Dow Over 9,200 as the Rally Continues
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Wednesday the Federal Reserve released its latest beige book report detailing economic conditions across the country, indicating that although the economy is not in full recovery mode, it is showing signs of stabilizing. The jobless claims increased, but the good news is that the 4 week moving average of total individuals on unemployment is declining, falling to the lowest in 3 months. Stocks rose Thursday, hitting their highest levels in nearly 9 months, as investors received another batch of better than expected profit reports.
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This week's Bullish pick was doing fine before the recession and even through it has had a drop in sales it should still show growth in 2008. It is the leading company in its industry but the stock price has not picked up as Wall St recovers and it pays a near 4% dividend. We see this as a value opportunity during a time where similar companies are being overbought. Our Bearish pick this week is a company that is above its 52 week high and with good reason. It’s shown a 2nd quarter profit for the first time in a long time. The analysts are falling over themselves to upgrade this stock as investors start to jump on the bandwagon. Truly it would be a good sign for everyone if this American automaker regains its status and more importantly starts to take market share worldwide. But this sudden rise looks like an over reaction right now from the same people that told you not to touch it with a 10 foot pole just 3 months ago. |
 Boeing (BA) -Boeing is a tricky company to gauge; it’s tied to the airline industry, which we tend to stay away from. But at the same time it's a diversified company that has only one major competitor and seems to be pulling away. The article below makes great points for being bullish on the company, but what we like most is that the stock is lower than in 1996, but profits have tripled since that time. The postponement of the much awaited Dreamliner has limited investor enthusiasm and kept the stock from rebounding, but the truth is the company is expected to have double digit growth this year without it.
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 Ford (F) - It's a far cry from the numbers posted last year same quarter, a profit that exceeded everyone's expectations and a nice surge in the stock. But, if you look at the numbers behind this rise in profit, you realize that it didn't come from an increase in product sales or lower costs or anything that indicates continuity. Ford isn't trying to fool anyone; they show the profit as a shift of debt and one time cuts, and rumors of a stock offering in 2010 are being ignored as the stock price passes 52 week highs. We think Ford will eventually emerge as the leading American automaker as it gains from the restructured auto-worker union agreements and pushes out a new line of fuel efficient cars, but the stock price will first fall as consumer confidence lags on durable goods.
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