Best Stock Buys This Earnings Season
07/11/2011 9:59 am EST
Trader and author John Person is looking for the market to rally into earnings season and believes that opportunities may arise to get the relative safety and steady income of a select group of dividend stocks.
Most investors and traders have heard the idea of “Sell in May and Go Away.” Our guest today is John Person to talk about that and maybe some places where we can keep our money during that time.
So John, we hear about dividend stocks; is that maybe a safe place to do this? What is your opinion?
Great questions, Tim. In fact, I think the “Sell in May and Go Away” mantra is working quite well as planned in 2011. As we hit the high from the Osama Bin Laden shooting, we saw the S&Ps hit around 1373. We have fallen down to 1255 level.
What that translates to is almost an 8% year-to-date gain in the S&Ps to almost unchanged on the year, and in fact, the Nasdaq went negative.
I think at this point in time, as we head past the quadruple-witching war, let’s say the second quarter expiration, we typically see sometimes a seasonal pop in the market going into earnings season.
So what I would be looking for is to be capturing some dividends, and also for stocks that have seen positive earnings in the last two quarters, and try to attack and enter long positions in some of those stocks.
Speaking of those dividend stocks, too, I read an article recently that talked about the gold companies increasing their dividend because they wanted to catch up to gold because gold had outrun them so much. What are your thoughts on that sector?
You know, that is a really good sector.
I think that if people can start looking at that—because from a seasonal perspective, we typically see gold prices bottom, and gold has not really gone anywhere, it has been in more of a sideways pattern, let’s say between 1520 and 1550 for the whole month of May and into some parts of June.
So if you can get into July and if the market pulls back, I don’t think you are going to see a tremendous pullback in gold prices, and I think [with] stabilization, that would be an excellent play.