Brett Owens is a leading on income investing; the editor of the industry-leading Contrarian Outlook ...
Six Stocks to Buy Now
02/06/2008 12:00 am EST
Jim Collins, chairman and CEO of Insight Capital Research and Management, sees more volatility before the market heads up again, but in the meantime is finding some NASDAQ bargains...
Jim Collins, whose OTC Insight newsletter had a sterling long-term track record before discontinuing publication last autumn, started out by analyzing our current economic and market cycle.
Collins remarked that he has mixed feelings about the recent large Federal Reserve rate cuts in just a short time, as he fears it may signal a panic mode for the market, especially accompanied by the large stimulus coming from Congress.
But he thinks that the Fed’s actions will eventually have a positive impact, but it will probably take about six months. And the fiscal stimulus will also take some time to show any results, as the rebate checks most likely won’t go out until June, then it will take another month for any consumer spending increases to kick in.
The financial markets are plagued with the subprime mortgage mess, which may extend to the first quarter of 2009; a 1% drag on the economy from housing; and GDP growth revisions headed southward.
Collins then remarked that gold may not be the best place to park your funds unless you believe inflation will remain high. Nor is commercial real estate, which is plagued by falling prices and rising vacancies.
Collins advised investors sitting on cash to stay in short-term instruments. However, if you are heavily invested, he cautioned against knee-jerk reactions. Instead, he suggested that you just ride this wave out, until the market returns to higher levels.
Collins made a case for investing in NASDAQ stocks, which are expected to sport a 20% growth rate in 2008 and whose price/earnings ratios currently look cheap.
Here are some of his current recommendations:
Bally Technologies (Nyse: BYI), a one-stop-shop for casino operators, is seeing healthy cash flow. The company is also receiving lots of international exposure, as well as increasing sales in its existing markets.
CF Industries (Nyse: CF) is a fertilizer company that is faring well against its competitors in Iran who are experiencing production problems, as well as those in China. CF has high relative strength, lots of cash flowing in, and is benefiting from the higher prices of soybeans, wheat, and corn.
Lindsay (Nyse: LNN) makes irrigation systems and is in a cycle for continued growth.
LifeCell (Nasdaq: LIFC) generates tissue from cadavers and pigs, a good growth market.
JA Solar (Nasdaq: JASO) is benefiting from improving efficiency in converting sunlight to energy, which is now approaching 18%.
MFA Mortgage Investment (Nyse: MFA) invests in semi-guaranteed mortgage-backed securities. As long as short-term rates remain low, the company’s cost of money is small and its spread is huge, so it should post significant earnings increases this year.
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