What should I buy?

Over the last few weeks, I have not been able to do much stock analysis. I've unfortunately been very busy at my full-time job as a software engineer. In my defense, there hasn't really been much to do as the unusual bullishness of the market has priced me out of a lot of opportunities. The gambler in me wanted to buy puts on QQQQ last week, but the chicken in me set the limit order too low to execute before Monday's fall. Such is life... It also doesn't help that APOL, OC, LM, WU, and USG have all gone up from when I first started looking at them.

I expect that I will be relatively busy until after the holidays. For my occasional readers, here's what to expect from me before the new years. I'll post a book review with key take-aways from Phil Fisher's Common Stocks and Uncommon Profits. Then I'll polish up my DCF calculator and publish it for everyone to use. I use this DCF calculator as a preliminary screen of stocks that have caught my eye. By publishing the tool, I'll be able to keep a history of what stocks are being screened by my well-informed readers. Hopefully I can get some good ideas from you =). Finally, I would like to work on providing podcasts of relevant earnings calls for my readers. I spend about an hour commuting every day, so podcasts would be very helpful for me to keep an eye on my basket of stocks.

As an update, Western Union and USG are two opportunities that I would jump on if the price ever came down to my current target buy-below prices of $21 and $47 respectively. In order to lock-in these prices, I sold Feb 07 puts on both stocks. Before Thanksgiving, I sold a Feb 07 $22.50 strike WU put contract for $1.10 per share. Because of Monday's drop, I am sitting on a loss with this position. I also sold a Feb 07 $47.50 strike USG put contract for $1.75 a share. For a good description on my view of writing puts, please refer to Million Dollar Countdown's post on 10 ways to minimize risk when selling put options.

In the blogosphere, I've found two other articles singing praises for USG. Whitney Tilson, a former Motley Fool columnist and now fund manager calls USG, the little stock that beats the market, while Evan Vanderveer likes USG the best. It's nice to be in good company. For those interested in Owens Corning, I would take a look at USG first. The situations are similar, but there are more gurus invested along side you with USG.

I am currently looking at increasing my position in First American Corporation (FAF), which has retreated about 5% below my original cost basis. It reported tentative third quarter results that missed analyst's estimates and may need to re-state its financial statements due to possible option-backdating. Since options back-dating usually does not impact cash flows, I view this as a temporary issue. I will need to review this past quarter's results before I make a move. I'm also considering increasing my position in Home Depot (HD). This week I made two small mechanical purchases of Advance America Cash Centers (AEA) and John B Sanfilippo and Son (JBSS). Should I buy more? I will need to do more due diligence before I increase the size of these small positions.

This blog doesn't really have that many readers, but I'd be interested in your opinions. What do you think I should buy? In times like these when undervalued stocks are hard to find, we really need to band together and share our results.

Good luck and be careful out there. The bulls are in control, but there are still a lot of uncertainties that everyone seems to have forgotten about.