What happens when no more jobs are available? For many Americans, it’s the perfect time to go back to school. That means Apollo Group (APOL), DeVry (DV), Corinthian Colleges (COCO), Career Education (CECO) and other educational providers could benefit despite the global economic crisis. So, what’s the best way to play these trends and profit in a tough market?

The Apollo Covered Call

The global economic crisis made 2008 a year that many investors would like to erase from their memory. A sharp rise in mortgage defaults caused banks to tighten lending for both consumers and businesses. Consumers stopped spending, businesses stopped producing, and raw material prices dropped sharply. The result was a rough 2008 that may pave the way for a solid recovery in 2009. Here are the top three trends that we see in 2009 and the top three stocks to go along with them…

The first big change in 2009 will be a new president that has promised to bring change. Barack Obama has petitioned Congress to pass an economic stimulus plan that could top $1 trillion. The plan will increase spending on public infrastructure in order to create more than 3 million jobs while improving the quality of life for Americans. The plan will also create opportunity for a few public companies.

The dry bulk industry may be on the decline with lower asset valuations and tumbling freight prices, but some investors believe that the record-low valuations may spur some positive action. Dry bulk shipping rates have plummeted more than 90 percent since last summery while the net asset values of the ships have dropped 70 percent in some cases. The result has been record low valuations for the owners of those ships – those companies operating in the dry bulk industry.

The Baltic Dry Index, which measures day rates for dry shipments, recently moved below 800, signaling the worst pricing since around 2002. These lower day rates are the result of reduced demand due to slowing economies around the world. Less iron ore shipments need to be made given the slower construction in both the United States and growing economies like China. However, many important players in the market are predicting a recovery.

Retail stocks have had a rough year that just keeps getting worse, with last month’s drop in consumer spending the largest since the data began to be tracked in 1947. Unfortunately, things do not look much better for 2009, with some 44 percent of consumers saying that they would further cut spending after the holidays, according to a study conducted by America’s Research Group. However, some investors see opportunity for strong retailers that can weather the storm.

Many investors looking at the retail sector will find no shortage of value in the form of low multiples, but relative value is no longer a valid measure in today’s environment. Investors should instead look at brand strength, asset valuation, cash flow generation and debt load to find retails that will be able to not only survive but thrive in the economic crisis. So, without further ado, here are our top three retail stock picks for 2009:

Randgold Resources Ltd. (GOLD), Gold Fields Limited (GFI), Kinross Gold Corporation (KGC) and other gold stocks rallied as investors looked to hedge against inflation. The U.S. dollar weakened against other currencies after the Federal Reserve lowered interest rates to help encourage economic activity, which led to a rally in many commodities including gold.

Investors purchase gold for their portfolios in order to hedge against inflation and a declining dollar while also using it as a safe-haven during times of instability. Prices have also been helped by a fall in mine supply, a slowing of central bank sales, ongoing de-hedging by producers, firm demand from ETFs, and a likely recovery in jewelry demand. Meanwhile, banks taking major short positions on the Comex market in New York may also be forced to cover their positions after the market’s recent rally.

The United States may have been in a recession with negative economic growth since December 2007, but China still expects to hit its economic growth target of 8 percent in 2008. Meanwhile, the country joined with leaders of South Korea and Japan in the first Asian economic summit designed to explore ways to help the region play a role as the center of world economic growth.

Despite the positive growth, the Chinese stock market has plunged more than 60 percent so far this year, compared to a 39 percent drop in the U.S. stock market. China may not have experienced single digit economic growth for six years, but the country’s economy is still quickly expanding as many western economies head into recession. So, how can investors take advantage of this differential?

Goldman Sachs analyst Argun Murti warned that oil could hit $200 a barrel last May as crude prices hit the $123 mark for the first time. Now, University of Calgary professor Philip Verleger is predicting $20 per barrel oil as the global slowdown eats into demand while destroying anticipated supply. The lesson here is that nobody really knows where oil prices are headed, but that doesn’t mean investors should avoid the oil sector. Rather, investors should build a well balanced portfolio to weather any storm.

The first thing taught in university investment courses is the concept of diversification. The best way to reduce risk is to diversify holdings across many different sectors. Similarly, the best way to diversify risk within one sector is to choose different types of businesses within the sector. This ensures that even if one sector falls, the others will rise to make up for it. The result is smoothed portfolio performance during even the roughest of economic times.

The U.S. government agreed to a $15 billion plan to bail out the big three automakers, but the package serves as only a temporary measure until a more permanent decision is reached. However, the temporary measures have provided hope for not only the U.S. automakers but also foreign automakers that have remained largely silent during this whole crisis. The big question now is whether or not they will be passed and the industry will be saved.

The proposed bailout package would provide a $15 billion loan to General Motors and Chrysler in order to stay in business while requiring them to restructure their operations to ensure repayment. The legislation would also include protections for taxpayer dollars, including the appointment of a federal official to oversee the automotive industry who could force the companies into bankruptcy if the companies don’t come up with a business plan by the deadline of March 31st.

The stock market rallied on Monday after Barack Obama unveiled his economic stimulus program. The president-elect promised to create the largest public works construction program since the inception of the interstate highway system a half century ago. The plan is designed to create millions of jobs while also providing a boost to the economy and improving the quality of life in the United States.

Obama’s infrastructure news may have sent a chill up the spines of some economists, but many investors are looking forward to the opportunities that will present themselves. Companies dealing with infrastructure may be the next big stocks in 2009 and beyond as this plan unfolds. So, what are some of the key stocks to watch?

Aeropostale, Inc. (ARO) shares are up more than 45 percent in 2008 despite a drop in consumer spending and a rise in inflation. The clothing retailer saw its same-store sales rise 13 percent in July and raised its second-quarter profit forecast, citing better than expected sales and gross margins. The performance comes in sharp contrast to competitors like Abercrombie & Fitch (ANF) that reported falling same-store sales and new pressures on margins, and demonstrates strong brand strength despite the poor economy.

Investors bullish on Aeropostale during the long-term may want to consider LEAPS options. Currently, the 35 January ‘10 LEAPS are trading at a $9.00 premium. The breakeven on any position is therefore $43.71, or 25.9% higher than the current market price, within the next 515 days. Considering the stock has already moved more than 45 percent in 2008 and an economic recovery may be just on the horizon, many experts view these long-term options as a bargain at these levels.

The future of U.S. coal is burning bright and long-term options may be the best way to capitalize on the trend. Growing demand in China combined with higher comparable valuations abroad will create a catalyst for the U.S. coal industry, according to many experts. The environment may also spark an unprecedented number of domestic and cross-border mergers and acquisitions. Investors looking to take advantage of these trends with leverage and limited risk should consider purchasing LEAPS options.

China is expected to generate the majority of demand for coal over the next decade. The fast-growing developing market economy requires coal to supply 80 percent of its energy needs, which makes it the largest consumer of coal in the world. The country may also be the largest producer of coal, but it may still become a net importer within the next couple of years. The increased demand in China has helped jumpstart global coal prices, which have risen substantially over the past year.

CSX Corporation (CSX) is still refusing to seat two of four dissident director nominees as it hopes an appeals court decision will disqualify a block of shares voted by activist hedge fund Children’s Investment Fund. The independent inspector of elections has found that four of five TCI nominees won election during the June 25th annual meeting, but if the appeals court upholds the fact that TCI violated securities laws, it could mean a complete loss for the activist hedge fund.

So, why should investors be watching this situation closely? Activist hedge funds are well known for unlocking value in their target companies. In the case of CSX, TCI believed that it could profit from a potential leveraged buyout of the firm back in December 2006. By January of 2007, TCI had acquired more than 10% of the company and was discussing the plan with investment bankers. By April, TCI knew it was not going to get what it wanted passively and began a proxy contest.

U.S. Steel Corporation (X) shares jumped higher yesterday after the company reported second quarter profits (see conference call transcript) that more than doubled while also increasing its dividend in a vote of confidence. The domestic steel company announced net income of $668 million, or $5.56 per share, compared to analyst estimates of only $3.80 per share. U.S. Steel also boosted its earnings forecast for the third quarter, citing a positive pricing environment.

The big question now is whether or not steel prices are sustainable at these levels. Harbor Intelligence analyst Rodrigo Vazquez told SteelGuru.com that he expects sheet prices to soften in the fourth quarter due to continued economic weakness in the U.S. that could further erode end user buying activity and slow demand for steel. The analyst forecasts that the U.S. will show an overall steel demand decline of 3.6% for 2008.

Kraft Foods (KFT) reported an unexpected jump in profits earlier this week as its commodities hedges and price hikes made up for the rising costs of raw materials. The world’s second largest food producer ended up turning a profit of 4% during the second quarter (see conference call transcript), which has added credibility to its three-year turnaround plan.

Kraft Foods also has many strong believers, including billionaire Warren Buffett. The Oracle of Omaha first disclosed a position at the end of 2007 and has since boosted it to 138.3 million shares. Buffett believes that the company has a strong brand portfolio, generates consistent free cash flows, and is substantially undervalued.

Advanced Micro Devices (AMD) may be trading well off of its 52-week highs, but it is not going out of business anytime soon. The leading manufacturer of semiconductors has experienced hardships along with the rest of the industry as consumer spending has declined, reducing sales and putting pressure on margins.

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