Lenny Dykstra recommends Nokia (NOK)

With $16 billion in cash, virtually no debt, and returns high ROE every year, Nokia (NOK) trading at a 52 week low of $26 is definitely worth a look.. With an enterprise value of $88 billion divided by $11.52 billion in net income last yr, that's an initial rate of return of 13%! -Stock Article Link

Lenny Dystra recommends Forest Labs (FRX)

"The company develops, manufactures and sells both brand name and generic drugs and pharmaceutical products. Its two biggest drugs are anti-depressant Lexapro and Namenda, which is used to treat Alzheimer's and dementia.

Forest Labs' balance sheet is pristine with $1.7 billion in the bank and no debt. It has a number of phase III and phase II drug trials ending in the next year and half."-Stock Article Link

Currently trading at near it's low of $34.17.

Lenny Dystra recommends Dell

Lenny Dystra likes Dell and so do I.

"Dell is a solid company. Dell may not be the sexiest pick, but the company has no debt and its return on equity (ROE) is off the charts. It has $8 billion in the bank and $4 billion in cash flow. Its forward price to earnings is an attractive 10.8."-Stock Article Link

Lenny Dykstra recommends Walmart (WMT)

Lenny Dykstra recommends Walmart (WMT) and again shows his scorecard. $162,950 in winnings. - Stock Article link

Dykstra recommends Campbell Soup CPB

" key products owned by Campbell(CPB) include Pepperidge Farm cookies and crackers, V8 juice beverages, Pace Mexican sauces, Prego pasta sauces and Godiva chocolates....

I always keep in mind my rules for purchasing and keep limit orders for DITM calls within the guidelines of $1 or less in premium -- meaning, the strike price plus the option price need to be less than a dollar more than the stock price. If you chase a stock, you will quickly be trading outside the limits for a purchase." -Stock Article Link

Buy Forest Labs (FRX) and get 16% compounded annual return

Forest Labs (FRX) develops and makes branded and generic ethical drug products. It products include Lexapro, a single isomer version of Celexa for the treatment of major depression and generalized anxiety disorder; Namenda, N-methyl-D-aspartate antagonist for the treatment of moderate to severe Alzheimer's disease; Benicar, an angiotensin receptor blocker for the treatment of hypertension, and Benicar HCT, an angiotensin receptor blocker and diuretic combination product; and Campral for the maintenance of alcohol abstinence. The company also offers Sudocrem, a topical preparation for the treatment of diaper rash; Colomycin, an antibiotic used in the treatment of cystic fibrosis; Infacol used to treat infant colic; and Exorex used in the treatment of eczema and psoriasis.

HISTORICS
-0% debt and always been debt free that I can see since 1998.
-Cash reserves have increased from 1998 of $150 million to $1.53 billion dollars.
-ROE since 1998 are as follows, 6%, 11%, 14%, 20%, 24%, 31%, 26%, 24%, 17%.
-Revenue has increased since 1998 from $427 million to $3.4 billion.
-Capital expenditures went lower from $102 million in 2004 to $30 million.
-Book value has growth compounded 23% 1998 from $1.25 to currently $10.16.

FORECAST
Current earnings per share is $1.62 but the company is committed to it's year end forecast of $3.05 - $3.15 a share. If you take the low end of $3.00 and compound it by a 5 year growth rate of 10% (analyst predict 12% growth) multiplied by a conservative p/e of 16 (lowest p/e in the past 10 yrs) gives you a $78.59 in 5 years. At today's price of $37.83, that's a compounded rate of return of 16%.

By year end, if it hits $3.05 in earnings, multiply it by 16 p/e = $48.80. (29% ROI. 87% annualized) FRX beat expectations for the past 4 quarters. They also issued a 10%+ buyback program of 35 million.

RISK FACTORS
- faces patent expiration for two of it's principal products, Lexapro antidepressant and Namenda Alzheimer's treatment (combined sales accounting for 80% of revenue) expiring in 2012. Analyst are saying their pipeline is inadequate.

Dykstra: Ride Forest Labs' Confidence

Excellent Article of how FRX got started

With Forest Labs having 0 debt, 1.5 billion in cash, a 10% buyback program in place, beating analyst for the past 4 quarters, I believe the odds are in your favor. Remember, buy in small increments and in wide scales.

Lenny Dykstra recommends Altria (MO)

Lenny Dykstra said "I am going to buy 10 January 60 calls (MOAL) DITM calls for $9.60, or better. Remember, I use limit orders only." -Stock Article Link

Now it's trading at $8.20. Personally I like to own the stock instead when you have nice dividend to go with it. (In Altria's case, it's 4%+) For options, you don't get the dividend.

Lenny Dykstra recommends Wachovia (WB) at its

" Simply put: It's just Wachovia's turn. The Wall Street operators are positioning themselves to take aim at the financial sector, the one sector that has not participated in this bull market." - Stock Article Link

Lenny Dykstra is on a roll. His scorecard shows $84,000+ in profits in the last 5 months....although I think his bankroll is over $1 million if you add his option positions.

Lenny Dykstra recommends DIVX

If you've watched videos online, many uploaded files use DIVX technology to compress the file for quicker transfer yet still try to maintain the quality of the video. Almost 12% of the float is sold short..... so there are a lot of bears on this stock. It is currently trading at $15.28. But DIVX is a small and profitable company with high ROE with virtually no debt and 156 million in cash. -Lenny Dykstra Stock Article Link

Lenny Dykstra rates Varian Medical a buy!

A RetireRichBlog.com stock pick, Lenny Dykstra also considers VAR , a good buying opportunity with deep-in-the-money call options.

" The company's stock has exceptionally strong fundamentals, including a 33% return on equity and an operating cash flow of $255.7 million. CIBC World Markets analyst Amit Hazan recently upgraded Varian, claiming that if orders are stable or increase, the company could very well beat analysts' expectations over the next few years." -Stock Article Link

Related Post.
Varian Medical(VAR)

Lenny Dykstra recommends Archer Daniels Midland (ADM)

"I will place a limit order to buy 10 December 30 calls (ADMLF) for $6.00 or better." -Stock Article Link

Currently the calls are selling at $4.90, so you would be getting it cheaper than Lenny.

Archer-Daniels Midland is one of the nation's leading ethanol producers. Whether ethanol is better or worse for the environment, it's here to stay because it's backed up by the government and Mr. Bush. The Senate committee passed legislation that would mandate a 700% increase in ethanol production by 2022. In addition, the proposed legislation would authorize loan guarantees and other incentives for ethanol research and plant construction. America just doesn't what to be at the mercy of Middle East oil and if it benefits farmers and the economy in the process, that's a bonus. Here is a video link to the benefits of flex fuel and the ethanol boom.

Options - Bull Call Spread is my favorite strategy.

I talked about call options and how you can use it to increase your return. You can also follow Lenny Dykstra's strategy of buying deep-in-the-money call options. So sticking with the options theme this week, I want to mention one of my favorite option strategies, the Bull Call Spread.

It's better to use an example to explain the Bull Call Spread strategy. I mentioned I like Motorola (MOT) stock at $18 and it should go to $25 within a year or two. Currently the call option on MOT strike 20 expiring Jan 2009 is $2.05. Now let's say you bought 1 contract. It will cost $205 (plus commissions, of course). That's the premium you have to pay and it moves lower as time approaches closer to the expiry date if the stock doesn't appreciate in value. With the Bull Call Spread, here's how you lower your risk.

Because you bought 1 call MOT strike 20, you can sell 1 call MOT strike 25. Currently the call option on MOT 25 expiring Jan 2009 is $0.65. By selling 1 call MOT strike at 25, you pocketed $65 to your account (less commissions, of course). That's right, someone actually gives you money. You become like the casino operator. That means your total risk is $205 - $65 = $140. Your maximum reward is between the 2 strike prices (25-20 = $5.00 ($500)). Your maximum return can be 257% return (($500 - $140) / $140).

Bull Call Spread Disadvantages
-You spend more in commissions.
-Becomes more complicated so you have to know what you are doing.
-If the stock goes up, you return is not as high as buying just a straight call option.
-If the stock continues to soar beyond $25, you still only make the maximum $500.

Bull Call Spread Advantages
-Less capital outlay so your risk is lower if you are wrong in your prediction.
-If the stock goes down and you are confident in your prediction, you can close your higher strike sell call position and then sell it again when the stock goes back up. For example, if the MOT stock goes down $2 to $16 and the premium for the MOT strike 25 is $0.30. You can buy 1 contract at $30 and close that position and profit $35 since you original sold it at $65. If MOT stock goes back up $2 the next day to $18, you can sell the higher strike call again and pocket $65.

Here's a professional explanation of the bull call spread

Lenny Dykstra's Deep-In-The-Money call options

Former baseball player of the New York Mets & Philadelphia Phillies, Lenny Dykstra works for theStreet.com. I consider him an excellent stock picker and gives informative ideas. Instead of buying stocks, he likes to buy deep-in-the-money (DITM) call options and gets out when it hits $1. (usually for him, he's looking for a quick $1000 profit). And like Jim Cramer, Dykstra is in the game with his own money and not just recommending stocks.

"The game, whether it's baseball or stocks, is about getting into a predictable situation, a 2-0 count, when the odds are in your favor. At 2-0, the guy's gonna throw a fastball into my love zone, where I can turn and burn. I got one rule in stocks. When I make a $1,000 gain, I sell. GTC, dude. Good-till-cancel order. Buy it at $10, sell it at $11."-Stock Article Link

Here are some of his latest stock tips

Dykstra: Buying Amgen One More Time

Dykstra: It's Time to Hit the Sirf Options

He now even shows his stats book scorecard....Dykstra: Turning Two Trades on BofA, Yahoo!