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2 Battleship Yields for Stormy Waters
06/14/2011 11:00 am EST
Even in challenging markets there are still solid yield plays you can find, like these two picks paying 5% or more, writes Mark Skousen in High-Income Alert.
Last month, among a group of insiders in New York watching the screening of the HBO film Too Big to Fail, Treasury Secretary Tim Geithner dropped a bombshell.
He privately told attendees that he was "certain" another financial collapse is on the way, and that raising taxes on the wealthy is inevitable.
“It will come again. There will be another storm," he said.
When? He wouldn't say, but he thought "it's not going to come for a while." But it will come, he warned.
It's pretty scary when top government leaders talk about imminent financial collapse. Not surprisingly, Secretary Geithner has tried to back off of his statement. But his dire warnings cannot be ignored.
Last week’s jobs reports weren’t encouraging—the US unemployment rate inched up to 9.1% and new job creation was anemic. Wall Street is falling again. The Fed continues its easy-money policy, with low interest rates and M2 money supply growing at a 6% rate, and rising.
I think these two picks are well prepared to take advantage of the situation. And there is plenty here to like…
Despite the sell-off last week, for example, Urstadt Biddle Properties (UBP) hit a fresh 52-week high. Urstadt owns, acquires and manages commercial real estate properties, particularly grocery-anchored shopping centers in the New York metropolitan area. The trust owns more than 50 properties, comprising over 4.6 million square feet of leasable space.
Urstadt will expand its business by opening new open-air shopping centers and retail properties in the New York Metro area, with a focus on neighborhoods within commuting distance of New York City. Management has proven that it can increase cash flow over time by renovating, then raising tenant leasing costs.
Also note that UBP has seen significant insider buying in recent weeks. Maintain your sell stop at $15 here, but keep buying.
The recent market weakness has created a fresh opportunity to add to your position in Navios Maritime Holdings (NM).
Navios is one of the global brands in seaborne shipping, specializing in international bulk cargoes. For more than 50 years, raw materials producers, agricultural traders, importers and exporters all have depended on Navios’ expertise and innovation. Expect the company to beat expectations when it announces quarterly results in a few weeks.
In sum, I expect the market volatility will be with us for some time as the economy struggles. But these stocks still have plenty of upside potential and a yield that beats just about anything else out there.
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