Stocks To Watch

I have compiled a list of a few stocks that have grabbed my attention as potential longs. The first stock is Checkfree (CKFR). It is 33% below its 52 week high, but has rallied in the past few trading sessions. Checkfree has a great business model and has low fixed costs. Checkfree offers companies the ability to process personal checks over the internet. They offer cheaper processing fees than Mastercard or Visa. Earnings are expected to grow between 12-14% annually for the next five years.

USG Corp. (USG) manufactures and distributes building supplies. Despite the housing bubble, commercial real estate is booming. Sales of USG's dry-wall continue to see record demand and pricing (PDF). The stock has a black cloud hovering over it with a $4 billion asbestos trust liability pending. I believe most of the $4 billion liability is already priced into the stock. Keep in mind that Carl Ichan has a large short position in this stock. Warren Buffett has been buying up shares under $47. Buffett now owns over 17% of USG. The recent decline in the stock is due to a rights offering. Which created more dilution (doubled the share count). The offering gave shareholders in July of 2006 the right to buy one additional share of USG for each share owned for $40.

Altria (MO) is a stock that I already own but would consider buying more at current levels. The stock is somewhat oversold in the short term. I still believe shares are worth $95 if the company is broken up. Altria also recently raised its quarterly dividend 7.5% to $0.86 per quarter.