October 11, 2006

Aggie Stock Watch

It was another volatile day of trading last Saturday as Texas A&M football looked to regain the confidence of the investor community on the road against a resurgent Kansas team that had won nine in a row at home dating back to 2004.


Investors came out of the opening bell still skiddish from last Saturday's huge sell-off, and the selling continued as Kansas parlayed a successful fake punt into an early 7-0 lead on their first possession. Aggie football continued to lose ground on the day as the offense couldn't get things on-track and setting up the Jayhawk offense with excellent field position for the first three quarters of the game.


The offensive struggles included numerous mistakes like false starts and personal fouls, but the most troubling factor in the stock's slide was the ineffective vertical passing game. While Stephen McGee's stats looked respectable on the surface, he rarely challenged KU's pass defense (ranked last in the Big 12) and did not attempt to stretch the field with some of the excellent speed athletes at his disposal.


Special teams also had a bad day, punctuated by a bad punt snap resulting in a safety that put KU comfortably up 18-7 in the third quarter. At that point, the stock hit a 52-week low at $29.45. Buyers were nowhere to be found.


However, the day took a dramatic turn when Aggie football announced the arrival of the new and improved fumble-free freshman Mike Goodson. Goodson took off on runs of 24 and 25 yards, and accounted for 60 yards on the 80-yard drive that brought A&M back into the game at 18-13.


But it was the final drive of the game that saw the stock skyrocket, as the season went from bust-to-promise in a matter of three minutes and 80 yards. Despite a consistent KU blitz, McGee stood tall and methodically marched the Aggies into Jayhawk territory. When A&M caught KU in another blitz and executed the skinny screen to L'Tydrick Riley all the way down to the six-yard line with 30 seconds remaining, investors flooded back into play and the stock picked up all losses on the day.


The stock had one final push before the closing bell as Jorvorskie Lane plunged into the end zone for the touchdown and a 21-18 road win. The stock ended the day up $3.28 at $40.96. Despite the late day gains, the stock still has a long way to go to make up for Black Saturday, closing down $9.04 for the season.


As of last Saturday, there appeared to be few opportunities in October to significantly raise the stock price given the lackluster schedule against mediocre Big 12 teams. However, that has now changed with the emergence of 6-0 Missouri, now ranked in the Top 20. Missouri walloped Texas Tech in Lubbock to the surprise of many investors, and now the Tigers are the new Big 12 darlings on Wall Street.


As a result, a potential A&M win over Missouri at Kyle Field suddenly has significance throughout the financial community, and could provide a significant springboard to the price of the Aggie football stock.


And while Chase Daniel is the new Donald Trump of the Big 12, I'm an analyst that puts a lot of weight on fundamentals and the ability to line up, control the line-of-scrimmage and effectively run the ball. This A&M offense has certainly proven that going back to November of 2005.


The Missouri defense is undersized, quick and opportunistic, scoring twice on interceptions against Texas Tech. However, this is one time where A&M's smash mouth running attack and conservative passing game just may pay off. The emergence of Goodson as a legitimate speed threat and the bullish Lane makes this ground game a two-headed monster, one that is a very consistent performer that is resistant to any potential recession fears.


The improved defense has been a surprise, with most of the defensive indices trending upward at a moderate pace with the biggest movers being rush defense and defensive speed. If the defense continues to perform at this pace, current investors will see a nice profit at the end of the season.


If the defense can slow down Daniel and the Missouri offense, then major short-term opportunities exist for investors this week. Based on my projections, a good showing and a win should see the stock trade in the $52-55 range, a nice $12-15 spike which will put the stock back into the black for the season.


But beware of special teams. They've been up and down all season, and leading indicators are trending down significantly right now. Kickoffs have lost almost 40 points in recent weeks, while Justin Brantly's short hang times on punts have put too much strain on the coverage indices. The field goal unit suffered another blocked field goal, so that's yet another aspect of special teams that's in limbo right now.


A&M was still able to overcome those mistakes to sneak out of Lawrence with a win. However, A&M won't be able to overcome special teams blunders to beat a much better Missouri team.


The investor community loves a front-runner, and the Tigers are the flavor of the week. If you are bold enough to roll the dice on Aggie football's special teams, go for it. There's a pot of gold at the end of that rainbow. If A&M doesn't lose the turnover differential and doesn't make significant mistakes on special teams, they will win this game. The fundamentals are always right.



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