9 New High Candidates

The list of stocks and ETFs breaking out to new multi-month highs is long and diverse today. I have chosen a few to highlight with my thoughts on each. Below is that list.

Market Vectors Gold Miners ETF (GDX) - The gold stocks are rising again today after pulling back last week with the overall market. A combination of a lower US dollar and the continuing uncertainty about where the economy is going has led to investors buying mining stocks. Add in the threat of inflation that I feel is VERY REAL and GDX should confirm its breakout and run to the mid-$40’s.

PowerShares DB US Dollar Bearish ETF (UDN) - The US dollar weakness can be profitable to commodity investors as well as holdings of the inverse US dollar Index ETF. With the index breaking down today the inverse ETF hit a fresh 4-month high.

Market Vectors Russia ETF (RSX) - Russia was beaten and battered early in the year, but has steadily made its way back to the best level since early November and is over 100% off the 2009 low. That being said, RSX is down 65% from the May 2008 high.

Coca-Cola (KO) - My strategy has been to move away from the “safe” sectors including consumer staples. KO has been one of the few stocks in the sector that continues to show relative strength. Close to hitting a new 7-month high and a 3.6% dividend make KO an attractive investment for the conservative side of a portfolio.

Capstead Mortgage (CMO) - A high-yielding play on mortgages sounds risky, but CMO has put together a steady uptrend since bottoming in November. With a dividend yield of 19.2%, CMO has made its way into many of PFG’s clients’ portfolios in the last month.

Morgan Stanley (MS) - There are a handful of financials I believe come out of this mess with stronger balance sheets and more powerful than before. MS is one of them and I would consider the stock a buy on weakness.

Brink’s Home Security (CFL) - Gun stocks and security stocks hitting highs - what does that tell you about the mindset of Americans? Not a good thing, but hey we are only trying to make money here, not cure the world of its issues. CFL closed at the best level ever today and is a buy on low volume weakness.

United States Gasoline ETF (UGA) - Gas prices rising in front of the summer driving season does not sound good to the vacationers gassing up their station wagons for the holiday season. Interested in hedging higher gas prices? Look at UGA, which is up 80% off the December low.

MYR Group (MYRG) - A stock that went public in September, MYRG is a play on the infrastructure spending in regards to the electrical grid. The company began over a century ago supply electricity to rural towns and now can be called on for a much needed upgrade to the electrical system. After going public in September 2008, the stock faltered and has now risen as the infrastructure spending begins.

Disclosure: Long CMO, GDX, KO

Comments

[doubleguns:]

CMO with a $1.98 earnings cant support the dividend. Don't count on that dividend to hold up.

If they are in commercial mortgages don't count on the stock price to hold up over the coming expected correction in this market either.

May 20 07:48 AM

[Matthew D. ...:]

Good points. CMO deals mainly with residential ARM, government-backed mortgages. Also dividend was raised last quarter to $0.56/share from $0.36 in fourth quarter and $0.55 in third quarter of 2008.


On May 20 07:48 AM doubleguns wrote:

> CMO with a $1.98 earnings cant support the dividend. Don't count
> on that dividend to hold up.
>
> If they are in commercial mortgages don't count on the stock price
> to hold up over the coming expected correction in this market either.

May 20 08:11 AM

[Kinabalu:]

CMO earnings in first qtr were $0.58 versus dividend of $0.56, in line with REIT requirement to payout at least 90% of earnings. Financings spreads, the key indicator for GSE mortgage REITs, increased to 216 basis points in the first quarter versus 117 bp in the fourth qtr of last year.


On May 20 07:48 AM doubleguns wrote:

> CMO with a $1.98 earnings cant support the dividend. Don't count
> on that dividend to hold up.
>
> If they are in commercial mortgages don't count on the stock price
> to hold up over the coming expected correction in this market either.

May 20 01:17 PM

[Socialism c...:]

My picks (FWIW):

KO (nice call with falling dollar -- glad I got in a week ago!)
ADM (grains = recession proof; we are not out of the woods yet, but must always eat)
BP (oil on the way back up, nice dividend!!)
AUY (inflation play)
SLV (inflation play)

May 20 03:40 PM

[Matthew D. ...:]

Thanks for comment, just a quick thought.

I agree with ADM and AUY. Also own SLV.

I do agree oil is moving higher, but would look at move leveraged plays such as PBR (I also own).



On May 20 03:40 PM Socialism cannot compete! wrote:

> My picks (seekingalpha.com/symbo...):
>
> KO (nice call with falling dollar -- glad I got in a week ago!)<br/>ADM
> (grains = recession proof; we are not out of the woods yet, but must
> always eat)
> BP (oil on the way back up, nice dividend!!)
> AUY (inflation play)
> SLV (inflation play)

May 20 06:53 PM