There’s a lot to cover today. Let’s start with the current portfolio.

Cytec Industries (NYSE:CYT) hit a new high yesterday. Raise your sell stop to $52.40.

Robbins & Myers (NYSE: RBN) is up too. Raise your stop to $23.60.

Finally, we’ve stopped out of RINO International (Nasdaq: RINO). Everything still looks great at the company… in fact it looks like a steal here. But it’s a mistake to fight the tape. So we’ll move on.

I’m told we’ve got some new members to the service, in which case, some of the marketing materials may have mentioned RINO International. Forget that one. I’ll replace it with a new pick below.

You may have also seen Navios Maritime (Nasdaq: NM) mentioned. That recommendation is still good. You can read the whole report on Navios here:

http://whitecapresearch.com/files/2010/08/FC0810-NM.pdf

If you’re new to the FastCap Strategist, you should start by reading the introductory report by clicking here. And you can also check out our options guide here.

For now, let’s get to the new recommendation.

Normally, I send a report in PDF format with a variety of the stocks’ fundamentals like the one above for Navios. We’re going to skip that this time…

First, because I want to get this to you as fast as possible since the manufacturing data has the market on a tear.

Second, because this company only put out a pre-release and not a full 10-Q report. So we’re breaking with tradition a bit since putting together all the tables would be tricky.

Normally, we wait for stocks to surprise on quarterly earnings announcements, and then we buy in after that. Studies have proven that there is plenty of profits to be made even after all of the information is out there in the market.

But in this case, the company released most of its numbers, but not all. (They put out an 8-K form and will put out their 10-Q a little down the road.)

On September 20th, this company beat the analysts expectation for earnings by 515% and the expectation for sales by 12%.

And would you believe me if I told you the stock was trading as cheap as 0.88 times sales and 6 times free cash flow?

You will when I tell you exactly what it is.

We’re making a bit of a contrarian bet on Lennar Corporation (NYSE: LEN), the homebuilder and financial services company.

I’ve been arguing we’re due for a rally (and, shortly after that, a full-scale economic recovery). Lennar’s numbers back that up.

Overall, the company posted earnings of $30 million this quarter compared to a loss of $171 million in the third quarter of last year. In its homebuilding division, revenue from home sales increased 10% over last year and gross margins on home sales rose to 21% from 7.8%.

The company has wisely focused its efforts on areas still experiencing growth, like the mid-Atlantic and the Carolinas.

The really tricky part of Lennar’s release is its Rialto division.

This division purchases large and small portfolios of loans at distressed prices, then works through those assets one at a time to resolve them at a much higher payoff.

Lennar is uniquely prepared to purchase these loans in bulk and then fix them up one at a time. They understand the housing market, they understand the buyers, and they have the financial infrastructure to salvage these loans.

The division swung from a loss of $0.5 million last year to a profit of $18.5 million. That’s because last year, the division was just starting and now it’s in full swing. For the year, Rialto has already booked $32 million in profits.

The full numbers aren’t out yet… but based on what I’ve been able to decipher, this program can become a major moneymaker for Lennar in the next few years – potentially eclipsing homebuilding.

Once this information gets totally digested, the market will like it. That’ll drive up Lennar’s share price. So lets get in now.

Action to take: Buy Lennar Corp (NYSE: LEN) for $15.50 or less.

Speculators can consider the Jan 2011 $16 calls, but don’t pay more than $1.25.

Hang tight, because we’re going to have more stock picks coming over the next two months in anticipation of a market rally.

Ahead of the tape,

Matthew Weinschenk