Posted: 7 month(s) and 8 days(s) ago   |   1 Comment(s)   |   Rating: 2 0
Posted by: WallStNick

Stock #1

After hitting its 52-week high of more than $100 at the start of the year, JEC now trades for under $30 per share. The company held up well for the first half of the year, but the credit crisis, as has been the case across the entire spectrum, was too much to endure. Investors sold en masse believing that a deep recession or worse was upon.

Well, that may be, but not if our new President has anything to say about matters. Riding a white horse with bags of cash, the new American administration has all but promised big spending in order to prevent a dangerous deflationary spiral. JEC will be a big beneficiary of stimulus spending and a bargain at these prices.

Stock #2:

General Electric (GE)

Any company with exposure to the credit markets has been absolutely crushed in this market. That is certainly the case with General Electric (GE).

Already struggling to regain its footing, the company lost nearly one half of its market capitalization over the last two months. As a good friend of mine says, there is no need to make things difficult in a portfolio. There are so many blue chip companies that have lost substantial value and yet offer compelling growth potential. That is the case with GE.

Add in a dividend yield of more than 8%, and investors get paid to wait for a more normal economic business cycle to kick in. Even the Great Depression ended at some point. The same will happen here. Buying GE at these prices is too good to resist.

Check out this Wall St. Network interview w/ GE's Marketing Manager, Steve Peterson. (2008)

Stock #3:

Chesapeake Energy (CHK)

When markets fall rapidly, investors that use leverage can be burned. Margin calls have certainly added to the volatility of the recent bear market, but one would never expect the CEO of a company to be forced to liquidate an entire position as was the case with Chesapeake Energy (CHK).

Bad enough that the entire oil and gas complex was collapsing under the weight of overleveraged speculation, CHK lost more than 50% of its value helped in part by margin selling by its CEO. Wise investors will recognize that such selling has nothing to do with the future prospects of CHK. Natural gas can be expected to play a significant role in any alternative energy program. CHK will benefit as a result.

Stock #4:

Pulte Homes (PHM)

Tired of people calling a bottom in the homebuilding sector? Me too, but this time may be different. I'm calling a bottom in the homebuilding sector.

Demographics alone are creating pent-up demand that will surely help the homebuilders going forward. So too will subsidized mortgages that may be coming in the near future. By that I mean 30-year fixed rate loans at 4% or so. Such a move would do wonders to spur buying in the market. That buying will eat up inventory that is currently hurting builders.

PHM is trading near its lows again after rallying strongly. An earlier call for the bottom in the sector may have been too early. That is not the case today. I'd be a buyer of PHM.

Stock #5:

Tesoro Petroleum (TSO)

Volatility is a killer in the oil refining business. With oil prices fluctuating like a yo-yo on steroids, the entire oil refining sector has been in the dumps in 2008. That can be expected to change in 2009.

One of my favorite names in the space is Tesoro Petroleum (TSO). Its shares have dropped by more than 85% over the last year as oil prices became the victim of excessive and highly leveraged speculation.

If the new administration has the nerve to limit leverage in the oil pits, the refiners stand to benefit greatly as oil prices would be much less volatile. The capacity issues of the last few years have not changed. It has been quite some time since a new oil refinery was built, and that lack of capacity will bode well for TSO.

Stock #6:

Chicago Bridge and Iron (CBI)

Huge increases in oil prices fueled project and infrastructure spending for the entire industry. Such a state benefits firms like Chicago Bridge and Iron (CBI) that specializes in building huge projects for the industry. The problem for CBI is that lower oil prices results in reduced spending for capital projects. Its shares have fallen off a cliff since oil peaked in July.

Now selling for slightly more than $5 per share, CBI is incredibly cheap. Though lower, oil prices are still at a relatively high level. Big infrastructure projects are still under way according to the major oil and gas companies. Even better for CBI is the movement to natural gas as a key to alternative energy plans. Liquid natural gas terminals can be expected to be in high demand as a result. I love CBI at these prices, and you should, too.

Stock #7:

Mosaic (MOS)

One of the hottest sectors at the end of this bull market was fertilizer companies. Demand for food and agricultural needs across the globe took hold of stocks like Mosaic (MOS). The momentum crowd really did a job here. In the last year alone, MOS nearly tripled in value only to lose all of the gains and then some. The stock is down nearly 85% from its peak.

I call the action here forced hedge fund selling. Redemptions at the huge funds result in sales of perfectly good stocks like MOS. While the stock did indeed go higher than it should have, I am convinced the fall has been too severe. This company makes good money that shows no signs of abating. In fact, demand for ethanol should increase under the new administration with ties to agriculture. I would take advantage of the forced selling in MOS and establish a position at these prices.

Stock #8:

Archer Daniels Midland (ADM)

The corn craze collapsed earlier this year as negative consequences of ethanol production came to the fore. The spotlight focused on the fact that corn production did little to reach its stated goal of reducing carbon emissions. Rapid increases in farming for corn resulted in water and energy use that exceeded any benefits, or so goes the argument against ethanol. When oil prices collapsed, that was the excuse that traders needed to dump the agriculture play. Archer Daniels Midland (ADM) lost half its value in the carnage.

Unlike the fertilizer play, ADM, though it had enjoyed solid growth, exhibited more Rational tendencies with respect to its valuation during all of this craziness. As such, losing half its value in this bear market is an opportunity for investors. I'm jumping on board making ADM one of Top 10 for 2009.

Stock #9:

Transocean, Inc. (RIG)

The drill, baby drill crowd did not win the election, but fear not oil drilling is not disappearing anytime soon. Although pressure for alternative energy will increase in the near future, solutions are a long way off. In addition, there is reason to be optimistic that the Obama Presidency will reach across the aisle in regard to all issues. That means a prior willingness to open offshore drilling may still be on the table. If so, companies like Transocean, Inc. (RIG) will do just fine thank you.

Oh, and don't forget OPEC. Do you really think they will let go of $100 oil so easily? Think again. Crude is still the energy necessity of a growing economy. When our economy recovers, and it will eventually, owning RIG will be a wise decision. I think that time starts in 2009.

Stock #10:

Fluor Corporation (FLR)

The President-Elect announced this past weekend a plan to add 2.5 million new jobs during the first two years of his time in office. Focusing on roads, bridges and schools that have been neglected for many years, a rebuilding boom of epic proportion appears to be in the works. This should not be a surprise given that the current crisis is being compared to the Great Depression.

I guess a big crisis requires a big government solution. No matter debating the political merits or lack thereof of such a response. Big spending is coming, and heavy construction-oriented companies like Fluor Corporation (FLR) will be huge beneficiaries. Of the 10 stocks in this gallery, FLR may be the one to buy before the end of the year. In fact, of the 10 on the list, this one is my favorite.

Check out this Wall St. Network interview with Fluor's CFO, Ken Lockwood. (2005)

Read the article as it was originally published, here.  

Add Comment / Rating

Posted: 7 month(s) and 15 days(s) ago   |   0 Comment(s)   |   Rating: 0 0
Posted by: WallStNick

With all the uncertainty in today's economy, many investors look at the stock market like a leper colony.

But there are a lot of very sound opportunities in the stock market for investors to make money.

Here's a list of the Top 10 Stocks for 2009, as first reported by MSN Money senior markets editor, Jim Jubak:

The 5 best stocks for the first half of 2009

• Deere (NYSE: DE), a farm machine producer that tracks the price of agricultural commodities. Yield: 3.1%. 

• Enbridge (TSX: ENB), a natural-gas and oil pipeline company that has a 3.8% yield.

• ExxonMobil (NYSE: XOM), the world's best integrated oil company for the current environment. With a yield of 2%, these shares just make my cut.

• Flowserve (NYSE: FLS). Can you say infrastructure? It makes pumps and valves for moving everything from water to oil and has a yield of 2%.

• Rayonier (NYSE: RYN), a producer of wood products and an owner of timberland. Yield: 7.2%.

The 5 best stocks for the second half of 2009

• Goldcorp (NYSE:GG), the world's low-cost producer of gold.

• Google (Nasdaq: GOOG), the dominant Internet search company just gets more dominant.

• HSBC (NYSE:HBC), the best banking franchise left standing in Asia.

• Petrobras (NYSE: PBR). The Brazilian national oil company has dozens of new fields under development.

• Thompson Creek Metals (TSX: TC), the second-largest private producer of molybdenum in the world.

Here are a few words from Jubak's article on how and when to invest in these stocks:

 My selection of the 10 best stocks for 2009 -- and my strategy for when to invest in them -- is designed to help you do three things:

• Make some money (although not a lot of money) in the first half of the year.

• Get you into position for a rally in the fall.

• Make sure your portfolio is ready for 2010, when the economy itself is likely to be in recovery mode and the major long-term trends driving the global economy will be your key to market-beating returns.

Always thinking ahead

Stock prices are built on anticipation. The market indexes had been falling for months before we got the initial gross-domestic-product numbers in October showing the economy had started to contract in the third quarter. And stocks have kept falling since then as investors have anticipated that the economy would contract even more -- maybe at an annual rate of 4% or 5% -- in the three months that end in December.

Anticipation of an end to the recession and an economic recovery will start stocks moving up again well before the recession is actually over. The historical record shows that stocks start to recover, on average, about two quarters (or six months) before an economic recession ends.

In other words, if the U.S. recession ends in the fourth quarter of 2009 or, more likely, in the first quarter of 2010, then we can expect stocks to rally starting in the summer or fall of 2009.

Timing is tricky

Timing the turn can't be exact. There's the risk of being early. The U.S. economy could struggle for longer than I now expect, and stocks could linger at low levels into 2010.

But there's also a risk of being late. If the bottom for the Chinese economy is in the second quarter of 2009, as Goldman Sachs now projects, then the global economy would start to pick up before the fourth quarter of 2009, and stocks would be likely to rally earlier than the fall of 2009.

So 2009 presents quite a strategic challenge.

In the first half -- or even three-quarters -- of 2009, you'll need to play defense. (But you don't want to be completely on the sidelines, just in case growth in China does bottom in the second quarter.) That means losing as little money as possible as stocks continue to founder while picking up a few percentage points of return here or there.

In the first part of 2009, I'd be very happy with anything like a 5% return from a stock portfolio. (Why not just stick it in supersafe Treasury bills or notes, you ask? Have you seen the yield on T-bills lately? It's as close to zero as you can get.)

Then toward the end of the year, move more of your portfolio to offense, without taking on a huge risk in case your timing is off. We know from the end of other bear markets that the first months of a bull market can produce explosive returns. But bear markets are notorious for producing final rallies that pull investors in and then fail, sending the early birds reeling to yet more losses.

Building a core

So what kind of stock picks could possibly work in that kind of uncertain and labyrinthine market? I'd suggest these 10 culled from the 50 in my new book, "The Jubak Picks." (I'll post the full list of 50 when the book comes out Dec. 30. This long-term portfolio will replace my existing 50 Best Stocks in the World list. You'll be able to find a link to it near the top in the left margin of every column, just under my 12- to 18-month portfolio.)

Why did I pick these 10 from the 50 in my book to be my best picks for 2009?

First, these stocks offer what I'd like to see now and for the next six to nine months: safety, a modest dividend return of at least 2% to 4% and some upside leverage if the global economy delivers a positive growth surprise. And second, they offer what I'd like to see for later: exposure to the most timely of the 10 long-term macro-investing trends that I describe in my book. (You can find a list of these 10 trends in my Oct. 21 column, "10 trends for long-term gains.") By buying these stocks, I start creating the core of a long-term portfolio for the five years or more after this bear market.

Use some cash to ease your way into positions in the five stocks in my picks for the first half of 2009 on dips in the stock market. Look for a stretch of days when the Standard & Poor's 500 Index is sitting near 840, which looks like a bottom for this stage of the bear at least.

Or you can also start to dollar-cost average into these stocks. That's an especially useful method if you are a beginning investor starting a portfolio.

Don't rush into investing all your cash. Remember this is still a high-risk bear market. And you want to have cash on hand to invest in my best stocks for the second half of 2009 when the time is right in the fall.

If you're a beginning investor or have moved all your cash to the sidelines, I'd suggest buying at a pace that puts about 25% of the cash that you ultimately want to devote to stocks into the market by mid-2009.

How to rebalance

If you're already invested, as I am in Jubak's Picks, I suggest rebalancing your existing portfolio using these dividend-paying stocks to replace other stocks in the sector that don't pay you to wait. If the stock allocation of your portfolio is already 50% or more in the market, I wouldn't recommend increasing that commitment to stocks now.

I've got Jubak's Picks at almost 50% in cash as of Dec. 16. That means I've got just 50% of my stock portfolio actually in stocks. (I run an all-stock portfolio on these pages. You, I assume, have some money in other instruments, such as bonds. I'm writing here only about the stock portion of your portfolio.) And I'm trying to keep my cash position at roughly that level even as I shift the portfolio to take advantage of the current opportunities in the market.

Think about gradually putting another 25% of your cash to work in the fall -- if it looks like the economic scenario that I outlined at the beginning of this column is working out as projected. Increase that buying if the recovery seems nearer than the end of 2009 -- or if we get a major "buy" signal from technical indicators. Hold off or slow down your buying if the economy sinks deeper and faster than economists currently project. Remember this second group of five stocks isn't designed to pay you to wait.

Don't try to hit a home run in 2009. You're likely to wind up whiffing. A solid single or two, maybe even a double, would be enough to turn 2009 into a better year for you than just about anybody expects right now.

Read the complete article here. 

At the time of publication, Jim Jubak owned or controlled shares of the following companies mentioned in this column: Deere, Enbridge, Flowserve, Goldcorp, Petrobras, Rayonier and Thompson Creek Metals. He did not hold short positions in any company mentioned.

Add Comment / Rating

Posted: 18 month(s) and 16 days(s) ago   |   5 Comment(s)   |   Rating: 0 0
Posted by: WallStNick

Shares of Apple (AAPL) hit $200 on Wednesday for the first time despite lower than expected holiday retail sales.

People are hooked on Apple products, and chances are they will be for quite some time--just as long as Apple keeps innovating.

Apple's new products also yield higher margins for the company through lower memory costs. Analyst Shelby Seyrafi has a $225 price target on the stock. "Apple has a lot of momentum right now," he told the Associated Press.

There isn't any reason Apple won't hit Seyrafi's price target.  

The Company posted revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share. These results compare to revenue of $4.84 billion and net quarterly profit of $542 million, or $.62 per diluted share, in the year-ago quarter. Gross margin was 33.6 percent, up from 29.2 percent in the year-ago quarter. International sales accounted for 40 percent of the quarter’s revenue.

“Apple ended the fiscal year with $15.4 billion in cash and no debt,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first quarter of fiscal 2008, we expect revenue of about $9.2 billion and earnings per diluted share of about $1.42.”

Apple shipped 2,164,000 Macintosh® computers, representing 34 percent growth over the year-ago quarter and exceeding the previous quarterly record for Mac® shipments by 400,000. The Company sold 10,200,000 iPods during the quarter, representing 17 percent growth over the year-ago quarter. Quarterly iPhone™ sales were 1,119,000, bringing cumulative fiscal 2007 sales to 1,389,000.

With this kind of consistent growth, there's no reason why you, too shouldn't love Apple to the core.

Add Comment / Rating

Posted: 20 month(s) and 12 days(s) ago   |   12 Comment(s)   |   Rating: 0 0
Posted by: WallStNick

Sirius Satellite Radio, Inc. (Nasdaq: SIRI) cut its third quarter loss to $120.1 million, or 8 cents per share, from $162.9 million, or 12 cents per share a year ago. Revenue for the quarter rose 45 percent to $241.8 million, but fell short of Wall Street's expectations of 244.3 million.

 The New York-based company finished the quarter with 7.7 million, and added 524,938 new subscribers during the quarter--a 50 percent boost over the year ago period.

 Seems like things are looking up for Sirius, largely due to Howard Stern, exclusive rights to broadcast NFL games, and deals with auto makers including BMW, DaimlerChrysler and Ford.

The company has also said that it hopes to close a merger with rival XM Satellite Radio Holdings, Inc. (NYSE: XMR) by the end of the year. If the deal goes through, the combined company would have roughly 14 million subscribers.

The problem for satellite radio companies, however is churn--how many members is each provider losing, and does the addition of new subscribers offset ones that have fallen off?  Monthly churn for Sirius edged up to 2.1 percent, from 2 percent a year ago. That's 161,700 members a month--nearly 31% of what the company added in the entire third quarter.

 Just wondering what people think of Satellite Radio. Is it a flash in the pan, or is it here to stay? Owning a Sirius radio myself, I can honestly say that listening to free radio has become painful. The content offered on Satellite Radio is far superior than anything that's free.

 The only question that remains is does the merit of the content (which is basically all they have) justify the monthly subscription price of $12.95?

 Any thoughts?

Add Comment / Rating