Seeking Alpha
Long/short equity, growth at reasonable price, research analyst
Profile| Send Message|
( followers)  

The market had a very rough opening this morning with the Dow down over 100 points and the S&P and Nasdaq looking weak. Yet the market rebounded a little, cutting some of the losses. Did you hear or read anything over the weekend that made you feel good about anybody solving the budget and debt issues soon? We have 10 days!

Most of us feel that Congress will surely get together on these critical issues. Default would seem to be out of the question! Isn't it? If so, some investors were buying into this weakness today on tepid volume. But that buying interest ran its course, and the market closed near its opening lows.

Leadership seems to be missing at the moment, both in the market and in Washington. Instead of sitting down and doing their jobs, Washington's factions have resolved to dig into their combat positions "to the death." Maybe that's a little exaggerated, but I haven't heard or read anything that made me think there is a solution near at hand.

Market Stats

Here are the Market Stats.

Last week's best performing sectors were Telecomm and Utilities. Mid-cap Value led the cap/style groups.

Just as last week, Telecomm was the one strong sector today (at least it didn't drop after leading last week). Telecomm is generally thought of as a safe sector due to strong yields and resistance to economic downturns. Even AT&T (NYSE:T) is up and Verizon (NYSE:VZ) had a good day as well.

Utilities were also ok again today, but we don't have much faith in them. They are a last resort. Some might have special growth opportunities in addition to being a utility.

Frankly, there is not much to do but hunt for bargains and potential hedges. VXX or other VXX-based derivatives could be used to hedge, but I would stay out of the money and buy cheap since the odds are that the market will rally sharply when and if the solution is found. It's very hard to imagine an actual default will occur due to disagreements about a bill that has already passed. Surely there are more intelligent and more appropriates ways to resolve our issues with ObamaCare.

3 Stock Ideas for this Market

I selected the following stocks from a custom GARP search looking for recent upward analyst revisions in MyStockFinder (*all data below from Yahoo Finance):

The Blackstone Group L.P. (NYSE:BX) - Financials

  • Trading for 24x current earnings and 9x forward earnings estimates
  • 3.5% forward dividend yield
  • Analyst revised EPS estimates up in last 7 days
  • 34% projected EPS growth for the year, 20% next year, 16% over the next 5 years

Thor Industries Inc. (NYSE:THO) - Cyclical Consumer Goods

  • Trading 19x current earnings and 13x forward earnings estimates
  • 1.2% forward dividend yield
  • Analysts revised EPS estimates up in last 7 days
  • 27% projected EPS growth for the current quarter, 19% next quarter, 12% over the next 5 years

Cognizant Technology Solutions Corporation (NASDAQ:CTSH) - Technology

  • Trading for 22x current earnings, and 17X forward earnings
  • Analysts revised EPS estimates up in last 7 days
  • 11% projected EPS growth for the current quarter, 14% next quarter, 18% over the next 5 years
Source: Where Is The Leadership?