Stocks To Watch

Last week, I mentioned that I had been watching several stocks to add to the Derrich.com portfolio. Three stick out in my mind as potential winners.

Motorola
Lately Motorola (NYSE: MOT) has been the center of attention on most analysts’ minds…or so it seems. Every other article discusses Carl Icahn’s continuing struggle to obtain a seat at the table (i.e. Motorola’s board); or how improvements in technological infrastructure mean the purchase of Motorola network equipment and software. Last week, Motorola CEO Ed Zander announced plans to unveil its iPhone competitor at the Software 2000 conference in Santa Clara, California. I suppose we’ll have to wait for the unveiling, but don’t wait to hop on board the Motorola train. A bit speculative especially given the current farrago of expectations, forecasts, and obstacles…but don’t forget the dividend yield of 1.10% either.

For the next two, I didn’t have to look too far. Both are based right here in San Antonio and are solid companies with solid management…and solid business models.

Argonaut
Argonaut Group, Inc. (Nasdaq: AGII) underwrite specialty commercial insurance in the property and casualty insurance markets through three segments: Excess and Surplus Lines, Select Markets, and Public Entity. Basically, the company provides insurance to entities that have an otherwise difficult time obtaining policies. It has proven to be a solid niche.

Last Monday (May 7), Argonaut reported that it grew first-quarter earnings by 22% on record first-quarter revenue.

Argonaut’s combined ratio, or rate of losses on policies, for the first quarter of 2007 was 94.2 percent, compared to 95.2 percent in the prior year, meaning Argonaut is paying a lower percentage of its premiums out in claims.

Argonaut also expanded and diversified its reinsurance segment with the announcement that it would merge with Bermuda-based property reinsurer, PXRE Group Ltd. to form the Argo Group. Reinsurance is the insurance companies that insurance companies use to spread out their own risks as a hedge against catastrophic loss. What does that potentially mean for Argonaut? Think Berkshire Hathaway…or Warren Buffet.

Kinetic Concepts
Do great minds think alike or what? I was watching Mad Money on Friday, and Jim Cramer mentions Kinetic Concepts as a speculative buy.

KCI (NYSE: KCI) engages in the design, manufacture, marketing, and service of wound care and therapeutic products. According to a MM recap on TheStreet.com, [Cramer] considers the stock speculative because “it’s not a pastiche. It doesn’t have a variety of product but instead is only levered to the wound-care business.” On Friday, KCI ended the day down on news that a new competitor has strengthened itself in the wound care game. The fear is that Smith & Nephew PLC, said competitor, would have no problems improving its market share…even doubling according to Cowen & Co. analyst Dhulsini de Zoysa. Sorry, Dhulsini. But if it’s good enough for Cramer, it’s good enough for Derrich.com.

Good luck, and make some money! And don’t forget to sharpen your stock trading knowledge at Stock Trading 101.

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