Here, we offer a six-pack of ideas. Mike Burnick looks at high-tech aircraft; John Murphy eyes the drug sector; Doug Hughes offers a banking bet, Jeffrey Everett picks a trio of ADRs, and Steve Sjuggerud offers a play on the US dollar.
Innovative Solutions & Support (ISSC NASDAQ) is the latest trading recommendation from
Mike Burnick, editor of Elite Stock Trader. "The company designs high-tech flight information
computers and advanced electronic cockpit displays that feed pilots with
critical real-time flight information. Its financial results are soaring thanks
to a government mandate that requires airlines to install this type of system,
in order to keep them all flying safely. Last fiscal year (ended September
2004), Innovative Solutions' sales rocketed nearly 64% higher. Profits climbed a
whopping 127%. Also, Innovative Solutions is a cash-flow machine, with $5.42 a
share in cash alone sitting on its balance sheet. We recommend ISSC as a trade,
and suggest using a 10% stop loss."
"A prediction from Pfizer (PFE NYSE) for
double digit growth next year has sparked some serious buying in drug stocks,"
says technical expert, John Murphy, of
StockCharts.com. "But, in my opinion, it's not one of the more attractive
drug stocks from a charting standpoint. There are better alternatives. One would
be Johnson & Johnson (JNJ NYSE). Its monthly relative strength line has been
rising for the last year. JNJ is still the star of the drug group. In addition,
Abbott Labs (ABT NYSE) and Bristol Myers Squibb (BMY
NYSE) have remained leaders. If you're looking to buy a drug stock, I'd choose from
among these three. Another alternative is to buy the Pharma Holders (PPH ASE) or the Healthcare SPDR (XLV ASE).
Either
ETF gives you broader exposure than you would get with an individual
stock."
Doug Hughes, editor of the Bankstock
Letter, is particulary adept at finding value-based bank stocks,
with a focus on potential takeovers. "First Financial Holding (FFCH NASDAQ)
is an S&L with 40+ retail branch
offices in South Carolina and coastal North Carolina. Their latest earnings of $0.47 a
share were up 15%, and this trend should continue. The bank has repurchased
shares in the past at much higher levels, so a new stock buyback
plan is likely soon. Book value is almost $14, the bank pays a very nice 3.2% cash dividend
that continues to go up, and insiders are buying. The stock trades at 2 times
book and at a p/e of 13. In this market, they could get almost 2.8-3 times
book in a deal. Downside should be no more than 5% from these levels. Accumulate
under $28.50 and buy all you can under $27.75. Make this a top long-term
holding, not a short-term trade."
"I'd like to suggest three ADRs," says Jeffrey Everett,
chief investment officer for Templeton Global Advisors in an interview with
Paul Kangas on
his Nightly Business Report. "Sanofi-Aventis (SNY
NYSE) is very interesting. It is one of the fastest growing of
the big pharma companies out there. It has been very successful in
restructuring since it acquired Aventis last year, recently announcing great cost savings. I
also like Pearson (PSO NYSE), a media stock in the UK. They own everything
from educational textbooks to the Financial Times
. We believe very strongly
in this company. It has a great balance sheet, great under-used assets, and very
strong long-term earnings potential. Also, the Korean banking sector is coming
back from the dead. Kookmin Bank (KB NYSE) is the largest with 30% of the market and 24
million customers. The entire sector is very cheap."
"Can you name one asset where everyone is bearish?" asks Steve
Sjuggerud, editor of True Wealth . "It's the US dollar. Everyone hates it.
Media coverage (an excellent indicator of when the trend is at an end) has reached
an extreme. Investment professionals are adamant that the dollar is
headed straight down. With everyone bearish, there are only potential buyers. I
understand that the US has big deficits. Remember, everyone else knows that too.
That's not new news. It's currently baked into the price of a euro. The safest
way to potentially make up to 20% in 2005 is through Everbank's Dollar Bull
CD . It is an FDIC-insured CD that pays
you some interest and, most importantly, will rise 1% for every 1% that the euro
falls versus the dollar. The risk of course, is if the euro strengthens. I
think the Everbank Dollar Bull CDs are an excellent risk-to-reward play. The dollar is
a cheap and hated currency. Get on board now. For further information, contact Everbank's
Chuck Butler at chuckbutler@everbank.com or phone him at
800-926-4922."
