Tuesday, October 04, 2005

SELLING STOCKS OF THE WEEK: BUYING AMR

After reviewing the Stock of the Weekportfolio this week We have decided to sell a few of our stocks that seem to have fallen into Bearish hands. Dillard’s (DDS), Joann’s Fabric (JAS), Spartan Foods (SPTN) and Russell Athletic (RML).

With individual stocks outperforming the S& P 500 and the 10 year treasury bond, each company was evaluated to see why it has not stood firm with other market performances. One common thread reoccurs: these businesses are tied to the retail sector. Perhaps rising energy prices, increase costs to transport goods, two major hurricanes and even Mr. Greenspan’s attempts to slow the economy are possible reasons for stock declines. (DDS) lost six stores in the Southeast due to the hurricanes. Dillard’s (DDS), sells upscale clothing which is a sector usually hit hard when consumers have less discretionary money to spend.

(SPTN) has been struggling recently with a major stocker holder group demanding that management enhance shareholder value. In other words, they have some internal problems as well as rising costs to transport goods to stores.

Russell Athletic (RML). just lost the sale of Jerzees brand boys sweats at all of the Wal-Mart locations. This is 2-3% of their revenue. Russell Athletic (RML). has also been affected by the hurricanes through damage to merchandise and distribution routes as well as rising costs to transport goods.

Quarterly sales at Joann’s Fabric (JAS), have been disappointing and present Joann’s Fabric (JAS), with additional challenges in meeting their 2005 performance expectations. Even with their strongest sales months ahead (September –January), they have an uphill battle. Additionally, they recently lost two of their top executives.

Even with a few “out-of-favor” choices, our Stock of the Week portfoliois still rolling on the positive side.

Moneys returned from the sale of these four stocks have been reinvested in AMR. We firmly believe the airlines are going to survive and have great faith in this stock pick to add to our Stock of the Week Portfolio. Look for Continential to be added to the portfolio as our next Stock of the Weekpick.

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