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; Mike Norman, founder of the Economic Contrarian; and Adam Lashinsky, senior writer for Fortune magazine.
Trading Pit
The war in Iraq is over. Companies are making money. Consumers are in a spending mood.
And the market responded! The Dow (search), Nasdaq, and S&P 500 all made significant gain for the week.
Mike believes now is the time to buy stocks. He said the market and economy have shown tremendous resiliency throughout the war and during terrorism scares. He believes the president’s tax cuts will go through and when they do, it will set the market on fire.
Adam said that barring a major terrorist attack, things won’t get worse for the market. He agreed with Mike that the market is headed up.
Gary B. is also bullish! He charted the S&P 500 and said the downtrend it began in August of last year is broken, so the bulls are in charge. He thinks the market will make a 10 percent gain before it makes any pullback.
Tobin said now is the first time in three years we are seeing a real stimulus for stocks. He explained that corporate bond (search) yields, gas prices, and the dollar are all down and the market is going up. This means in 6-9 months we are going to see real growth, and now is the time to buy growth stocks.
But Scott believes now is the time to take profits because the market is in the final stage of its post war rally. He thinks stocks will pullback a little and investors should look for a better buying opportunity in the near future.
Stock X-Change
Scott, Tobin, and Mike chose a stock that each thinks will help you profit now that the war is over.
Mike selected Disney (DIS). He said people will be traveling more now that the war is over and that the terrorism threat level has been lowered. Tobin and Scott both said they wouldn’t buy Disney right now. (Disney closed on Friday at $18.89.)
Scott chose Ruddick (RDK). He explained that it is a company that makes thread for fiber and will see a big benefit from a better economy. He added that Ruddick has an excellent management team and he thinks it can go up 20-30 percent. (Ruddick closed on Friday at $13.90.) Mike wasn’t too excited about Scott’s pick. Toby likes the stock.
Tobin said investors should buy Western Digital (WDC) because it is finally starting to grow and the computer storage business is making money for the first time in 20 years. Also, he said Western Digital’s earnings will grow 3rd and 4th quarter. (Western Digital closed on Friday $9.56.) Mike likes this stock. Scott said it’s fully valued and thinks Maxtor (MXO) is a better stock right now.
Chartman
If you’ve lost all faith in Wall Street because of phony analysts, Gary B. says don’t worry, the charts never lie! So he and Adam looked over three charts that told him they’re going higher.
The first chart he chose was Cox Communications (COX). It recently had a beautiful breakout from a good base. Gary B. thinks its chart is in perfect shape and it should reach $40. (Friday’s close: $32.05) But Adam said even though Cox is the class act of the cable biz, it has mountains of debt and it’s getting into the telephone business, which is very tricky.
Next he selected AT&T (T), which is a chart that everyone loved to hate for a long time. AT&T just broke through a downtrend it had been in since the start of the year. Gary said he would look for the stock to move back to the low $20s before it retreats. (Friday’s close: $16.77) Adam likes this stock. He said Ma Bell’s a survivor and it has a nice dividend yield. He agreed with Gary that the stock will hit the low $20s.
The third stock that yells to Gary it’s going up, is Foundry Networks (FDRY). Gary said this chart is a thing of beauty and it just broke to a new 52-week high. He expects it to be up 50 percent in 6 months. (Friday’s close: $11.81) Adam doesn’t like this stock. He said the time to buy this stock was a month ago because it’s up 50 percent since April 1st. Adam advised investors to wait for Foundry to sell off before buying it because it’s just too expensive.
Predictions
Mike: Stocks & interest rates are on the rise. Dow hits 9000 by Christmas
Scott: Microsoft (MSFT) is no longer Mister Softee! Up 20 percent by September
Gary B.: eBAY (EBAY) is a-okay! Goes up 35 percent before end of the year
Adam: SARS scare is over! Virus has no more impact on market
Tobin: Natural gas prices will blow up. Chesapeake (CHK) up 45 percent by summer
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