06/17/2005 12:00 am EST
Here are five ideas from five of the best in the advisory world. Larry McMillan looks at a suspicious duo, Mark Skousen sticks with income winners, Richard Rhodes and Jim Oberweis offer energy plays, and technician Martin Pring highlights the top sector ETFs. (Click on each advisor's photo to read his bio.)
(For more information, please click on each advisors' photo.)
"We don’t normally mention situations such as these, but there are two stocks whose implied volatility has been so high—and whose stock action has been so bullish— that one suspects 'somebody knows something'," says options specialist Larry McMillan, editor of The Option Strategist. "They are Internet Initiative Japan (IIJI NASDAQ) and Esco Tech (ESE NYSE). IIJI has been a takeover rumor before—nearly two years ago. ESE may just be an 'engineered' momentum play. But the increase in implied volatility and the stock activity, when combined in this manner, often foretell corporate events. Both are overpriced, and would be appropriate only for the most speculative traders, but—for those who do consider themselves aggressive— these can be bought on pullbacks."
"I remain very bullish on our income plays, especially our real-estate positions," says Mark Skousen, editor of Forecasts & Strategies. "Muni Mortgage & Equity Mae (MMA NYSE) is yielding 7% nearly tax free and Novastar Financial (NFI NYSE) is yielding 16%. Allied Capital ( ALD NYSE), a business development company, declared its regular 57 cent dividend last week, giving us a steady 8.5% annualized yield and should be accumulated now. With oil remaining solidly above $50 a barrel, our favorite Canadian oil & gas trust is Pengrowth Energy (PGH NYSE), which is paying a generous 10% dividend."
"The ‘overweight’ oil-patch theme is working quite well for us— a circumstance we don’t expect to change in the very near future," says technician Richard Rhodes, editor of The Rhodes Report. "Integrated oil producers such as ExxonMobil ( XOM NYSE) and Chevron Texaco (CVX NYSE) are still well off their highs, even as crude oil approaches its highs between $55-$60 barrel. Meanwhile, natural gas, heating oil, and unleaded gasoline all showing bullish technical patterns that suggest new highs are ahead. This is a ‘core’ position we want to sit with for quite sometime. Hence, rallies are not to be sold, but pullbacks are to be bought."
"Dawson Geophysical (DWSN NASDAQ) is an oil and gas field services company that acquires and processes seismic data," notes Jim Oberweis, editor of The Oberweis Report. "Similar to how a doctor will look at a MRI prior to surgery, energy companies use seismic data to help them decide where and how to drill a prospective well. Dawson’s growth is driven by overall exploration activity, which has reaccelerated in recent quarters as crude oil and natural gas prices have moved higher. Clients of Oberweis Asset Management own 190,000 shares. These shares may be appropriate for risk-oriented investors. "— Merrill Lynch Biotech Holders (BBH ASE) and the Pharmaceutical Holders Trust (PPH ASE). We expect this sector to outperform, once the short-term relative strength correction has run its course. Consumer staples has corrected back to support and now looks headed higher again. We will recommend the Consumer Staple SPDR (XLP ASE) on a Friday close above resistance at $23.85. The third sector, technology, is not completely out of the woods. But iShares Dow Jones Technology (IYW ASE) appears to be on the verge of a relative strength breakout and we'd buy on a Friday close above $47.5."