2008 January 16 | money blog

16 01 2008

Stocks to buy and not to buy on weakness

Posted by: in Goog news

Filed under: Google (GOOG), Amazon.com (AMZN), Citigroup Inc. (C), Bank of America (BAC), Merrill Lynch (MER), Morgan Stanley (MS), Broadcom Corp’A’ (BRCM), Lehman Br Holdings (LEH), Bear Stearns Cos (BSC), Stocks to Buy, Potash Corp. of Saskatchewan (POT)

Stock exchange While you may be thinking the stock market’s fallen off a cliff, it’s really only a couple of percentage points off its highs. There could be a lot more downside, and while the Dow has some support at 12,000, what if that doesn’t hold? That’s when the real pain begins and what you should be prepared for. You’re really going to have to avoid most of the hotly debated names because they’ve proven themselves unworthy of your hard-earned cash.

When I warned you that the trouble in the financial and housing sectors would pressure the stock market, I underestimated how quickly the pain would begin. Then, I threw out 10 names I was considering buying if they showed signs of either bottoming or some good old-fashioned panic — neither has happened yet, so I’m still watching and waiting.

In particular, Apple (NASDAQ: AAPL) and Intel (NASDAQ: INTC) really disappoint me. I haven’t been an Apple fan ever since its stock became too pricey, but the muted reaction to Macworld really proves my point that expectations were too high. And Intel — well, thanks to its pathetic excuse for a quarter, it’s forced the Semiconductor HOLDRs (AMEX: SMH) to take out some hugely important multi-year support, which tells me to avoid all the semiconductor stocks. Just say no to potential buys like NVIDIA (NASDAQ: NVDA), Broadcom (NASDAQ: BRCM), Texas Instruments (NYSE: TXN) and Altera (NASDAQ: ALTR).

And Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER) — even though I’m starting to get interested at these prices, their recent deals mean those stocks still don’t deserve my money just yet. Neither do their compatriots Bank of America (NYSE: BAC), Morgan Stanley (NYSE: MS), Bear Stearns (NYSE: BSC) or Lehman Brothers (NYSE: LEH).

Investors: I’m sorry these market leaders have let you down, but there are better-managed companies out there. Here are some I’m looking at scaling into on weakness, but remember, this is not the time for speculation — it’s the time for preservation, so I urge you to be extremely cautious.

Focus on the fastest-growing, best-performing agriculture leaders like Monsanto (NYSE: MON), Agrium (NYSE: AGU), Potash Corp. (NYSE: POT) and my absolute favorite, Mosaic (NYSE: MOS), which just reported stellar earnings. They all have beautifully uptrending earnings estimates and stock charts.

If you’re looking for well-run internet companies, Google (NASDAQ: GOOG), Amazon.com (NASDAQ: AMZN) and Priceline.com (NASDAQ: PCLN) are my three favorites; through no fault of their own, these stocks are now on sale, especially as compared to their growth rates.

Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund. DISCLOSURE: Timothy Sykes holds no positions in any stocks mentioned.

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16 01 2008

Perhaps the worst of the banks’ troubles behind them?

Posted by: in Stocks Money News

Filed under: Federal Reserve

In the face of daily headlines about just how strapped the banks are for cash in the wake of massive and continuing subprime related writedowns, we finally get some news that the worst may be over.

According to the Wall Street Journal [subscription required], “The results of the Federal Reserve’s latest auction of loans to commercial banks suggests that the banks’ need for money is growing less urgent.” The Fed saw the difference between the minimum bid rate and the accepted rate in its auction narrow.

A month ago, banks were jumping at the Fed’s loan auction, bidding for over $60 billion in loans, although the Fed only lent a third of that amount.

That’s good news for shareholders in banks: The worst of the writedowns may be through, and the banks may not need to raise more cash by selling themselves off to foreign investors at firesale prices.

But stability for the banks and less need of cash may make the Fed less likely to continue to slash interest rates.

Continue reading Apple’s Macworld star: It’s not the MacBook Air, it’s the AppleTV

16 01 2008

Apple’s Macworld star: It’s not the MacBook Air, it’s the AppleTV

Posted by: in Stocks Money News

Filed under: Products and services, Launches, Apple Inc (AAPL)

Although Apple, Inc (NASDAQ: AAPL)’s Macworld keynote address by CEO Steve Jobs was followed by millions of eyeballs yesterday, the biggest “wow” product was the announcement of the MacBook Air, the world’s thinnest and perhaps most advanced miniature laptop computer. While the MacBook Air stole the show, an announced enhancement to an existing Apple product should have been highlighted more.

Yes, I’m talking about the Apple TV. That product, which has aged nicely but has seen disappointing sales results, will now be able to download movies, music, television shows and other podcasts directly over the Internet — no PC required. This is a paradigm shift from the Apple TV’s recent presence, which limited the capability of such a promising product sharply. The good news: existing Apple TV products will be upgraded soon to allow for the new functionality for free. Also, the product’s price has dropped from $300 to $230.

The Apple TV product, as it will be in a few weeks when the software update becomes available, will become arguably the best equipped product to pull entertainment content from the internet directly to a small box that’s connected to the living room TV. All products thus far just haven’t had the user interaction finesse or the entertainment catalog Apple harbors on its iTunes store, and the steps to get that content from the internet to the television involved too many steps.

16 01 2008

Oprah Winfrey to get her own network!

Posted by: in Stocks Money News

Filed under: Television

Oprah Winfrey is teaming up with Discovery Communications to create a new network, cleverly titled OWN, the Oprah Winfrey Network.

The network will not carry her trademark Oprah Winfrey Show to start, but since Ms. Winfrey has the option of ending her deal for the show with the networks in 2010 and 2011, she could move the show there then.

Winfrey told reporters that “Eventually that will happen, we hope”. Discovery will own half of the network, and Winfrey’s production company will own the other half.

Oprah Winfrey moving to her own cable network would, if it does happen, send shock waves through the television industry and create additional problems for the already beleaguered networks. Similar to Radiohead’s decision to forgo the major labels and release their album on their own, such a move would send a clear message to the networks: Cable is ubiquitous enough that top stars don’t need you: We can do it ourselves and keep a bigger chunk of the money.

It’s too soon to know what will happen. The new network could flop, but given Oprah’s popularity, I seriously doubt that will happen.

16 01 2008

Wall Street’s foreclosure sale to foreigners

Posted by: in Stocks Money News

Filed under: Deals, Middle East, Citigroup Inc. (C), Merrill Lynch (MER)

It’s no secret that America has financed its budget deficits from foreigners. Of course, we also buy tons of goods from foreigners.

Now, Wall Street is pitching foreigners for big slugs capital. So far it’s working with more than $90 billion raised within the past few months, according to a piece in the Wall Street Journal.

Actually, this is not a new thing. If anything, the US has a long history of being wild and crazy with finances (examples: crash of 1929, the junk bond binge, the S&L crisis, the conglomerate craze and so on). After all, back in the 1800s, the U.S. financial system relied heavily on foreign sources of capital.

However, this time it’s premier financial firms - such as Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER) - that are selling large amounts of equity to some foreign buyers known as sovereign funds.

While no doubt these funds see big-time opportunities as the investments include juicy protections and dividend yields, foreign governments also realize that the U.S. needs to stay afloat. Despite the talk of “decoupling” of the global economy, the fact remains that the U.S. is the mega spender. Foreign governments, therefore, need to play ball with the US.

With the heated presidential election, the sovereign investments are certainly a topic of debate. But Wall Street has moved with incredible speed to complete these investments and has tried to structure the transactions as passive arrangements.

Finally, the Wall Street Journal piece also indicates that there has been lots of enthusiasm from sovereign funds. In other words, based on the due diligence, they see lots of opportunities here - at least for the long-term.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Continue reading Kroger being sued by man with ‘popcorn lung’

16 01 2008

Kroger being sued by man with ‘popcorn lung’

Posted by: in Stocks Money News

Filed under: Products and services, Law, Kroger Co (KR)

Wayne Watson, the man who ate at least two bags of microwave popcorn a day for years and developed “popcorn lung” is now suing The Kroger Co. (NYSE: KR) . Popcorn lung is the name given to the lung condition bronchiolitis obliterans, which is linked to the flavor chemical diacetyl. The lawsuit claims that Kroger “failed to warn that preparing microwave popcorn in a microwave oven as intended and smelling the buttery aroma could expose the consumer to an inhalation hazard and a risk of lung injury.”

This isn’t the only lawsuit over diacetyl flavoring. A lawsuit is currently pending on behalf of workers at a factory in Missouri who mixed large vats of flavors. They say hundreds of workers now have lung disease and respiratory illnesses from inhaling the flavoring. Interestingly enough, the chemical actually is a natural substance that gives butter its flavor. It is also found in some cheeses and wines. Microwave popcorn makers say their formulae are being changed to remove this flavoring from the product.

16 01 2008

Trading update on top short of ‘08: Closing short on First Solar

Posted by: in Stocks Money News

With the continued weakness in financial markets, I am reminded of a saying by old Jewish sages about 1800 years ago. In the book Ethics of the Fathers the question is asked, “who is happy?” The answer given is,”he who is happy with his portion.”

With that in mind, I am suggesting to readers to close their short position on First Solar (NASDAQ: FSLR) and book a gain of more than 32%. As a reminder, First Solar was my top short of ‘08, and while I would have expected to keep the short on for more than just a couple of weeks, sometimes you just need to book a profit. Not bad for 16 days. Though I still believe that all these alternative energy stocks are trading too high, 32% in 2.5 weeks is a nice return and I suggest booking it.

Remember: Some times the bulls win and sometimes the bears win, but the pigs never win.

Happy trading!

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 1/16/08.

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16 01 2008

Bloggingstockcast: iTunes movie rentals have a lot of competition

Posted by: in Stocks Money News

Filed under: Apple Inc (AAPL)

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