Stock Smarts: Stocks To Buy Now!
The market is on its way to a third consecutive down year. Still, there is some strength out there:
Staples Up 11.5%
Energy Up 10.1%
Durables Up 10.0%
(First Half of 2002)
But there are a lot more losers, including the following sectors:
Technology Down 23.0%
Health Care Down 11.6%
Services Down 6.9%
(First Half of 2002)
So would you be better off picking through the losers for bargains, or paying up for the stocks that are winning in a down year?
Wayne Rogers of Wayne Rogers & Co says that he is a believer of staying with what is working like those consumer staples stocks. He says fishing for a bottom in stocks is a losers game.
Fox Business News contributor Dagen Mc Dowell agrees "bottoms" are impossible to spot. But she thinks it’s worth it to put some money into beaten down sectors (like drugs), because when the market does come back, these stocks will be along for the ride. And, she says, one thing this market has taught investors is to be diversified in a variety of stocks as well as in bonds.
Jonathan Hoeing of Capitalistpig Asset Management says buy strength and forget weakness. Weak stocks tend to stay weak, strong stocks get stronger, and tend to stay that way compared to the rest of the market.
Hilary Kramer from Montgomery Asset Management says that nobody wants "to catch a falling knife," but there are opportunities out there among weak stocks that have been punished for no good reason. She likes the financial institutions, especially consumer banks like SunTrust (STI), First Tennessee (FTN), and KeyCorp (KEY).
Jonas Max Ferris of Maxfunds.com says stocks are weak but in many cases still very expensive and not at all enticing.
Last January when stocks started getting hit with Enron-it is, investors began looking for companies with businesses they could understand. On the January 19, 2002 show, Jonathan, Hilary and Wayne each picked a "Simple Stock":
We took a look at how these stocks have fared, and whether or not they would buy some more, hold on to what they have, or dump it altogether.
Jon’s simple stock: Goldcorp (GG)
Since January 18, 2002: UP 41%
Jonathan still owns a bit of Goldcorp, but he has lightened his position. He would rate this stock a hold right now. Hilary agrees, saying that gold has had its run up. Wayne has a position in Goldcorp, but wouldn’t add to it right now.
Hilary’s simple stock: General Mills (GIS)
Since January 18, 2002: Down 11%
Hilary still owns General Mills, and would consider buying more; the value is still there. Wayne thinks that General Mills is a long-term play but he’s not a buyer here. Jonathan wouldn’t be a buyer at these levels either.
Wayne’s simple stock: Harley-Davidson (HDI)
Since January 18, 2002: Down 5%
Wayne is still a holder of Harley, and thinks it is a good defensive play. Jonathan says it isn’t a buy. And even though it is a premium brand, Hilary points out that sales of motorcycles were down in the Spring and there is competition coming in from foreign markets and she doesn’t think it is a great stock.
Mutual Fund Face-Off: The Year’s Best Funds
Chances are the mutual funds you own are down for the year. But there are some funds bucking the trend. Which is the winning fund to buy? Dagen and Jonas have picked a couple that could continue the momentum throughout the rest of the year.
Dagen: Oakmark International Fund (OAKIX)
Minimum Investment: $1,000
Expenses: for every $13.00 for every $1,000 invested
Year-to-date (through 7-3-02): Up 7.1%
Jonas: American Century International Bond Fund (BEGBX)
Minimum Investment: $1,000
Expenses: $19.90 for every $1,000 invested
Year-to-date (through 7-3-02): Up 12.0%
Dagen, Jonathan and Wayne wrapped up the show by answering some e-mail questions
Question: "What is going on with Johnson & Johnson (JNJ)?"
Wayne: It’s a terrific company, and I have a position in the stock (bought long ago), but it’s probably overpriced.
Jonathan: What freaks me out about JNJ is that people consider this stock to be a "safe haven," and it really isn’t. Too expensive – wouldn’t touch it.
Dagen: It is a safe have, just more expensive that some of the others.
Question: "Would it be smart to buy WorldCom (WCOME) because it is so low?"
Jonathan: I gambled on Enron and lost. You are probably are better off with a lottery ticket.
Dagen: It’s like going to the beach and throwing fistfuls of cash into the ocean.
Wayne: Go to Vegas. You’ll have more fun
Question: "I am a Qwest (Q) employee and I have 15% of my 401(k) in company stock. Is it wise to retain the stock, with the new CEO change?"
Dagen: Qwest still has a lot of problems. A new CEO is a step in the right direction, but you don’t need to own this stock. Qwest does match contribution with company stock, but you can move the moony out of the stock right away and you should.
Jonathan: Didn’t we learn anything from Enron? You are way too overweight in Qwest.
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