Wall Street Suffers a Pullback
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The U.S. economy grew at a 3.5% annual rate in the 3rd quarter, ending a string of declines over four quarters that resulted in the most severe slide since the Great Depression. The Market, which had fallen earlier in the week on lower than expected earnings reports across most sectors, bounced back strong on Thursday on the news that, technically, the recession is over... or at least a recovery is on track.
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This week we have seen the pull back many speculators had predicted. It's hard to tell how much of a pullback there will ultimately be, but it will be a wait and see game with the monthly job numbers. As any good investors should do, we keep a list of companies that we have been waiting to recommend if they fell low enough. This company is an alternative energy play that has fallen particularly hard on a negative outlook. We like the long term value, especially with the government’s new look towards renewable energy and the subsidies that will come accordingly. This company has high growth potential and pays a great divided too. Our Bear pick has been a nice play on the US automaker industry, that had nowhere to go but up in the last year and became a popular pick for contrarian investors. We do see some problems in the near future for this company as demand for its product will lag job recovery. |
 FPL Group (FPL) - FPL is the U.S.'s largest producer of wind and solar power is also a good natural gas play. We have been looking for a good alternative energy play and FPL fits the bill. The pullback on FPL over the last few weeks is giving us a entry point we are comfortable with. Aside from its wind, solar and gas assets, FPL is the third largest provider of nuclear power to the U.S., making this company a great growth buy. Usually the downside to companies with tremendous growth potential is the time you have to wait, enduring negative earnings until the growth is realized. But the FPL balance sheet is strong and has a long history of paying a good dividend while you hold it.
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 Ford (F) - There are 3 reasons we are bearish on Ford. First, the cash for clunkers program is over and so are the puffed up numbers that came with it. Also, the ironic truth from the program that was supposed to reenergize the U.S. auto industry, is that Toyota was the biggest winner, not Ford, GM or Chrysler. Second, the credit availability for new cars is not available at the levels you would need for a prolonged recovery. 2010 might see credit loosening a bit, but for now we see this as a big hurdle to the consumer. Lastly, dealerships are scared to carry inventory. If you walk into a Ford dealership and ask about a new Ford Mustang, chances are you will have to wait for the factory to send it down. With the amount of inventory that dealerships had to swallow in 2007-08, no one is in a hurry to stock up on cars that might ultimately be on sale in 2010.
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