Five Stocks to Own Now that the Dow Has Bottomed 50 comments
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The market is very volatile these days, but believe it or not, the market bottomed out on July 28th when the Dow closed at 11,131. Yes, it was the bottom. In the last two years, banks were down 70-80% on average from previous highs. They should never have dropped so low (all thanks to the panic selling).
Keep in mind, we never had negative GDP and employment is strong. This is not a recession, so what pushed market to such a low level? It is the panic selling. Sooner than later, investors will realize that Merrill Lynch's (MER) CDO sale was a huge mistake, and the company should be worth much more than 24c on a dollar. That is why investors pushed the market higher after Merrill's panic sale. One thing investors should pay attention to is that the financials are leading the rally since July 28th, which is a good sign, and that is why we will see the market going higher from here.
So what stocks should investors buy here? I would buy five stocks for long term holding, which could be once in a lifetime opportunities for many of us. Two alternative energy stocks First Solar (FSLR) and Solarfun Power Holdings (SOLF); two financial stocks Washington Mutual (WM) and Wachovia (WB); and one refinery Valero (VLO).
Alternative energy is here to stay, and it may emerge in a big way in our life. Solar energy so far is the cleanest alternative energy, plus we have support from both McCain and Obama, so no matter who wins, solar will benefit. But we still need to pick the best ones.
First Solar is a thin film leader in the sector. The company reported astonishing results for last quarter on Wednesday, which is a sign to rest of the sector that solar will be a good investment opportunity. On the polysilicon side, SolarFun is the leader in terms of revenue growth. So far the company presented the best growth rate and margin in the industry. This quarter will beat Wall Street expectations by a big margin.
Financial stocks are beaten down so much that owning one or two stocks in this sector is a must in your portfolio. Look around you will see many are very attractive, but WaMu and WB are way undervalued. Both companies are in better position than other banks. They may become takeover target by big banks, such as Goldman Sachs (GS) and JP Morgan (JPM). If you hold for a long time, you will be rewarded handsomely.
Finally, refinery companies suffered from the high flying oil price. Almost all of them are at multi-year lows, and even the best refinery such as VLO can not escape disaster. However, things change fast, the oil bubble has started to burst, and we see refineries back to life again, and this time, they're coming back big in my opinion. VLO simply is the best of its kind.
Stock position: Long.
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This article has 50 comments:
www.moodys.com.br/bras...
User 235322 has probably got it right, but I am supershort but that's super duper short.
FSLR is overpriced where it is. I can't believe a 300 stock is ever a generational buy. besides, their technology uses toxic ingredients and there is talk about outlawing it in Europe.
Buying WM or WB is a recipe for disaster. The only reason WM isn't in receivership is because they have not been forced to acknowledge their losses on 2nd mortgages and exotic firsts. WB isn't in much better shape. You're looking to get wiped out on either of these.
Can't speak to VLO, I don't really follow the oil sector.
This has to be the dumbest article on SA this week.
time to double down, or sell half.... So much fun.
Anyone remember Joe Granville?
One could argue that every sector will be affected by financials since liquidity and credit drives business but still some will be more affected than others. I think solar energy is now viewed as a great long term investment in energy across the globe and no longer some speculative investment....
In short, I concur on SOLF and lots of other good undiscovered alternative energy related stocks out there. Consider SATC as well. Do your own research and good luck.
Every sector affects each and every other one.
Hmm, sheer coincidence Schulle chose to hype SOLF, for example? The same stock pick used by $500,000, very recent prize winner of the CNBC Portfolio Contest. Of course, the winner was "playing the game for fun and going for broke", he explained in the interview.
On banks-- unless one is inside with privileges information, we're all looking at very old data (end of March 2008 and provided by BankRate). We may sleuth/read here and there the statistics on each bank's "trimmed" assets, however and unfortuantely those assets have only continued to erode as piles of foreclosures mount and grow into dismal, disconcerting mountains. Looking at the 3/2008 latest reported CAEL for Wachovia and Washington Mutual respectively, BankRate states these institutions reported net losses representing an annualized return on assets as follows: (Wachovia: -0.22% ROA and a two star soundness rating) ;and (Washington Mutual: -1.34% ROA and, yikes, a lone star soundness rating). And, these have been shored by loans these banks have obtained!
Just as we, living in the "Golden State," observed Indy Mac hawking CDs at 4.2% APY in April when no one else was, not surprisingly we see Wachovia and Washington Mutual now pleading for CD investors to "come on down" for 4.25% APY. It is VERY, VERY quiet inside and outside these banks. One could almost hear a pin drop inside with no waiting lines of course, and there certainly is no shortage of parking spaces in their lots.
Maybe Schulle can sell hot pretzels with grainy mustard on the Jersey shoreline or at the Santa Monica Pier with...a little more credibility.
You do not say where "here" is--the place you describe and tell us people are standing in line to make deposits rather than withdrawals. Your response also does not tell us the source of your WM numbers.
Supershort may be right on regards alternative energy. Watch what happens to photvoltiac panels when the federal and state incentives disappear for the Solar Initiative at the end of the 2008. The hype of a lot of startup companies has a good many of their consultants arrive at a site without so much as a pathfinder to measure sun/solar expectations/cloud cover etc. at all times of the year.
Europe is way ahead of us with this product. Some companies selling here will provide you with an analysis of output for all the months of the year one can expect based on a certain watt system, reporting summer months in AC and winter ones in DC.
Hel-lo, the current that counts is AC. By noting results in "DC" they make a case for photovoltiac appear to look better. So much for tricks of the trade for the uninformed. Wind power requires 100 foot towers--try that on a residental lot where land is expensive or in urban industrialized areas--takes up quite a chunk of land.
Puh-leeeeze. Facts.
Well, perhaps not as no one so far has used four letter words and longer ones that usually end in "er" and are oftentimes preceeded by a reference to one who gives birth.
Come on people! A little class here!
Agree or disagree, but show some respect.
We are all entitled to our opinion AND if there is anyone here who believes (including any and all contributors) that a posting here can effect the price of a security, I would suggest to them that they take prep classes to obtain their GED.
Yes .. attempting to call a market top or bottom is Cramerish (need I say more?), but I appreciated the contributors comments on individual stocks.
CIAO and God Bless America!
BUZZ.... oh, i'm sorry, that's the wrong answer... thank you for playing... you are welcome to come back and try again in 6 months.
These are my personal observations as I stood in line at a WAMU
branch in California. I trust my eyes a lot more than the ramblings
of the experts, nevermind how many stars they pass out.
You might want to ask the 200,000+ Ca. state employees, that had their wages reduced to minimum wage, if we live in a "Golden State".
but i find that people who ridicule the article do so hiding behind cowardly screen names. show some balls and print your name atleast
but i find that people who ridicule the article do so hiding behind cowardly screen names. show some balls and print your name atleast "
Sure, maybe use a name like User 238740&1/2.....
Jobs report was dismal, still in a downward slope. Waiting for the "magic number" when they will all scream "RECESSION." That is when that may be time to call a bottom, although I think the global economy will be sluggish for quite some time. I look for China to go into a major slowdown now after the olympics are over. The tendency is to overestimate the impact of any specific event on the economy. There are already reports that the cities are smog filled and even some of the venues are inadequate. The massive buildup of hotels has been overdone and there are more than expected vancancies. China didn't plan on the global slowdown and thought they were going to go like gangbusters. Their numbers are going to be way off and then just like when someone gets buyer's remorse, they will cut back spending to make themselves feel better and conserve capital. Look at all the cities where the olympics have been held. The lasting economic benefits have been brief and usually followed by a period of contraction before starting another leg up, Lake Placid, Park City, Sarajevo, etc.....
To Ricki who bought FRE on July 31st....You enetered a bad position as the chart shows you bought right at it's peak and it appears it will test the low of under $5. It may go back to 3.89. That is a technical base. So your options are this.
Sell and protect against further loses, as it is highly unlikely it will reach your entry point anytime soon.
Hold the position but sell calls on your stock. Though it has run down quite a bit, the calls will bring in minimal funds.
Buy puts 5 strike price, and hold your position.
Wait for the lows of the year and then double down or possibly tripple down your position to play the bounce. This is the riskiest and takes a planned strategy becuase it is only used to get out of a position and not as an investment. Sometimes I close out my bad trades like this just with a minimalk loss as compared to a huge loss, just to "get out." Never hold this position for more than a 5 days after the bounce because the stock will usually retrace and then you are going to have a larger loss than you had originally.
Given the market and financial conditions, shorting the XLF is a better play than goig long. It has had a nice run up and you could pocket an easy 10% within the next few dfays.
On Aug 08 07:17 AM supershort wrote:
> "whenever an article is written by an author whether right or wrong
> he puts his name on the line.
> but i find that people who ridicule the article do so hiding behind
> cowardly screen names. show some balls and print your name atleast
> "
>
> Sure, maybe use a name like User 238740&1/2.....
>
> Jobs report was dismal, still in a downward slope. Waiting for the
> "magic number" when they will all scream "RECESSION." That is when
> that may be time to call a bottom, although I think the global economy
> will be sluggish for quite some time. I look for China to go into
> a major slowdown now after the olympics are over. The tendency is
> to overestimate the impact of any specific event on the economy.
> There are already reports that the cities are smog filled and even
> some of the venues are inadequate. The massive buildup of hotels
> has been overdone and there are more than expected vancancies. China
> didn't plan on the global slowdown and thought they were going to
> go like gangbusters. Their numbers are going to be way off and then
> just like when someone gets buyer's remorse, they will cut back spending
> to make themselves feel better and conserve capital. Look at all
> the cities where the olympics have been held. The lasting economic
> benefits have been brief and usually followed by a period of contraction
> before starting another leg up, Lake Placid, Park City, Sarajevo,
> etc.....
>
> To Ricki who bought FRE on July 31st....You enetered a bad position
> as the chart shows you bought right at it's peak and it appears it
> will test the low of under $5. It may go back to 3.89. That is a
> technical base. So your options are this.
>
> Sell and protect against further loses, as it is highly unlikely
> it will reach your entry point anytime soon.
>
> Hold the position but sell calls on your stock. Though it has run
> down quite a bit, the calls will bring in minimal funds.
>
> Buy puts 5 strike price, and hold your position.
>
> Wait for the lows of the year and then double down or possibly tripple
> down your position to play the bounce. This is the riskiest and takes
> a planned strategy becuase it is only used to get out of a position
> and not as an investment. Sometimes I close out my bad trades like
> this just with a minimalk loss as compared to a huge loss, just to
> "get out." Never hold this position for more than a 5 days after
> the bounce because the stock will usually retrace and then you are
> going to have a larger loss than you had originally.
>
> Given the market and financial conditions, shorting the XLF is a
> better play than goig long. It has had a nice run up and you could
> pocket an easy 10% within the next few dfays.
You have not read my post carefully. The buildout in China, India and Russia are done. The little glimmer of hope has been tied to the olympics that their economies will continue to grow at a pace that has been priced into the market. The slowdown affects everything.
As far as WM. If they were clamoring to get in, the Saudi's would have jumped in again, just like they did with Citi and they got burned, but so did Citi. WM is not a good investment in my opinion. You may think it's cheap and at $5 it may very well be, but how are they going to make earnings? Write more loans? The industry is broken and will be depressed for quite some time. If you wish to hold this for years and risk another "shoe drop" then go right ahead. But the potential for more runs on banks is there and quite real. WM is not in great shape.
I read it. I was in a bit of a rush.I do not see it the same the way.To much is being made of the olympics and the pricing into their markets is almost out not yet.On wm at 3-4 maybe 5 depending on a wide range on circumstances and economic varibles, time frames, risk tolerence etc...that is your opinion and that is fine.It is not a shooting start by any means.I didn't say it is cheap I didn't go there In 1 to 2 years I feel there are a few that can turn into a huge return.I built up a basket of them.We'll see how it plays out.I did bite around 4 but I am not in a rush or expecting any miricles tomorrow.On China.I am not in the camp of China falling off a cliff as far as growth goes and everyone going back to rice while living underground and riding bikes same with the other parts of he world.When those stories come out and a low numbers hits I'm looking to buy a little.Tech is another area where the U.S. has a huge future out in front of it.The air just needs to come out of all this first....The demo numbers are much to large to ignore.The other area I like is Coal.It will also turn into a great buy if it countinues this way.Have a good day I have to get back to work...
On Aug 08 10:03 AM supershort wrote:
> User 236687:
>
> You have not read my post carefully. The buildout in China, India
> and Russia are done. The little glimmer of hope has been tied to
> the olympics that their economies will continue to grow at a pace
> that has been priced into the market. The slowdown affects everything.
>
>
> As far as WM. If they were clamoring to get in, the Saudi's would
> have jumped in again, just like they did with Citi and they got burned,
> but so did Citi. WM is not a good investment in my opinion. You may
> think it's cheap and at $5 it may very well be, but how are they
> going to make earnings? Write more loans? The industry is broken
> and will be depressed for quite some time. If you wish to hold this
> for years and risk another "shoe drop" then go right ahead. But the
> potential for more runs on banks is there and quite real. WM is not
> in great shape.
Wow !!!