10 Most Interesting Stocks for 2009

After taking a little holiday inspired break, I have decided to rededicate myself as there are simply too many interesting things going on in the markets to stand idly by on the sidelines. Given how awful 2008 was, 2009 should be better as I doubt we can go any lower than the November lows that were set late last year. I still believe that when invested in the right companies investors should be able to beat the market. Below, I have compiled a list of some of the most interesting stocks for 2009 that I put together before the New Year but that I am just now getting around to posting.

1. Allied Irish Bank (AIB)

An Irish bank with significant overseas assets in Eastern Europe, the U.K. and the U.S, when these assets are coupled with the company’s strong position in Ireland, the stock has a strong risk / return ratio going forward. The bank has been battered by financial market turmoil but the bank’s balance sheet appears to be in decent shape relative to its Irish peers. With newly added capital, Allied Irish should be able to hold onto its international divisions making it a rising international banking star.

2. CapitalSource (CSE)

One of the more fascinating financial plays, this former MREIT acquired a California state industrial bank this last summer, securing a funding source that it can control. The company has some of the highest capital ratios out there and limited exposure to the California residential mortgage market. As the company begins funding an increasing number of loans through its deposits as opposed to its credit lines, the company should see a dramatic decline in its funding costs. The bank’s large net interest margins will most likely become the stuff of legends, as its competitors will be unable to match its strong corporate client list.

3. The Bancorp (TBBK)

A Philadelphia bank with innovative deposit gathering techniques, strong management and capital ratios and a new subsidiary that will be taken public in the near future with a mandate to acquire other banks' payment processing and technological infrastructures.

4. Dow Chemical (DOW)

With commodity prices declining, Dow’s costs have declined significantly. Given these declines, the company should be able to overcome any significant demand destruction that occurs during the recession. The stock’s recent decline should be alleviated by a new partner to replace the Kuwaitis and a lower offer for Rohm & Haas (ROH).

5. The Phoenix Companies (PNX)

An Insurance company and asset manager that is currently engaged in a restructuring that will result in a spin off of the company’s asset management division. This spin off should create immense value for shareholders and leave them with two companies that would both be ideal to own.

6. Rambus (RMBS)

I have been a longtime holder of the company and it finally appears that the patience that I have had with it is finally going to be rewarded. The company’s ability to defend its patents are going to dictate its future; however, substantial rulings against Hynix and Samsung should be handed down before a large patent trial commences in late January. I believe that the trial will amount to little, as the cartel lined up against Rambus will begin to settle over the next two weeks causing the stock to rocket higher. Given that the company is on the verge of a massive multi-billion dollar patent settlement with the world’s largest semiconductor companies, its current price is appalling and it likely represents the buy of the year.

7. 21^st Century Holding Co. (TCHC)

A Florida insurer that should benefit from the dismantling of Florida’s state run insurance company and a general rise in rates. The company is cheap on all levels and a new management team appears to be running the company in a manner that allows one to realize how poor the prior management team truly was.

8. Chesapeake Energy Corporation (CHK)

Chesapeake’s large debt load, attractive properties and cheap valuation make it a definitive buyout target for any major produce looking to replenish dwindling reserves.

9. Sprint Nextel Corp. (S)

A Kansas City telecom giant trading at a relatively cheap valuation when compared with its peers, assuming the level of its customer defection has peaked. The company’s new management team appears to be making strong progress in turning around a long time laggard of the telecom industry.

10. Lorillard Tobacco (LO)

Lorillard is the cheapest of the big tobacco companies with the ability to buy back a significant amount of stock and raise its dividend substantially. In addition, it appears that the fear of a menthol ban is significantly overdone.

Best of luck to all in 2009 and remember to watch for the next bubble as there is far too much money floating around the system for one not to develop. My guess is that it's going to show up in government bonds; however, should the economy continue to weaken, all bets are off.

Disclosure: None

Comments

[mjohnh:]

I am not sure when this was written, but itd was posted after the news on Rambus' loss in a major patent battle. Lost it for destroying evidence. If this is the Patent(s) referred to in this article, the author obviously was not aware of a major event which sent the stock price down on 1/09/09, two days ago. A sequel on Rambus is certainly needed to tell the reader whether the author was aware of the event on friday.

Jan 11 05:21 AM

[JohnLL:]

Also, the spin off of VRTS from PNX closed the first of the year, and the EX date for distribution of Vertus was back in December. Since the ex date, PNX is up about a buck, but it appears VRTS is not being priced appropriately yet. So while there may still be some opportunity in Phoenix and/or Virtus, it will not be in getting in before the spinoff.

Jan 11 07:46 AM

[Paul Price:]

Chesapeake Energy Corporation (CHK)

Chesapeake’s large debt load, attractive properties and cheap valuation make it a definitive buyout target for any major produce looking to replenish dwindling reserves.

______________________...

A LARGE DEBT LOAD would make any company a much less attractive takeover target in today's tight credit markets.

Jan 11 08:02 AM

[Davers:]

The adverse Rambus ruling came Jan. 9 in DE, and the company announced in a conf call that it will appeal. The court cases referred here by the author happen in CA starting Jan. 20th. Only 4 of a dozen or more patents in suit were covered by the DE decision; the remaining patents at suit in CA are completely untouched by the DE decision. If you own a computer, cell phone, digital camera, MPs player or HDTV, it has infringed RMBS patents inside it made by such Rambus patent infringers as Samsung, Hynix, Micron and nVidia. The patent suit in CA starting Jan. 20th is the largest patent lawsuit in history, with Rambus claiming over $3 billion in infirngement damages.


On Jan 11 05:21 AM mjohnh wrote:

> I am not sure when this was written, but itd was posted after the
> news on Rambus' loss in a major patent battle. Lost it for destroying
> evidence. If this is the Patent(s) referred to in this article, the
> author obviously was not aware of a major event which sent the stock
> price down on 1/09/09, two days ago. A sequel on Rambus is certainly
> needed to tell the reader whether the author was aware of the event
> on friday.

Jan 11 10:37 AM

[BlueOkie:]

Wonder why you are not investing in these.

Jan 11 11:42 AM

[upn42:]

Follow the money and stay too long in any type of rapidly rising asset class and you'll live to regret it. Tech 1998 to 3-01 then real esate 2002- 2006 now government bonds 2008-- ????. When the velocity of money picks up better trade into Muni's or AAA to A.

Jan 11 12:06 PM

[petervankan:]

Are you also the seeking alpha contributor that recommended Allied Irish Banks as cheap and very low risk when it was trading at 16 euros five months ago ? It has climbed back to 2 euros recently.

Jan 11 12:07 PM

[stox2buy:]

Can any one suggest a few potential 10 baggers other than Thermogenesis (KOOL)?

Thanks in advance.

Jan 11 03:05 PM

[socphd71:]

on TCHC: Hurricanes have an affinity for Florida, Louisiana and Texas, three of the states where TCHC underwrites insurance. The big insurers have fled these states, especially FL. Even for a speculation, this company seems uncommonly risky.

Jan 11 08:07 PM

[zeronimo:]

CSE technically looks good. The price went sideways from November to today. To get a better and bigger picture, use the weekly chart. The stochastics is rising. I think this divergence is a Class B bullish pattern and could potentially rally at least for a short-term.

Jan 12 12:00 AM

[H.J. Huneycutt:]

My thoughts on TCHC are similar to socphd71. Almost all the major insurers have fled Florida for a reason --- it wasn't worth it. The state of Florida itself was just one big hurricane away from bankruptcy because of that fund.

Not sure why TCHC will succeed where everyone else has run away. Realistically speaking, they are going to have to charge absurd premiums to be adequately funded. And the general consensus is that Floridians don't think they should have to pay such absurd premiums. Something's got to give eventually. Maybe that something could be that Floridians decided to pay in, but I kinda doubt it.

More likely --- Floridians wait till the next big hurricane and a population shift away from Florida begins to develop. But maybe I'm wrong. Either way, I'm not betting on anyone who is primarily insuring Florida.

Jan 12 02:53 AM

[Jake2:]

Is that the Rambus guy from the movies? Heard it was a smash. Sly Stone really knows how to make 'em. Wouldn't buy the stock though. Stinks a little.

Jan 12 03:01 AM

[Bryan Kautzman:]

Well, the author DID say these were the most interesting stocks of the year...not necessarily the best buys.

DOW currently has an unsustainable dividend. I'm anxiously awaiting their Q4 earnings report as I don't believe they will be able to continue paying the dividend without dipping into their cash. Four cents profit per share last quarter. If profit slips any more, they'll have to cut the dividend. That's when we'll see DOW bottom.

S is a company that appears to me to be in trouble. They could be next asking for a bailout. Seriously, anyone look at their profit margin for Q3? -83%, and you want to know why? Because they have lagged way behind their competition. I have to believe that a company's product has some semblence of an ability to compete before I'll invest. Right now, Verizon is the far superior product. That said, I'm not about to invest in Verizon either. They have a debt load that is staggering, but at least they are turning a profit.

Jan 12 05:36 AM

[Bryan Kautzman:]

Forgot to add my disclosure: I am short on DOW.


On Jan 12 05:36 AM bjohn13 wrote:

> Well, the author DID say these were the most interesting stocks of
> the year...not necessarily the best buys.
>
> DOW currently has an unsustainable dividend. I'm anxiously awaiting
> their Q4 earnings report as I don't believe they will be able to
> continue paying the dividend without dipping into their cash. Four
> cents profit per share last quarter. If profit slips any more, they'll
> have to cut the dividend. That's when we'll see DOW bottom.
>
> S is a company that appears to me to be in trouble. They could be
> next asking for a bailout. Seriously, anyone look at their profit
> margin for Q3? -83%, and you want to know why? Because they have
> lagged way behind their competition. I have to believe that a company's
> product has some semblence of an ability to compete before I'll invest.
> Right now, Verizon is the far superior product. That said, I'm not
> about to invest in Verizon either. They have a debt load that is
> staggering, but at least they are turning a profit.
>

Jan 12 05:38 AM

[Alicia_Finance:]

I will like to hear the feedback on the list from the forum members at Wall Street Survivor, they appreciate other perspectives on trading.

Jan 12 11:24 AM

[mkreisel:]

Rambus is probably the ultimate patent troll: it has been suing others ever since it went public in 1997.

I doubt it will get anything from MU, not because of spoliation or something legal, but because MU itself will go bankrupt very soon.

Jan 12 02:38 PM

[Market Folly:]

LO caught our eye on your list simply because we've seen a lot of hedge funds buying it over the past few quarters. Specifically, Eric Mindich's Eton Park Capital: www.marketfolly.com/20...

and Chase Coleman's Tiger Global: www.marketfolly.com/20...

and a few more funds, which we've detailed on our blog, as we feel tracking prominent hedge fund movements is information worth monitoring seeing as they control a lot of the capital these days.

Jan 13 07:31 PM

[bern7744:]

that is one of the dumbest and corrupt lists I have seen in a long time.it must have been put togather to bail out Bernie

Jan 15 02:20 PM

[Chris B:]

As an alternative to VZ, S, or T, you could take a look at AMX - American Movil. The cellphone market in Latin America has much more growth potential than in the saturated US, and check the valuation!



On Jan 12 05:36 AM bjohn13 wrote:

> S is a company that appears to me to be in trouble. They could be
> next asking for a bailout. Seriously, anyone look at their profit
> margin for Q3? -83%, and you want to know why? Because they have
> lagged way behind their competition. I have to believe that a company's
> product has some semblence of an ability to compete before I'll invest.
> Right now, Verizon is the far superior product. That said, I'm not
> about to invest in Verizon either. They have a debt load that is
> staggering, but at least they are turning a profit.
>

Jan 15 03:48 PM

[Hefaistos:]

The #1 on the list, an Irish bank, well, hm,... Anglo Irish bank was nationalised today, probably leaving nothing to investors. Other Irish banks may follow suit, according to news:
news.bbc.co.uk/2/hi/bu...

Jan 15 04:18 PM

[zaparozhe:]

Does "interesting" mean future reading about chapter 11 filings, liquidations, nationalizations"? These co's are either on the ropes or just plane crappy.

think you should go on permanent holiday

Jan 15 05:17 PM

[ArtfulDodger:]

Let me thank some of the commentators for being up on these stocks and knowing their faults.

Mr. Paul Price: you are right as usual. Companies don't go around looking for lots to debt to buy; they like clean balance sheets as a rule.

Thanks.

Jan 16 08:31 AM

[Stone Fox C...:]

Not sure if thats really true. Think the author's point was that with the high level of debt CHK might be more willing to deal. A buyer with a strong balance sheet might be able to get a better price that way. Don't see CHK selling out though. Any sell would likely be a take under as CHK would only let go if they were forced. The current stock price doesn't reflect the assets in the ground so why would they sell.


On Jan 16 08:31 AM ArtfulDodger wrote:

> Let me thank some of the commentators for being up on these stocks
> and knowing their faults.
>
> Mr. Paul Price: you are right as usual. Companies don't go around
> looking for lots to debt to buy; they like clean balance sheets as
> a rule.
>
> Thanks.

Jan 16 05:29 PM

[SMSimcox:]

Anglo Irish Bank is NOT Allied Irish Bank.

Jan 16 08:06 PM

[longtermstocks:]

www.independent.co.uk/...

Jan 16 11:24 PM

[Irish_fox:]

The Irish government is adamant that Allied Irish Bank (AIB) and Bank of Ireland will not be nationalised like Anglo Irish Bank. They are no where near the same sorry case. The government is talking about taking a stake in AIB and Bank of Ireland (Ireland's biggest and 2nd biggest banks), for re-capitalising them with €2 billion each of taxpayer's money. AIB is the strongest of the two asset-wise. I believed the finance minister - Lenihan, when he spoke on television last night about ensuring the future viability of these two Irish banks and if it being in the National Interest. I bought 1500 shares at $1.59 yesterday and may buy more based on this strong statement of support. Even if it means going long, these stocks should regain a lot of their former glory when the good times come again. They will unlikely be this cheap and grossly undervalued ever again. Please do your own DD and understand that this is only my opinion.

Jan 21 05:11 AM