A few interesting plays

Here are things that I am watching closely:

-J Crew (JCG) got hit for 20% on Friday on lowered guidance. It's the best operator in the space, it targets and gets rich clients that are loyal and it is still growing at a 18% clip going forward. The revised guidance brings it's forward multiple back equal to it's growth rate and I can see this one springing back nicely. I took my first bite this morning. If you like the "rich people are still going to shop" theory, the other one I like is Coach (COH). The ones I would pass on are TIF, JWN and SKS.

-DryShips (DRYS). I started building in a position in this one last week, and I have not even done comps on shippers yet. It trades around 5 times forward earnings from continuing ops... dirt cheap. The catalyst: it's in the process of building the only exclusive deepwater drilling company (i.e. they don't even do the shallow water stuff; they are only where all the demand is building). They plan to spin off this subsidiary in about a year. I think it gets up near 200 in that time frame. The downside: just about the only shipper with a bad yield. I will post a full write up on DRYS when I have time to do comps.

-Chesapeake (CHK). Just about the only thing that worked today was natural gas. CHK's CEO made another multimillion dollar purchase of the stock last week. It is real close to the trend line it pulls back to, and this is a great time to get in a leading nat gas company. XTO and APA are also cheap, I'd watch out for SWN and UPL. I am long CHK.

-If you want to play steel the 2 cheapest companies out there are MTL and MT. I would go with MTL between these two. MTL is a vertically integrated (aka not getting killed by raw material prices) steel manufacturer in Russia. Personally, I own SID, which is a vertically integrated steel manufacturer in Brazil because I have more faith in that country's operating environment. You have a golden opportunity to get in SID right here where it is now.

-There's a nice long/short set up in the rails if you were to go long NSC and short KSU, the cheapest and most expensive of the major rails, respectively. On top of it, NSC has a 1.7% yield while KSU has none.

Those are some names peaking my interest right now.