Briefly Speaking ...
04/08/2005 12:00 am EST
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 email@example.com or phone him at 800-926-4922."