Schaeffer's Street Chatter Highlights the Following Stocks: Expedia, Administaff, and Guitar Center.

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Expedia (NASDAQ:EXPE), Administaff (NYSE:ASF), and Guitar Center (NASDAQ:GTRC). "Street Chatter" is a report that analyzes three newsworthy stocks that are generating a lot of attention on Internet message boards. "Street Chatter" is published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.

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Street Chatter:

Expedia

Good morning. Expedia (NASDAQ:EXPE) reported fourth-quarter results late yesterday, with net earnings of $25.2 million, or 7 cents per share, down 43 percent from last year. Excluding items, earnings came in at 20 cents per share missing the Zacks estimate by 23 percent. Revenue rose 13 percent to $494.7 million.

In response to the earnings disappointment, Soleil downgraded the stock to "hold" from "buy," and Merrill Lynch cut it to "neutral" from "buy." The stock gapped down this morning, and showed a loss of 15 percent on the day at last check. Trading volume today is very high.

The stock is currently capped by resistance from its 10-week moving average, and the 20-week might provide some impedance to a recovery, too.

Let's take a look at the sentiment. We regularly track three areas:

--Analyst ratings, to gauge Street sentiment

--Equities sentiment, in the form of short selling 

--Options sentiment, in the form of put/call ratios and trends, and peak open interest

From Zacks I see that, notwithstanding today's downgrades, analysts award:

--5 "strong buys"

--1 "buy"

--5 "holds"

--0 "sells"

--0 "strong sells"

This coverage certainly leaves room for downgrades. Almost half the ratings are the supposedly rare "strong buy." Remember that this stock closed last week at $24.24, a dime lower than is closed the month of July last year. And today it has fallen like a dump truck off a cliff.

Short interest on EXPE is quite considerable, potentially a good sign from a contrarian perspective. It climbed more than 13 percent in January and more than 17 percent of the stock's float is now sold short. The short-interest ratio, the number of days it would take to cover the 20 million shares sold short, is seven.

The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.75 indicates that calls outnumber puts by a small margin in the February, March, and April series of options. The SOIR has climbed from a low of 0.24 in December, indicating mounting pessimism.

So there we have it. EXPE's stock price has, fittingly enough, traveled in a variety of directions since last summer, but there is no overall uptrend to be detected. Analyst coverage seems too optimistic, which we should take as a warning sign. Short interest is high, and if this stock starts to rise, causing the short sellers to rethink, there could be an interesting short-covering rally. Increasing pessimism in the options pits suggests that options players have realistic expectations, and possibly hints that sideline money is waiting.

Overall, the stock earns itself a Schaeffer's Equity Scorecard rating of 5.0 out of a possible 10, which is a very neutral reading. Is this a buying opportunity? There seems to be support at 20, which could limit the downside. But how attractive is the upside? That's the real question.

Click the following link to see a Daily Chart of EXPE Since July 2005: http://www.schaeffersresearch.com/wire?ID=15331 .

Administaff

This morning, Administaff (NYSE:ASF) posted a reported fourth-quarter profit of $10.9 million, or 39 cents per share, more than doubling its year-ago profit of $3.5 million, or 14 cents per share. Sales for the three-month period soared 22.8 percent to $305.6 million from $248.7 million in the same period a year earlier. Analysts had predicted earnings of 27 cents per share on revenue of $303.2 million.

Not surprisingly, the shares gapped higher on the positive news to tag a new all-time high at $49.11. At last check, the security was up more than 15 percent, trading above former resistance at the 47 level. The shares had been trapped in a range between 40 and 47 since late October. This sideways channel had allowed the equity to consolidate into support at its rising 40-week moving average. The stock has not suffered a weekly close below this trendline since March.

From a long-term perspective, ASF has been a strong performer, outpacing the S&P 500 Index (SPX) on a monthly basis since August 2002.

Despite the equity's stellar long-term uptrend, investors haven't exactly been enthusiastic about the shares. In options trading, the stock's Schaeffer's put/call open interest ratio comes in at 0.55, which is near the middle of the ratio's annual range. This reading indicates a degree of complacency among investors, leaving ample room for optimism to grow.

Short sellers continue to favor the stock. While the number of ASF shares sold short dropped by two percent in January, the remaining three million shorted shares still account for 13.5 percent of the equity's float. The stock's short-interest ratio rests at nearly 11 days to cover, offering ample fuel for a short-covering rally.

Wall Street has yet to jump on this high-flyer, with six of the seven analysts following the firm rating it a "hold" or worse. Any upgrades from this skeptical bunch could boost the equity even higher.

Click the following link to see a Monthly Chart of ASF Since July 2005: http://www.schaeffersresearch.com/wire?ID=15335 .

Guitar Center

Rounding out today's trio of stocks, we have Guitar Center (NASDAQ:GTRC). Late yesterday, the company issued fourth-quarter and full year results. For the quarter, net sales climbed by 20 percent and net income jumped 24 percent. However, the earnings forecast fell short of analysts' estimates.

In response, Piper Jaffray shifted its 12-month price target on GTRC to $65 from $68. Wedbush Morgan reiterated the stock at "buy," but Credit Suisse First Boston insisted on "neutral." The stock gapped sharply down, smashing through support at its 10-day and 20-day moving averages, but support at the 50 level finally checked the freefall.

From a low in September 2001, the stock has gained close to 500 percent. The pullback that began last August has brought the 10-month and 20-month trendlines into a bearish cross, but if the support holds at 50, that situation could reverse soon. This is the fifth straight month when that support has been tested and held. December was an interesting month - the stock closed 2005 at $50.01. The 50 level just doesn't want to give way.

From Zacks I see that, notwithstanding today's downgrades, analysts award:

--3 "strong buys"

--2 "buys"

--0 "holds"

--0 "sells"

--0 "strong sells"

This coverage is thin and leaves room for downgrades, but there are acres of space for fresh coverage.

Short interest on GTRC climbed by 25 percent in January, and comprises 12 percent of the stock's float. This provides quite a bit of fuel for a short-covering rally, if anything triggers price rises.

The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.92 indicates that puts outnumber calls by a factor of almost two-to-one in the February and March series of options. GTRC does not yet trade April options. The SOIR is at an annual high, indicating a pessimistic extreme in the options pits.

In summary, analyst coverage is thin, short interest is high, and there is pessimism in the options pits. From our contrarian perspective, these are all encouraging. Against all this negativity, the stock has made some major gains since 2001 and the current consolidation phase does not necessarily signal that the song is over. With support at 50 and the stock trading at $50.66 at last check, this could be just the right moment to jump in.

Click the following link to see a Daily Chart of GTRC Since June 2005: http://www.schaeffersresearch.com/wire?ID=15338 .

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Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method .