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Dr. Stephen Leeb
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Dr. Stephen Leeb is a recognized authority on the stock market, macroeconomic trends and commodities, especially oil and precious metals. Dr. Leeb is founder of the Leeb Group, which publishes a line of financial newsletters including The Complete Investor, Leeb Income Performance Letter, Leeb... More
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Game Over: How You Can Prosper in a Shattered Economy
  • Stocks to make you comfortably wealthy.  0 comments
    Mar 16, 2010 3:51 PM | about stocks: CERN, BMY, ODSY, WFM, MDT, WBMD

    The U.S. economy now shows clear signs of growth. Most likely, U.S. growth will exceed 3% for this quarter and the next one as well.

     However, the second half of this year doesn't look quite as rosy.  By then, much of the government's economic stimulus will start to wear off.  Three percent growth over the next few months could prompt Chairman Bernanke to start cutting back monetary stimulus in the fall as well.  That could have a negative effect on the market.

     Meanwhile, commodity prices are likely to keep rising this year, even if we don't maintain 3% or higher growth. The higher commodity prices will, of course, add to inflationary pressures and also depress growth. 

     In fact, our research shows that the key level of growth to watch is 2%.  With less than 2% growth, the demand for oil can hold steady or decline.  Over 2%, oil consumption rises.

     The combination of rising U.S. oil consumption plus more rapid demand increases in China and the other developing nations should keep oil prices in an uptrend, especially in the second quarter of this year and beyond.

     OUR FUTURE OF LESS

     We've been over this territory with you before, and we have little reason to think anything will change.  We can hope for technological innovations or amazing discoveries of cheap oil, but barring such miracles the world now faces a profound and protracted commodity shortage.

     So perhaps it's time to stop hoping for miracles and start figuring out how we can live in a world with less materials at our disposal.  This will be a fundamental change in the world economy, which until now has been based on ever greater exploitation of natural resources. 

     Of course, we're talking about the long-term here, not the next six months.  Nonetheless, commodities are the building blocks of our modern lifestyle.  If you think governments have a hard time controlling their spending, just wait until the world is forced to control its consumption.  For a society built on wanting and consuming ever more stuff, the withdrawal symptoms could be as painful as what a heroin addict experiences in rehab. 

     Don't shoot us; we're just the messengers.  Please, just use this information to be one of the few who come out ahead over the next decade.

     Despite the questions about the future of the U.S. economy, we're pretty certain about future of the financial markets here.  You will still be investing in stocks for income and growth. However, the stocks that deliver the best performance may be quite different from those which were the market leaders ten years ago.

     THE INDUSTRY OF COMPASSION

     This past Saturday, I was flying back home from a meeting in London.  The weather was dramatic to say the least.  My plane had to land in the middle of a Nor'easter storm.  It's scary moments like these that make you think about what's really important in life – essentials rather than luxuries.

     While I was buckled in my seat, I decided to take my mind off the weather by compiling a list of stocks whose business is to make people’s life better.

     The list I came up with included companies that concentrate on relieving suffering – compassionate stocks, if you will.  With a large and graying population and government health programs destined for huge shortfalls, these companies are almost certain to do well. 

     Healthcare is not like other industry, after all.  You can make do without a bigger house or a new car or a yearly vacation.  But you can't neglect your health, or that of your aging loved ones.  Next to pain and suffering, every other concern pales.

     So here's my list of 6 Compassionate Stocks – companies in the business of relieving ill health and suffering.  I won't discuss their fundamentals here, due to shortage of space, but here are their names and what makes them great long-term picks...

     * Cerner Corporation (CERN) is the leading supplier of software to the healthcare industry.  There will be a lot of pressure in coming years to cut back on healthcare costs (in fact, there's already a lot in the news on this subject).  Cerner's products create savings by making doctors and hospitals more efficient.  Even though this company is small, its growth potential is large.

     * Amylin Pharmaceuticals (AMLN) – a member of our Fast Track portfolio - is a company we have discussed several times over the past few years.  The company just received some good news from the FDA that sent its shares soaring this morning.  This move is just an indicator that the company's long-term prospects are excellent.  Its major drug shows tremendous potential for relieving adult diabetes, a growing problem in this country.  Plus, its side effects are even more positive.  The drug promotes weight loss, lowers blood pressure, and improves cholesterol balance.  Who wouldn't want those side effects?

     *  Odyssey Healthcare (ODSY).  This may seem like a morbid choice, because Odyssey is the largest hospice care operator in the U.S. Hospices are hospitals for the aged and dying.  Their mission is to make terminal patients as comfortable as possible before the end.

     It's a fact that our society spends enormous amounts of money on medical treatments that only slightly extend people's lives.  For example, Avastin is one of the most successful cancer drugs, but it doesn't cure cancer.  It only prolongs life for a few more months.

     Hospices will become a growth industry as the number of elderly people expands this decade.  It's a win-win industry in that most people would rather spend their final days in comfort, and will pay handsomely to do so.

     * Whole Foods (WFMI) is the largest natural and organic food supermarket chain in the U.S.  And it has operations in other nations too.  Though organic food is more expensive than non-organic, the company balances this by offering non-organic foods at sharp discounts.  In addition, it specializes in catering to people with food allergies, including celiac disease.  Celiac disease is an allergy to gluten, a protein found in wheat and consequently most breads and other baked goods.  Whole Foods carries a large selection of gluten-free products.

     If you've read Michael Pollan's books, you know that eating pesticide-free food is a big and growing concern these days.  Whole Foods' organic lines fill this need, and we think the company will be growing strongly for many years.

     * Medtronic (MDT), a leading medical technology company, has been around for a long time.  It makes a variety products, but is perhaps best known for producing heart pacemakers – its expertise in electrical cardiac stimulation dates back to 1957.  However, it also has developed treatments based on a deep brain stimulation (DBS) technology.  DBS appears to be the most effective way of dealing with serious, long-term disabilities such as Parkinson disease, obsessive-compulsive disorders, Tourette Syndrome, multiple sclerosis, epilepsy, distonia, and other neurological disorders.  It may not be the most risk-free approach, and science doesn't yet know exactly why it works.  But the fact is it does work and can bring much relief to people with these long-term conditions.

     *  WebMD Health Corp.(WBMD), our last choice, is another company with what we see as a very secure future.  You should definitely check out the website.  The company puts very useful and comprehensive health information at your fingertips.  Whatever problem is bothering you or someone in your family, you can become better informed by reading this website.  It's a goldmine for hypochondriacs, worried parents of sick children, and anyone who wants to take better care of themselves.

     Obviously, we could add other compassionate stocks to this list, but this will get you started.

     Keep in mind that the world of the future, a world of commodity shortages, may not be as bad as it sounds at first.  You have many options that can add to your quality of life and financial security, including investing in healthcare.

     

    Stocks: CERN, BMY, ODSY, WFM, MDT, WBMD
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