Excerpt from Raymond James strategist Jeffrey Saut's latest essay (published Monday, March 21st):
...As for Japan, it is a strange feeling to attempt considering how investors should position themselves in light of this tragedy. As stated, I have thought Japanese stocks were cheap for quite some time. They obviously got cheaper last week given the Nikkei 225’s 20% decline from its March 9 high into last Wednesday’s intra-day low before firming late week. Plainly, this weakness caused a concurrent drop in the two investment vehicles I have been using since May 2009, namely Japan Smaller Capitalization Fund (JOF/$8.70) and WisdomTree SmallCap Dividend Index (DFJ/$41.55). These funds are now back to the levels I originally recommended them.
Those wanting to invest in Japan should consider said vehicles using last week’s intra-day low as a failsafe point. I also think Japan will use more liquefied natural gas (LNG) and consequently I have recommended 6%-yielding Teekay LNG Partners (TGP/$39.98/Strong Buy) for investment accounts. Obviously, the nuclear nightmare had an equally deleterious impact on nuclear stocks. Hereto, a buying opportunity may be at hand. Accordingly, investors should consider the Global X Uranium ETF (URA/$14.85), which is a fund that holds a basket of more than 20 uranium stocks. I would use last week’s intra-day low of $13.25 as an “uncle point.”
The call for this week: Minyanville’s insightful CEO (Todd Harrison) had this to say on Minyanville’s must have “Buzz and Banter,” late last Friday, “A confluence of elements have come together today, including a potential ‘blink’ in Libya, relative calm in the Mid East and optimism regarding the nuclear situation in Japan. One other item bears mentioning and that’s the news the Fed says some banks can resume dividends after the stress test. That news has poked the ‘piggies’ back through the $52 level for the KBW Banking Index (BKX/$52.09) and lent a ‘bid’ to the (overall) tape.”
Recall, after avoiding banks for ~10 years, I turned constructive on them last November when the bank index began outperforming the S&P 500 (SPX/1279.20). While I have not recommended the money center banks, I continue to embrace many of the regional banks often mentioned in these letters. I also remain an energy bull and offer 6.8%-yielding LINN Energy (LINE/$38.80/Strong Buy) for your consideration. LINN has a 20-year reserve life, a 100% ROI on drilling, 30% organic growth, a 7% cost of capital, is 95% hedged, and has a 50/50 mix of oil to natural gas.