Saturday, April 25, 2009

Top 10 Stocks to Buy: Part II

[This article is a continuation of Top 10 Stocks to Buy: Part I.]

6. Research In Motion Limited (RIMM)Top 10 Stock RIMM

I remember when Puff Daddy was the only guy in America using a Blackberry. In the five or so years since then, the Blackberry has become more and more mainstreamed. Pretty soon your grandmother will have one.

Think of RIMM as sort of a Hewlett-Packard for the 21st century mobile generation; a standout technology research and development company.

This is a stock I am comfortable buying at its current 20 times earnings.

7. Parker-Hannifin Corporation (PH)Top 10 Stock Parker-Hannifin

This stock is a cheap buy at 7.5 times earnings, and is even giving out 2.5% of its price through its dividend annually.

With governments broker than ever, aerospace-manufacturer Parker-Hannifin could appear to be in a bit of a bind. Its type of heavy, advanced technologies may have to undergo a longer (if not deeper) drought than other elements of the economy, but I can tell you that this is a very well-managed company with a long period of growth awaiting it in its future.

Listen to management’s conference calls and you will see why PH is in my top 10 stocks to buy for the long-term.

8. Yahoo! Inc. (YHOO)
Top 10 Stock Yahoo YHOO
Yahoo stock is way down since it totally blew an excellent opportunity to allow itself to be bought by Microsoft last year. “Ousted” CEO Jerry Yang made one of the more obviously bad choices of 2008 by letting his ego trump smart business by not selling his crappy ailing company.

However, many knowledgeable people, including the controversial Jim Cramer, seem to be big fans of new Yahoo CEO Carol Bartz. And negotiation has resumed with Microsoft (MSFT) rather quietly.

Buy Yahoo stock for the next 6 or 9 months and see what happens. I give it a 2:1 shot that Yahoo is bought for some premium by Microsoft over that time; or at least the two will team up in their online activities, giving unknowledgeable investors a reason to believe in them and send their stock prices higher.. At that point it’s time to sell, sell, sell! Because Google is the man online, and you don’t want to bet on their competitors in the long-term.

Thus, make buying Yahoo stock a shorter term play, riding the near-term likely occurrences and the stock market’s probable buying action.

9. CVS Caremark Corporation (CVS)
Top 10 Stock CVS
One of the great all-time companies, CVS, is down 33% since last June. This stock is selling at 13 times its earnings and reported a profit increase of 17% in the 4th quarter of 2008.

If you’re going to buy CVS stock, make it a long-term play; think in terms of holding this stock for at least five years. If in the meantime it becomes fairly overvalued, then sell it. But basically this is one of those companies that is a good bet over the long-term whenever it is kind of cheap.

My main concern with buying CVS stock is…

10. Wal-Mart Stores, Inc. (WMT)Top 10 Stock Walmart WMT

Walmart’s selling at 14.3 times earnings, and always seems to be positively surprising that it continues to dominate and grow. I don’t know if any of you saw CNBC’s documentary on Walmart, but the scene that stuck with me most was when they showed people at the company’s headquarters, whose databases update every hour or so with every single item that has sold at every single store over the past hour. Their analytics software is constantly and very smartly analyzing all that data in a very Walmart-ish way.

Personally, I would like to see Wal-mart overcome some of the unpleasantries encountered when shopping there. Specifically: crowded parking lots, long lines, crowded navigation of the aisles. If they could give me a clear path in, through, and out of there I think I’d do 100% of my shopping at Wal-mart.

If you missed my first five top stock picks, you can find them at Top 10 Stocks to Buy: Part I.

Sunday, April 19, 2009

Top 10 Stocks to Buy: Part I

[This article details the top 5 stocks. 6-10 are here: Top 10 Stocks to Buy: Part II.]

Well, here it is, my current list of what I believe to be the top 10 stocks to buy right now. The stock market is up 23% since March 9, 2009, and we don’t want to miss out on what is likely to be a further and significant upside for buying stocks over the next year or so.

1. Google Inc. (GOOG)

I have written previously on my belief that Google is a great stock to buy, so I won’t go into too much detail here again. Suffice it to say, that Google strikes me as being quite capable of creating entirely new industries of profitability which don’t even exist now. GOOG has been more successful than is generally known with their foray into the mobile cell phone world with Android, and they are just generally in an advantageous position to benefit from the entire world’s moving onto Ye Old Information Superhighway.

Well.. I’ve already written more than I meant to. I love this company. Look for them to create many billions of dollars out of thin air over the next five to ten years.

2. The Walt Disney Company (DIS)

Disney for less than 10 times earnings? Buy this stock; it’s a bargain whenever you can get a “hundred” year-old amazing company for less than ten times its profits.

How many families are going straight to Disney World as soon as they can have a sigh of relief at the end of the recession worries? A lot.

3. Nordic American Tanker Shipping Limited (NAT)

Buy stock in this shipping company and you get in on a 11.5% dividend yield; not guaranteed of course but still. Those shippers sure like to pass on their profits!

Hopefully they arm their seamen to blast those piece-of-**** Somali pirates.

4. General Electric (GE)

This is my other top 2 stock to buy, that barometer of the American economy, General Electric stock. I will try not go into too much detail since you can find a more fleshed out analysis through that link.

Just think about this: if GE and the American economy as a whole mirror each other, then isn’t buying stock in this behemoth a great way to play the Recovery? It truly is a great mirror; what with its hands in both finance and more solid products. The stock just got way too beaten down to not buy it if you’re a long-term investor.

5. Altria Group, Inc. (MO)

Ma-ma-ma Marlboro! The greatest S&P 500 stock of the past 50 years is selling at 11.5 times earnings and giving back out 7.5% of its price tag on an annual basis right now.

Those of us who are smokers probably noticed Altria raising cigarette prices significantly a few weeks before Obama’s new huge tax on the poor went into effect on April 1, 2009. They can do that and they can still sell their cigarettes. I think it’s called an inelastic price?

Altria is as smart a company as there is at making and managing and diversifying to protect and grow profit. Maybe it’s immoral but I would suggest buying their stock.

Read the second part in this series: Top 10 Stocks to Buy: Part II.

Friday, April 10, 2009

Good Time to Buy Stocks Now?

Like the child who has been hiding from an abusive parent, investors are peaking their heads around the corner too see if it is safe to come out and start to buy stocks again. The financial public has had to endure over a year of CNBC and Bloomberg commentators’ constant question to every single guest: “Are we at a bottom yet?.. Is this the bottom?.. How about now?”

I don’t know about you but after a couple months of that constant refrain I started to yell at the TV screen or radio every time Maria Bartiromo or Kudlow The Tax-Obsessed asked Mr. Predictor if we were at a bottom yet. (The most common answer: “I think so, but we still may go lower.”

A bunch of idiots trying not to get caught being wrong by not taking any position but hypnotizing you into believing they just said something which was informed by their years of undocumented beating the S&P 500 and the Dow Jones.

Anyway, I digress. This article is my answer, late as it may be, to the question, “Did daddy pass out yet?” Err.. “Is it now finally a good time to buy stocks?”

The 666 Stock Market Bottom: March 6, 2009

On a date which was numerically fascinating enough on its own, 03/06/09, the Standard & Poor’s 500 Index touched the 666 mark, the sign of the Devil! As of close today, Thursday, April 9, 2009, the S&P 500 stood at 856. This is an amazing gain of 29% in just one month. I would guess that the U.S. stock market hasn’t seen such a gain in so short a time since the 1930’s Great Depression.

I have previously focused on best stocks to buy in 2009: Google and General Electric. Now I would like to state that it is time to buy indexes, buy industrial stocks, buy food stocks, buy penny stocks online for God’s sake! Close your eyes and hover your finger over the business section like it was Ouija board and buy whatever stock it lands on. (Please do not follow that direction, or at least don’t blame me if it doesn’t work out, although chances are it would… But still.)

I was inspired to write this post when I heard Warren Buffett say, “Just because the economy’s going to get worse doesn’t mean it’s not a good time to buy stocks.” This was from his most recent interview with Becky Quick from CNBC.

And the economy is going to get worse. For all I know, another 600,000 will be laid off for the next couple months, lowering national purchasing power, lowering revenues, forcing more layoffs, etc. (By the way, that’s why the government has to intercede, another point Buffett makes well.)

But stocks in all likelihood should not revisit the 666 lows. And even if they do, that does not mean it’s a bad time to buy. Unless you are the next Edgar Cayce, you should not be in the business of calling exact bottoms. And you should certainly not both try and predict the future of the market and invest your family’s money accordingly. Warren Buffett and his second-in-command Peter Lynch never tried to do any of that; they know they can’t. But they have managed small amounts of money into vast fortunes simply by using their own rationality. Be greedy when others are fearful. Now is a high-probability time, a window of investment opportunity if you will. The window is not a little slit like in a prison cell. The window is, say, 350 points wide on the S&P index. And all we can really know is that the longer we wait to buy stocks the more likely the stock market will be more expensive at that time and those corporate earnings will cost more.