Recap of Saturday, August 24:T. Alliance Gaming; Patterson Energy

Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:

Brenda Buttner:  Welcome everyone to this edition of Forbes on Fox.  David is off today.  This is the Informer.  Bruce, let's start with you.

Bruce Upbin, senior editor:  Astrazeneca (AZN) is the fourth largest drug company in the world.  They've had some disappointments recently.  A lung cancer drug had disappointing results.  But this represents a huge buying opportunity.  This stock is cheap compared with others in the industry. 

Brenda Buttner:  Dennis, sometimes stocks are cheap because they should be.  Is this one of them?

Dennis Kneale, managing editor:  I don't think so.  I think you're pretty safe going with big drug stocks.  This is a pretty solid company.  It's not going out of business anytime soon.

Brenda Buttner:  Okay Bob, let's move on to you.

Bob Lenzner, national editor:  When there's blood on the floor, it's usually a good time to buy.  There's a lot of blood on the floor at AOL Time Warner (AOL) and Tyco International (TYC).  And I think a lot of smart people are buying those stocks now.  I think once Tyco cleans up their corporate governance, there are assets there.  I think AOL will keep the dark cloud over them because of the on going investigations into their accounting.  But it's these clouds that create a buying opportunity for these companies. 

Mike Ozanian, senior editor:  I think the problem with AOL is after this write-off, their leverage is going to increase and cut into their assets.  I think in the future it's going to eat into the company's cash flow. 

Dennis Kneale:  I'm still bullish on cable stocks.  I think AOL Time Warner is the best collection of assets in the world.

Brenda Buttner:  Okay, Dennis you're up.

Dennis Kneale:  Let's talk tech stocks.  Even though they're down a lot, in some ways they're still very expensive.  So we asked our whiz, Mike Ozanian, to find stocks that look good and that are cheap.  Here's what he found:  Nvidia (NVDA) and International Rectifier (IRF).  International Rectifier is a company with chips that convert electrical power into other things.  It has a low debt and a pretty strong balance sheet.  It trades at 19 times earnings.  Nvidia is a graphics chip maker for video games.  It makes the graphic chip for XBox.  It's only at 13 times earnings.

Mike Ozanian:  Another good thing for these stocks are that analysts have been raising their estimates for this year.  That's a pretty bullish sign.

Brenda Buttner:  Okay, finally Mike will there be baseball on Labor Day?

Mike Ozanian:  I say there will be a strike.  There's no way players are going to let the owners put a cap on their salaries.  The good news is the strike will be settled before the World Series and the players will be the winners.  The owners's net worth has gone down considerably and they've got too much debt from new stadiums. 

Makers & Breakers

Alliance Gaming (ALLY)

Eric Green, Penn Capital Management: MAKER

I like Alliance Gaming because there's going to be an increase in gaming in this country.  Many states are running big budget deficits.  There's a need for a replacement cycle of games.  Alliance is number two market share. Their numbers are great. 

Mike Ozanian: BREAKER

I don't think this stock is worth a roll of the dice and I'll tell you why.  Their cash flow picture troubles me.  Their inventory is building up and their receivables are building up, which means they're not paying customers like they normally do.  That would make me a little nervous and I'd stay away from it.

Jim Michaels:  BREAKER

Why do we call this gaming?  It's gambling and I'll tell you I'm not gambling on this one. 

Eric Green, Penn Capital Management:  Well the reason why inventory and receivables are building is because they're growing so fast.  It's a great management team and gaming is here to stay. 

Patterson Energy (PTEN)

Eric Green, Penn Capital Management: MAKER

We think there's a natural gas shortage in the U.S. and we need to be drilling more holes in the ground.  Patterson is the No. 2 driller and they have great management.  They have the most leverage to the upside.

Jim Michaels: BREAKER

This is a feast or famine business.  Right now it's famine but the stock is acting like it's feast time.  Nobody knows what their earnings are going to be and nobody knows if they're even going to pull through.  There was big selling by insiders in May just a few points above the present price. I'm gonna pass on this. 

Mike Ozanian: BREAKER

Sorry to do this to you Eric but I'm a breaker too.  Wall Street analysts have cut their earnings forecast for this year by 40%.  So I'm out.

Eric Green, Penn Capital Management:  They're going to increase their numbers.  It just might be later down the road.