Buoyed by News (original) (raw)

Some recent good news for several positions in the Stocks Under $10 model portfolio bodes well for these stocks, and we'd like to update you and give our perspective. We remain bullish on all three of these One-rated names, but are not taking any action on this Alert.

After the close Wednesday, Sun Microsystems (SUNW) announced the authorization of a $3 billion share-buyback plan. This move comes as no surprise to us, and we have previously highlighted the possibility of an increase in Sun's buyback plan as one of the drivers for this stock going forward. The authorization is a positive for shareholders, as it indicates management's confidence in the health of its business.

Analyst reaction to the announcement is generally favorable. Investment bank UBS noted that based on yesterday's closing price, the $3 billion plan would reduce outstanding shares by 16%, implying a 2 cents to 3 cents improvement in earnings per share on an annualized basis.

We are pleased to see our thesis working out in this position and believe the buyback confirms that shares are attractive to buy after their recent pullback following the company's April 24 earnings miss.

In other news, Home Solutions (HSOA) was awarded another 19millioninnewcontracts,19 million in new contracts, 19millioninnewcontracts,11 million of which are expected to be completed during 2007. The new contracts were won by two of the company's subsidiaries -- Home Solutions Restoration of Louisiana (HSRLA) and Fireline Restoration. HSRLA was awarded renovation projects for a number of elementary and high schools, as well as for the concourse of New Orleans' Armstrong International Airport and sidewalk work in the French Quarter.

As we've highlighted over the past weeks, Home Solutions' business prospects remain solid, and we believe investors will be rewarded as the company continues to announce positive news and prove the large number of shorts wrong.

Finally, Taser TASR announced that a study by the Cleveland Clinic found that Taser's X26 device does not affect the short-term function of pacemakers and defibrillators. The Clinic's tests, conducted on pigs, were unable to trigger a shock to the implantable cardioverter defibrillators (which monitor heart rhythms) even when the Taser darts were directed to the "worst case" area, surrounding the device.

Although we doubt that the research will fully allay investor concern over potential lawsuits from claims that Taser's products cause injury and even death in rare cases, the news is a small positive for investors. Taser has defended itself successfully in the past, and this most recent data provide more evidence of the safety of the company's products.

Frank Curzio is a research associate at TheStreet.com.

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