Recovery Doubts Once Again Send Stocks for a Tumble
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The week was up and down as mixed news led the direction the markets on a daily basis. Thursday the Nasdaq fell over 2% as a stronger dollar and more discouraging signs of a slower than expected economic recovery triggered a sell off in stocks. The market's drop on Thursday added to Wednesday’s decline, when stocks slipped on a drop in home construction and disappointing forecasts from technology companies. There were 505,000 initial jobless claims filed in the week ended Nov. 14, the same as the revised figure the previous week, the Labor Department said in a weekly report.
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Housing and Job reports released this week showed that the recovery is slower than expected and analysts think there may be a "double dip" in the housing market that would see another drop coming. With this news in mind we looked for companies that were hit hard with the initial recession and have made moves to not only survive but profit now. Our Bullish pick fits that mold and will also be in great shape if the housing market does recuperate next spring and head upward. Our Bearish pick should see a stock price drop soon based on the fundamentals of the company. It’s been on a nice surge the last few months with smoke and mirrors, but all of that is evident now and we wouldn’t be surprised to start seeing downgrades and the drop that comes along with that. |
 Home Depot (HD) - Their last quarter numbers show that there is already a strong recovery going on at their stores. The housing recovery is in doubt with numbers contradicting each other from week to week. Whether the real-estate market has begun its recovery, or won’t fully recover until later next year, Home Depot has restructured itself to be profitable in the current environment. A strong dividend will pay you to wait until the real estate market truly recovers and sends this stock over $30.
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 The Great Atlantic & Pacific Tea Company (GAP) - This is A&P supermarkets. The company seems to have a lofty stock price and when you look at the numbers, it doesn’t make sense. Over $1 billion in debt and it has not turned a profit in years. It seems that the only reason for the rise and sustained stock price has been reports that the company was a buying target, which now looks unlikely. The stock price has almost tripled since the summer and now that analysts are seeing a buyout or merger as doubtful, it seems poised to start falling.
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