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LanczGlobal Top Stock Picks (2008-1996)



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2008 Top Stock Pick: Staples, Inc.(SPLS)

StaplesStaples, Inc. (SPLS $20.79) - On November 13, 2007 we selected our 2008 top stock pick and strongly recommended purchasing Staples into the current weakness below $21 a share, being particularly aggressive into any further weakness into the upper teens. Investors should take advantage of buying a well managed industry leader whenever it is near historic lows and this is the case with Staples. We feel so confident that Staples will continue to take advantage of their competitors that our Lancz Long/Short Portfolio has initiated purchases of Staples in conjunction with a "short" position in Office Depot (ODP $22.06). If Staples continues to decline over the short term, we would expect Office Depot to decline up to 3x more due to their inferior positioning and deteriorating outlook versus Staples. This will be even more apparent over the difficult retail environment expected over the next few quarters. This is similar to last month's purchase recommendation of Best Buy when it was hitting new lows, and subsequently shorting Circuit City after Best Buy's better than expected earnings when Circuit City moved up in sympathy. Staples advantages over Office Depot are similar to Best Buy's over their main competitor Circuit City. For many of the reasons outlined in this report, we feel very confident that Staples will outperform the S&P 500 over the next two years as well as outpace the specialty retailers as a group.



2007 Top Stock Pick: P.H. Glatfelter (GLT)

P.H. GlatfelterP.H. Glatfelter (GLT $13.75) - Similar to our top selection from last year, we made GLT our top pick for 2007 in the first half of the fourth quarter rather than at year end. Both years we expected year end rallies, so an earlier selection made sense. P.H. Glatfelter is one of the world's leading manufacturer's of specialty papers and engineered paper products. The company targets smaller, niche markets with limited number of suppliers that serve book publishing, digital imaging, and many other technical markets. Last year net sales in the U.S. were 69% of total with another 25% coming from Germany. The stock is down from nearly $20 a share earlier this year after recent results proved disappointing. Most of the shortfall has come from a recent acquisition of a mill in Chillicothe, Ohio that will take more time than expected to reach intended profit margins. We feel by this time next year the company will be running on all cylinders and Wall Street will respond by pushing the stock back toward new highs. In the interim, a dividend yield of over 2.6% will be paid while you wait, but even more importantly management has indicated that over the next 3-5 years the company will sell approximately 40,000 acres of its timberland holdings which should generate proceeds around $150M. We feel management is focused on enhancing shareholder value over the long term (also announced will sell 20,000 acres of properties in Pennsylvania in addition to the aforementioned 40,000 timberland acres). When you combine all this with improving fundamental results, you have a stock with 10-15% downside and up to 50% upside over the next 1-2 years. While P.H. Glatfelter is a much smaller company than our typical top pick for the new year, we like its potential compared to its peers.

UPDATE (11/14/07) - Exactly one year later P.H. Glatfelter appreciated 18.9% since making it our stock of the year on November 15, 2006. Including dividends, this works out to a total return over 20% versus the S&P 500 5.3% total return during the same period.



2006 Top Stock Pick: PetSmart (PETM)

PetSmartPetSmart, Inc. (PETM $21.51) - This year we decided to select our top pick for 2006 in mid-October rather than in December for two reasons. First of all, stocks in general are down YTD creating a good buying opportunity for most equities. Secondly, our top pick, PetSmart, is now down nearly 40% for the year making it one of the worst performing retailers in 2005 and we feel Wall Street has it all wrong. PetSmart has had disappointing earnings results of late, but we feel management is doing the right things to enhance shareholder value. Some of their strategy is temporarily hurting short term results and scaring Wall Street, and this is what makes PetSmart a misunderstood investment that we favor. We feel the company's added expenditures in initiating doggie day care and grooming services bode well for enhancing margins and customer loyalty over the longer term. Similar to our past favorites, PetSmart offers solid appreciation potential of upwards of 50% over the next two years with much less risk now that the stock has plunged from the mid-thirties to the low twenties per share. While we would never place too large a bet on only one stock and recommend a properly diversified portfolio of various investments, we do like the potential in PetSmart for investors seeking capital gains into 2006-2007.

UPDATE: During the summer of 2007, investors finally caught on to the progress PetSmart was making with their pet hotels and grooming services. After doing very little the initial 9 months after our making PetSmart our Top Pick, the stock surged over 50% and we have utilized the strength to lock-in long term gains.



Historical Top Stock Picks Performance (2007 - 1996)

(Green designates the Aggressive Pick)

Year

Symbol

Description

Recommended
Price/Share

One Year
Return

Two Year
Return

2007

GLT

P.H. Glatfelter

$13.75

16.87%**

N/A

2007

CTXS

Citrix Systems

$27.05

58.93%*

N/A

2006

PETM

PetSmart

$21.51

34.17%

39.24%**

2006

PDCO

Patterson Companies

$33.84

4.94%

15.57%**

2005

THE

Todco

$18.37

107.18%

86.00%

2005

PSMT

PriceSmart

$7.25

15.31%

147.03%

2004

NWL

Newell Rubbermaid

$20.30

19.16%

17.14%

2004

SDS

Sungard Data Systems

$25.99

9.00%

38.32%*

2003

PHA

Pharmacia

$40.50

11.31%

N/A

2003

ELN

Elan Corp.

$1.80

282.78%

1413.89%

2002

ALL

Allstate

$30.88

19.78%

39.31%

2002

BLSI

Boston Life Sciences

$2.66

-57.99%

-53.38%

2001

MOT

Motorola

$18.75

-19.89%

-53.87%

2001

SYMC

Symantec Corp.

$27.50

141.20%

47.31%

2000

BSX

Boston Scientific

$20.81

-34.22%

15.91%

2000

DIS

Disney

$28.625

1.09%

-27.62%

1999

BSX

Boston Scientific

$25.875

-15.46%

-47.10%

1999

DOL

Dole Food Co.

$28.5625

-43.11%

-42.67%

1998

DIVE

American Oilfield

$11.875

68.42%

N/A

1998

FDC

First Data Corp.

$26.8125

18.88%

83.92%

1997

PYX

Playtex

$7.50

36.67%

114.17%

1997

ART

A.C. Nielsen Co.

$14.75

65.25%

91.53%

1996

PGA

Personnel Group

$13.125

83.81%

151.43%

1996

ICI

Imperial Chemical Industries

$44.75

-2.93%

26.75%

Stock of the Year Average =

27.32%

40.25%

Aggressive Average =

41.12%

158.24%

Aggressive Average Without ELAN =

19.15%

32.68%

* As of 8/10/05 acquisition
** As of 10/31/07 close



Disclosure: LanczGlobal LLC is an independent investment research firm. All articles and content are for informational purposes only and are not intended to be a solicitation, offering or recommendation of any security. LanczGlobal LLC does not represent that the securities, products, or services discussed in this publication or within LanczGlobal.com are suitable or appropriate for all investors. All recommendations and analysis constitute an opinion which may change without notice and may or may not prove correct. Readers must make their own independent investment decisions, as past success can not guarantee future results. LanczGlobal LLC or Alan B. Lancz are not affiliated or endorsed by any national media and only acts as an authoritative source of information. Such information does not constitute a recommendation to buy or sell securities or investment vehicles.