Recap of Saturday, July 19:Lowe's and Providian Financial

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David Asman: Victoria, Nasdaq's up, but there's one stock you say to avoid.  What is it?

Victoria Murphy, Senior Reporter: Yeah, BEA Systems (BEAS).  They make application server software, and they're kind of a Wall Street darling right now.  I don't buy it, nor would I buy this stock.  Their products are kind of getting commoditized, and they're facing stiff competition from IBM (IBM), Oracle (ORCL) and also an open-source version called JBoss that is gaining a lot of traction. I wouldn't touch it.

David Asman: Mike, a false profit stock?

Mike Ozanian, Senior Editor: And they've got another big problem, David.  They have a $273 million tax liability on their balance sheet.  This represents a future obligation to Uncle Sam.  When Wall Street gets a hold of that, the stock's going to be in trouble.

David Asman: Well Bruce has, what could be, a good buy in tech.  Tell us about it.

Bruce Upbin, Senior Editor: CDW Corp. (CDWC).  They sell printers, PCs, and software.  They're like Dell (DELL) except they sell other stuff, besides Dell stuff, to small and medium sized businesses which are desperately needing help in technology.  They don't have those big staffs to help them.  The sales are doing OK.  They're picking up a lot of government business, but it's not falling off like other people's.  The stock is cheap, compared to your other companies like Dell, Yahoo! (YHOO) and eBay (EBAY).

David Asman: Victoria, CDW.  You're out in tech valley, what do you think?

Victoria Murphy: I agree with Bruce.  The thing that I like about CDW is that the company has room to grow.  Their sales and distribution centers can take on twice the current capacity without a lot of added costs.  So they're likely to see a nice increase in earnings once revenues kick up.

Mike Ozanian: I have a feeling that they may have missed one of their recent earnings targets, and I think that's going to happen again.  What they've been doing, to make their numbers look a little better, is they've been slashing their marketing expenses, and pushing more of the costs onto their venders.  I think that's going to come back to haunt them.

David Asman: Mike, that's two in favor of CDW, now Schering-Plough (SGP).  Do you like them?

Mike Ozanian: I do.  It's been a dog of a drug company for a while.  The stock is 60 percent off its high of two years ago, but it's coming out with a new cholesterol drug, which it made alongside with Merck (MRK), and I think it has great potential.

David Asman: But it lost Claritin, right?

Mike Ozanian: It came off patent, it lost that to generics, but I think this ZETIA is going to make a long earnings recovery.

Bruce Upbin: With Schering-Plough, you'd rather buy the Merck than the Schering-Plough.  You want a big pipeline with lots of drugs coming out, and Schering-Plough doesn't have it.

Mike Ozanian: I think sometimes it's better to have a company that's not quite as good if it's at a big discount, and that's what I like about Schering-Plough.

Makers & Breakers

Lowe's (LOW)

George Muzea, President of Muzea Insider Consulting Services: MAKER
I like it because insiders, basically, have been on the sell side, and, all of a sudden, abruptly, three insiders came in and bought the stock at current levels.  And one of those buyers was a CFO, who increased his holdings by 25 percent

Mike Ozanian, Senior Editor: MAKER
I do like it.  Lowe's has been expanding, but more important, they've been expanding at a profitable rate. They're generating 50 percent more cash now than they were last year, per square foot.

Elizabeth MacDonald, Senior Editor: MAKER
You know, you can't beat this money juggernaut, whether it had $1.5 billion in earnings in the last reporting season.  And, also, I like this company because it's beating Home Depot (HD) in terms of service.  The only way it's going to win this war with Home Depot, or any other store, is service.  I like it enough because, you know, I can bring my fidgety mother to the store, who hates shopping, I trust them enough to keep her attention.

David Asman: Three makers even though we should emphasize to most people that it is trading near 52-week highs.

Providian Financial (PVN)

George Muzea: MAKER
I like it because insiders were buying the stock at $5 last year, and most recently are paying up for the stock at $9.  When insiders pay up for the stock, that means that more good news is coming.

Elizabeth MacDonald: BREAKER
I think insider buying is a good leading indicator, but still, I am worried about this stock.  It has gotten into loads of trouble with state regulators for deceptive sales practices, it's flooded the market with deceptive credit card offerings, and also, the earnings are way off.  I'm a breaker on this stock.

Mike Ozanian: MAKER
I'm a maker for two reasons.  Number one: the stock is cheap, it sells right about at book value.  And number two: they lend, primarily, to deadbeats, but they also have a lot of reserves put aside, so that if the deadbeats don't pay, it won't be a big problem.

David Asman: George, what about Elizabeth's point that they do have some shenanigans they've got to pay up for?

George Muzea: Again, I believe in following what insiders are doing, not what they are saying, and what other people are saying.  In my opinion, everyone has to look at valuations and make their own judgment.  But from an insider perspective, I like this stock.

Elizabeth MacDonald: I still think that this is a problem stock, because of the deceptive sales practices.