State of the Market: Today's Most Compelling Buy (Feb. 13, 2013)


Bull's Eye Report - Today's Most Compelling Buy
Wednesday, February 13, 2013

At, we strive to "own the best and ignore the rest" in our equity portfolios. Toward this end, each day we search our database for a "top stock" (a top rated company in terms of earnings strength as well as company and industry performance) that presents a strong technical "set up" and a good entry point.

In short, when our equity team is looking to add a stock to one of our portfolios, the "bull's eye" stock shown below is generally their first choice.





% Gain
Prospect Capital Corp PSEC Asset Management & Custody Banks 9.0 +4.36% $11.07

Why We Like The Stock:

Prospect Capital Corp (PSEC) is our most compelling buy today due to the fact that it is a top- rated stock in the Financials sector, which has been a strong performer in 2013 thus far. Since its November lows, PSEC has been trending steadily upward from ~$9.90 up to its current price at $11.38, making higher highs and higher lows during the uptrend. We featured PSEC in this report back in late January, and the stock has continued this pattern of higher highs and lower lows, so at similar prices, we think it is even more attractive now. The stock has also nearly filled its November gap down. Should PSEC be able to break above $11.50, the next logical step would be back up to resistance at $12. Helping PSEC along is some moderate insider buying momentum, which is usually a good underpin to a rallying stock. PSEC hasn't had quite the upward thrust of similar Asset Management & Custody Bank stocks like Waddell & Reed Financial (WDR), Apollo Global Management (APO), Federated Investors Inc (FII), or Janus Capital Group (JNS) in 2013. However, that doesn't mean that PSEC isn't an attractive trade. The stock is currently sitting at a good entry point, is in a healthy uptrend, and has plenty of room to run.
We Would Be Buyers:

At the current price (~$11.38), or on a pullback to the 200-day moving average (~$11.16).

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Company Profile:

Prospect Capital Corporation (Prospect Capital), is a financial services company, which lends to and invests in middle market privately-held companies. The Company is a closed-end investment company. It invests in senior and subordinated debt and equity of companies in need of capital for acquisitions, divestitures, growth, development and recapitalization. We work with the management teams or financial sponsors to seek investments with historical cash flows, asset collateral or contracted pro-forma cash flows. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments.

Stock Rating:

The Stock Rating indicates the combined score of our proprietary Earning Strength and Company Performance models. The rating scale is 0 - 10 with 10 being the highest.


At the time of publication the editor and affiliated companies own the following positions: None

Note: Positions may be bought or sold while this publication is in circulation without notice.

  Prospect Capital Corp - Last 3 Months

  Prospect Capital Corp - Last 12 Months

  Prospect Capital Corp - Last 5 Years



The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided 'as is' without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

The information contained in our websites and publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.

Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

Index returns are price only and do not include the reinvestment of dividends. The S&P 500 is a stock market index containing the stocks of 500 large-cap corporations, most of which are US companies. The index is the most notable of the many indices owned and maintained by Standard & Poor's, a division of McGraw-Hill. S&P 500 is used in reference not only to the index but also to the 500 companies that have their common stock included in the index.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks , Investing Ideas , US Markets

Referenced Stocks: APO , FII , JNS , PSEC , WDR

David Moenning

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