Stocks Move Higher as Goldman and Intel Lead
the Rally
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It was a week of gains on Wall Street as Tuesday and Wednesday saw substantial rallies, pushing the DOW above 8,700 and the S&P over 940. But the Nasdaq was the big winner as the Intel rally boosted the index close to 1,900, its highest number YTD. Intel’s reported profit and revenue (after market close on Tuesday) dipped from a year ago, but surpassed forecasts. They also predicted better revenue growth for the second half of the year thanks to improved demand for PCs. Initial unemployment insurance claims fell to the lowest level in 6 months, according to a government report on Thursday, but the news was received with caution as the number seemed to have more to do with the timing of the auto industry's job cuts than a sudden turn in economic confidence.
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This week we are going to recommend a company that is both a dividend stock and a play on the ageing "boomer" population. It’s a solid company that has a long history of boosting its payouts and being profitable, even this year. The sector has fallen on regulations, litigation and patent issues but our pick should be a leader as it will eventually comes back.
Our Bearish pick is a company we love, but it has become too expensive as the tech sector has had a tremendous rally. It's no doubt a market leader, a tech bell weather and as close as you come to a monopoly in today's economy, but short term we see a pull back.
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 Abbott Laboratories (ABT) - Pharmaceutical companies have been beaten down lately and Abbott has not been immune. The company is in much better shape than its competitors as it is both well diversified and specifically suited to profit from the aging population. Its rheumatoid arthritis medication, Humira is the leading prescription for the disease and its patent protected till 2016. It also is a player in Lasik eye surgery equipment; glucose monitors for diabetics and produces the top drug-delivery stent, used to unblock coronary arteries. Abbott is a solid performer with current P/E of 13 and it routinely invests heavily into R&D.
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 Google (GOOG) - Google is an advertising monster. As an internet company that deals with online advertising, we recognize its power and potential and it’s not easy to make a call like this. The truth is that Google has always been expensive for its P/E and forward earnings only look unrealistic until you look at its track record of beating predictions quarter after quarter. The downturn in the economy has affected its bottom line and as the rally started, Google's stock price is approaching pre crash highs rather quickly. This recommendation is based on the assumption that the stock price either rises or stays above $430 after its earnings report on Thursday.
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