Briefly Speaking ...
06/18/2004 12:00 am EST
Here, we offer a potpourri of ideas: airline picks from Dennis Slothower, dividend stocks from Barbara Marcin, several favorite options trades from Larry McMillan, the best timber stocks from Richard Young , and a favorite food-commodity play from Eric Roseman.
"We are seeing bullish technical signals, which suggest that you
need to get ready to commit the balance of your cash positions," says Dennis
Slothower, editor of Stealth Stocks . "Several indicators are now at
the very bottom and poised to take off. I think corporate earnings are going to
be extremely impressive this quarter. With the market trading sideways this
quarter, another big drop in p/e’s is about to happen, making stocks a very good
buy. One sector that has been badly beaten down but should benefit in a falling
crude oil environment is the airline industry. Two stocks that I like are
Mesa Airlines (MESA NASDAQ) and AirTrans Holdings (AAI NYSE). These two companies are doing well now, in
spite of high crude oil prices, but should really prosper if crude oil can slide
further."
"One savvy investment manager who thinks dividend stocks
are about to have their day in the sun is Barbara Marcin, manager of
Gabelli Blue Chip Value Fund (GABBX)," notes Matt
Schifirin , senior editor for Forbes. "Last year,
Marcin's value fund gained 44%. Lately, she has been on a spree buying
dividend-paying stocks. ‘Companies are boosting dividend rates at one of the
fastest rates in years,’ said Marcin to a group of planners at a recent meeting
of New York's Financial Planning Association. ‘They typically don't do that
unless they are sure they can maintain their earnings and cash flow.’ Among
telecom stocks, she likes Verizon Communications (VZ NYSE), which has a
4% yield; SBC Communications (SBC NYSE), yielding 5%; and AT&T (T NYSE), with a 5.5% yield. Among financial stocks, she
owns Washington Mutual (WM NYSE), with a yield of 4.3%; Citigroup (C NYSE), yielding 3.3%; and Bank of America (BAC NYSE), with yield of 3.95%."
"The recent decline looks like nothing more than the ‘normal’
sharp, but short-lived sell-off," says Larry McMillan editor of The Option Strategist
. "Among individual options positions, we like Nokia (
NOK NYSE) and recommend the Nokia October 15
calls at a price
of 1.00 or less. Use a stop if Nokia closes below 13. W
e also like American Express (AXP NYSE) and suggest the American Express October
50 calls at a
price of 3.40 or less. Use any close in the stock below 49.5 as a mental closing
stop. AXP has begun to move higher over the past few weeks and—given
the fact that its put-call ratio buy and sell signals are usually reliable—
we feel it has more room to go on the upside. Krispy Kreme
Doughnuts (KKD NYSE) suffered badly when growth projections didn’t
keep pace with over-optimistic estimates. After gapping lower, nearly a month
ago, KKD has stabilized and is trying to complete a basing formation. A close
above 23 would complete that base. We recommend a conditional buy for the KKD
August 22.5 calls, if KKD closes above the 23 level. If bought, uses 21.5 as
a mental closing stop.
"Investors should hold shares of timber firms as a counter-balance
to an investment portfolio," notes Richard Young, editor of Investing
Intelligence. "Deltic Timber (DEL NYSE) grows and harvests timber and manufactures
and markets lumber. The company owns over 400,000 acres of timberland primarily
in Arkansas and North Louisiana. The firm’s real estate unit is engaged in both
residential and commercial sales. Plum Creek Timber (PCL NYSE) is a REIT that produces lumber, plywood,
and medium-density fiberboard. The company owns eight million acres of timberland and ten
wood-processing mills. The issue provides a yield of 4.49%. Meanwhile, our
latest addition to our monster stock list is Rayonier (RYN NYSE), which owns 2.2 million acres of timberland
in the US and New Zealand. Effective January 2004, RYN converted to REIT
status. It will now pay out to shareholders annually most of its earnings. The
current yield is 5.7%. Long term, I’d look for a total return consisting of
current yield plus capital appreciation to match inflation, thus
providing your investment with purchasing power protection."
"Following a mild correction in commodity prices, the trend
remains firmly intact and as bullish as ever," says Eric Roseman, editor
of Commodity Trend Alert . "Anyone having doubts about this bull market in
hard assets is not looking at the statistics. The key to this new bull market
lies in Chinese demand, relatively low global interest rates, and a weak dollar.
I think all three conditions will remain in place, providing further support for
most raw material prices in the 2000s. Archer-Daniels-Midland (ADM NYSE) is America's largest processor of
commodity-based ingredients, ranging from oilseeds, corn, wheat, and other
agricultural products, providing nearly 1,000 ingredients for virtually
every food application. In my option, the stock is heading much higher as
the bull market in earnings drives sales through the roof. Here you have
all the fundamentals for a great rally, supported by a bull market in the
commodities sector for ADM products, huge insider buying, and a stock chart
looking like a champ as it breaks resistance levels on superb
earnings."