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PRIME STOCK NEWSLETTER FOR December 6th, 2010

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Position Statement: In our Prime Recommendation Letter we attempt to identify the recommendation with the highest probability of moving higher.  We recommend that stop orders be placed at the time of purchase,  and once the position has moved profitable we recommend a stop be placed a minimum of $0.375 above the purchase price and moved higher as the position moves higher.

Today's Comments: The overall market finished Friday slightly higher in a relatively broad based move that saw the majority of the sector indices I track move higher on the day. There was strength in the Banking, Biotech, Chemicals, Consumer, Commodities, High Tech, and Healthcare Providers. There was weakness in the Telecom, Retailers, and Insurance indices. Oil was higher by $1.19 to $89.19 per barrel, and Gold was higher by $16.90 to $1,405.40 per ounce.


Sterling Calendars for the Week of December 6th, 2010.

Date

Est. Time Release

For

Consensus Prior
12/07 3:00pm Consumer Credit Oct. ($2.3B) $2.1B
12/08 7:00am MBA Mortgage Applications 12/03 N/A (16.5%)
12/08 10:30am Crude Inventories 12/04 N/A 1.07M
12/09 8:30am Initial Claims 12/04 430K 436K
12/09 8:30am Continuing Claims 11/27 4,250K 4,270K
12/09 10:00am Wholesale Inventories Oct. 0.8% 1.5%
12/10 8:30am Trade Balance Oct. ($44.4B) ($44.0B)
12/10 8:30am Export Prices Ex.-Ag. Nov. N/A 0.7%
12/10 8:30am Import Price Ex.-Oil Nov. N/A 0.3%
12/10 9:55am Michigan Sentiment Dec. 72.5 71.6
12/10 2:00pm Treasury Budget Nov. ($134.0B) ($120.3B)
  Misc. Calendar
Date: Comments:
12/06 Pep Boys 'PBY' announces earnings after the close. Est. $0.08
12/07 Autozone 'AZO' announce earnings before the open. Est. $3.40
12/07 Talbots 'TLB' announces earnings before the open. Est. $0.26
12/07 Vail Resorts 'MTN' announces earnings before the open. Est. ($1.10)
12/07 Casey's General Stores 'CASY' announces earnings after the close. Est. $0.77
12/09 Smithfield Foods 'SFD' announces earnings before the open. Est. $0.55
12/09 Esterline Techs 'ESL' announces earnings after the close. Est. $1.23
12/09 Green Mtn. Coffee 'GMCR' announces earnings after the close. Est. $0.20
12/09 National Semi. 'NSM' announces earnings after the close. Est. $0.32
12/10 Jackson Hewitt 'JTX' announces earnings before the open. Est. ($0.74)
  The full earnings calendar for this week can be found (here)

Recommendation: Sell/Short

Big Lots, Inc. 'BIG'

Company: Big Lots, Inc. Symbol: 'BIG'

Closing Price: $29.50

Web: www.biglots.com

YH: $41.42 YL: $26.74 EPS: $2.81 P/E: 10

Shares Outstanding: 76 Million

Forecasted EPS: $3.07 Market Cap.: $2.2 Billion
Dividend: N/A Yield: N/A Aver. Daily Trading Volume: 1.7 Million  
Price Targets:  $28.41 and then $23.54 Upside Stop:  $29.67
Options Rec.: December 30 Puts @ $1.00/contract Options Symbol: BIG X 30
Options Premium Sales Strategy
Options Rec. December 30 Puts @ $1.00/contract Options Symbol: BIG X 30
Break Even: $30.50 Profit Potential: $0.50 Est. Return: 1.7% Annualized Ret. (est): 52%

Additional information on Big Lots, Inc. 'BIG' can be found (here)

Company Description: Big Lots, Inc., through its subsidiaries, operates as a broad line closeout retailer in the United States. The company offers products under various merchandising categories, which include consumables category consisting of food, health and beauty, plastics, paper, chemical, and pet products; home category, such as domestics, stationery, and home decorative products; and furniture category comprising upholstery, mattresses, and ready-to-assemble products, as well as case goods products that include bedroom, dining room, and occasional furniture. It also provides products in the hardlines category, including electronics, appliances, tools, and home maintenance products; seasonal category comprising lawn and garden, Christmas, summer, and other holiday products; and other category, which include toys, jewelry, infant accessories, and apparel products. As of January 30, 2010, it operated 1,361 stores in 47 states. The company was founded in 1967 and is based in Columbus, Ohio.

Chart for Mosaic Company>

Chart updates daily

Recent News: 12/03 Big Lots 3Q net income drops 42 percent AP (Fri, Dec 3)
  12/01 [$$] Which Retailers Could Be Acquisition Targets? at Barrons.com (Wed, Dec 1)
  11/23 Big Lots' shares make big gains on ratings upgrade at MarketWatch (Tue, Nov 23)

A full list of the news headlines for Big Lots, Inc. 'BIG' can be found (here)

Our Analysis: The shares of Big Lots, Inc. 'BIG' moved sharply lower on Friday, finishing the day on heavier than normal trading volume. The shares of 'BIG' should continue to move lower and test $28.41/share, the point from which they gapped higher on the open of trading on February 1st of this year. If the shares of 'BIG' close below that level, then they should continue to move lower and test $23.54/share, the point from which they gapped higher on the open of trading on December 4th of 2009. I see upside resistance coming into play on the shares of 'BIG' @ $29.26/share, and have set my stops accordingly @ $29.67/share.


Stocks Looking Higher

UHAL, WRLD, TWC, OXY, VRUS, PANL, WLT, TEN, DD, KM, ALTR, A,AIR, CE, VSAT, STR, OMC, SEE, FORR, AA, WAG, GLD, USO, VLO, AMAT, CVS, HK, LYB, A, VRX, AON, MWV, DG, VECO, ANR, IVN, CVC, NAV, CNK, BG, SDRL

Stocks Looking Lower
CSCO, TEVA, M, DTV, BIG, SWY, MCP, ECL

Yesterday's Edition of the Prime Stock Newsletter
The Sterling Investment series of newsletters is produced by Sterling Investment Services, Inc.  If you would like to receive a chart on any index or stock mentioned in this report please contact us at the below mentioned numbers.  We also offer custom research reports on any stock investment that you may desire information on.  To receive further information on these services please visit our web page at:  www.sterlinginvestments.com   If you would like to contact us our # is 800-275-6901,  fax # (404)-816-8830  Email address is: enelson@sterlinginvestments.com  Sterling Investment Services may hold positions in the securities recommended or may be providing consulting services to the companies mentioned within this report.
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