Brenda Buttner and was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Bob Olstein, president of the Olstein Funds.

Trading Pit

The first strike of Operation Iraqi Freedom occurred on March 19 -- a target of opportunity according to the Pentagon.  Did the strike hit Saddam that night?  We still don't know.  But we do know what followed was a stunning military success resulting in the liberation of Iraq, Saddam out of power and a safer world for everyone.

And since the first day of the war, the market is higher. Not dramatically higher, but going in the right direction.

Bob believes the market is going to continue going up slowly.  He said the current situation in the market is very similar to 1974-1982 period, when we came out of the ’73-’74 bear market.  He thinks the economy is starting to turn around right now.

Tobin’s bullish until at least the end of the year.  He explained that this will be the time we know if the economy is truly back on track.

Gary B. charted the Dow since the March 19 “Target of Opportunity”.  He said the Dow has been up since then, and if it closes above 8500, investors should put on their “rally caps”.

Scott said there has been a lot of stress on the market and now that that stress is gone, it will help lift stocks.  He thinks the Dow will break through 9000.

Pat likes what he sees as well.  He said the outlook for industrial spending is getting better, business confidence is up, and inventories will need to be restocked because they are extremely low.  His only concern is that we need to create jobs to keep up consumer spending.

Stock X-Change

Scott, Tobin, and Bob chose stocks that will get the biggest boost from the rebuilding of Iraq. 

Bob chose Tyco (TYC).  He said it will benefit from the rebuilding of Iraq because it makes engineering products that will go into rebuilt Iraqi buildings.  He believes this new business will give the stock a jump-start and send it over $20. (Tyco closed on Friday at $14.61.)  Both Tobin and Scott don’t like the stock. 

Tobin chose BJ Service (BJS) because it makes the high-pressured equipment that is needed to get the oil out of Iraq.  He said it is a cyclical business, so buy the stock at $38-39 and sell when it hits $50.  (BJ Services closed at $37.98 on Friday.)  Scott likes that the company’s earnings are relatively stable and added that its chart looks good.  Bob said it’s a great company, but just too expensive.

Scott recommended Flowserve (FLS).  He explained that for oil or water to move it needs to be pumped and this company makes the valves, sealants, and pumps that puts liquid through a tube.  He thinks the stock is very cheap right now and can go to $20.  (Flowserve closed at $14.76 on Friday.)  Toby and Bob both said Scott made a great pick and the stock is very cheap.

Chartman

Gary B. and Pat looked at three stocks that have won big since the first bombs targeted Saddam in the middle of March.

First up, Delta Air Lines (DAL), which is up an incredible 35 percent since March 19.  Gary B. thinks there is more high flyin’ ahead for Delta.  It recently broke a downtrend and he thinks it can reach $20 before the end of the year.  (Friday’s Close: $11.97)  Pat doesn’t like airline stocks.  On a positive note, he did say that Delta has good labor relations and is in no immediate danger of going bankrupt.  But even though the company has relatively low costs, these costs are not low enough.

Sears (S) is another stock that is making a great gain since we first took on Saddam-up 31 percent in just over a month.  On its chart, Gary B. thinks that Sears has formed a good base.  He recommended buying the stock if it can close above $30.  (Friday’s Close:  $27.05)  Pat said Sears is going back to its retail roots, which is a good thing, but it is losing the retail war because other large discount stores are stealing its business.  He thinks it’s a dying business and recommended to avoid the stock.

And since Operation Iraqi Freedom began, J.P. Morgan Chase (JPM) is up 22 percent.  Gary B. said the stock cracked through a long downtrend, but it needs to pullback a little.  He likes the stock in the mid $20s.  (Friday’s Close:  $27.96)  Pat owns J.P. Morgan Chase and is sticking with it.  He said the company had a good first quarter and its balance sheet has improved.  He thinks now is the time to buy this stock because it is at a bargain price.

Predictions

Tobin: Buy on dips-this rally is for real!  Dow hits 9500, Nasdaq 1550

Gary B.: We may rally short-term but Dow sees 7500 before 9500

Scott: Nasdaq is the hot index; will finish the year at 1750

Pat: McDonald's (MCD) is going higher.  Don't believe me?  Just ask Bob!

Bob: Fill your shopping cart with Safeway (SWY) stock!