’t like the stock now, I seill want to keep an eye on it.

Looking past the short term troubles, this company has the ability to grow profits 25% a year. Right now the Chinese are cutting back on purchases of medical devices just as the world is starting to buy more. China was strong during 2008 when the world was weak. A perfect storm could occur if MR’s domestic and international markets started doing well. So I need to keep an eye on this stock, 45% growth could happen in the future. You never know.

Lululemon Athletica (LULU)

Lululemon makes and sells yoga and exercise equipment.

LULU stock went on a tear after 2008 as kids and women went ahead and bought new workout clothes. I missed the initial run, and have been watching the stock for the last couple of quarters.

Last quarter LULU whipped earnings estimates, sending the stock higher. Still, I’m leary of buying LULU stock because I think things could cool down now that the initial bust is past us.

Notice profit growth looks to be 0% two quarters from now. 36 times earnings is high for this uncertainty.

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