A Week of Volatility as Buffet Says Recession is Over
|
Earlier this week stocks again were pushed to one year highs as the market continued its rally. Markets closed Thursday down for the second day in a row as a surprising housing report showed a decline in home sales last month. The report breaks a 4 month streak of increases with a 2.7% dip in August. According to the Labor Department there were 530,000 initial unemployment claims filed in the week ending Sept. 19, down 21,000 from the previous week and 6,138,000 people filed continuing claims in the week ended Sept. 12. Both numbers are down for the third consecutive week.
|
|
Warren Buffet joined the chorus this week of experts that say the recession is over. That may be true, but there are still economic indicators that show that the recovery may slower than expected. So we remain cautious and our Bull recommendations are still based on companies that have low debt, strong cash flow, will enjoy a nice lift as the economy recovers, but will also be ok in continued turmoil. Our Bullish pick for this week fits that bill and has a decent dividend to help us sleep better at night. The Bearish pick for this week is a company that has the worst numbers in a list of companies that might fail, is in a sector know for bankruptcy and is up over 100% recently. It’s a real nightmare waiting to happen. |
 Koninklijke Philips Electronics (PHG) - A true global giant, Phillip's management has proven to have foresight with their move to LED lighting and their advance in medical technology. The balance sheet is strong and although we like the company right now at a $24.14 price, we are targeting this European blue chip at $23.00 if we see a pullback in the markets. Their investment in emerging markets (27 percent in 2009 over 2008) is paying off as it should rise from 1/3 to an estimated 1/2 in 2015. The move for energy conservation around the world coupled with the ease to buy and replace the incandescent bulb with the LED bulb makes this an attractive long term investment. Don't forget it pays a nice dividend too.
Full Story
|
 AMR Corp (AMR) - The company's current debt is double their book value plus their TTM Net Income, not a good sign. The stock price is up over 100% in the last three months on news of its last refinance. Although they have cut many unprofitable routes from their schedule, the airline sector has too many better managed companies to support long term profitability. Also, in 2010 AMR is looking at significant pension obligations that will cut whatever profits are made. Out of the 6 companies in the article we include with this review, this company seems the most likely to see a bankruptcy in the future.
Full Story
|
|
|
|
|
