The Wall Street Rally Continues
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Investors hoping to see a continuation of last week’s rebound into this week must be happy as gains were seen every day. Thursday threatened to stop the trend, but a late day surge by investors kept the 7 day win streak going. The session all but guarantees a positive finish to the summer rally as Thursday’s ascent was broad-based, but financial stocks garnered the most support while the tech sector lagged. Positive news included the reported jump in sales of newly constructed homes in July, hitting their highest level since last September. Other data showed weekly jobless claims fell to 570,000 last week from an upwardly revised 580,000 the week prior, still slightly more than the expected 565,000.
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This week we are looking at some of the investment stories and how we can profit from them. One of the big stories is the "off and on" release of Boeing's Dreamliner which is now on again and looks to be real this time. Buying Boeing this week may not be the best way to get in so we are looking at other players that will benefit from the headline and why. Our Bullish pick will benefit, but it can also stand on its own and pays a great dividend to boot. Our Bearish pick, like our other recent Bullish picks is what we consider overbought. The markets continue their climb and some companies that have seen obscene gains have serious fundamental problems. The newspaper business is in trouble and there has been no solution for the loss in circulation and ad revenue that has been ongoing for years now. This week's Bearish pick has done an admirable job staying afloat and even churning out profits, but like the American SUV, its future doesn't look good. |
 Honeywell International, Inc. (HON) - We recommended Boeing as a Bullish pick just 30 days ago not only because we believe it’s a strong company but we felt the much awaited Dreamliner would be making headlines soon. Well, if you can't bring yourself to buy Boeing today after the Dreamliner announcement and the 9% spike in stock price, then you should look at Honeywell. Honeywell is a strong and diversified company, focusing on aerospace, advanced materials, retail security and home products. It's not necessarily a short hold if you are looking for a sharp rise and it's also a nice dividend play (3.3%) so you can sleep easy.
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 Gannett Co, Inc. (GCI) - An international media information company whose flagship USAToday has managed to remained profitable, Gannett has been on a monster surge in the current market rally. The stock has more than quadrupled since bottoming out at $1.85 in March. The problems are its debt, more than 3.5 billion, and a current movement to short the stock. Not only do we see this company as being overbought recently, but it is also in a dying industry. Gannett has done a great job to this point cutting expenses and it has been proactive in the internet revolution, but it has too much in newspapers both in the US and in the United Kingdom. With ad revenue taking a 32% drop and circulation slowing, we recommend investors take their profits and walk.
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