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 Gary Kaltbaum, president of Kaltbaum & Associates.
Trading Pit
Saddam's regime is no more, but it appears he still is alive. Many say it was his voice on an audiotape that surfaced last Wednesday with threats of a secret war against America. Maybe not coincidentally, Wednesday and Thursday were down days for stocks. And remember, we saw this kind of stuff with Usama bin Laden (search) and the markets reacted each time.
Tobin is no longer concerned about any threat from Saddam or Usama. In fact, Toby said if the market sold off due to a concern about either, he’d buy stocks!
Gary B. charted the S&P 500 and showed that over the past year every sharp move up has been met with a sharp move down. And right now, the index is at a resistance level where he thinks it could sell-off again, simply because it has had such a sharp run up in such a short amount of time.
Gary K. said the market does not care about Saddam because it is trading on fundamentals and valuations, and is acting well right now. His biggest concern is that the world is bullish right now and he thinks the market is out to fool the world. Gary K. believes the next couple of weeks will indicate if the bulls or bears are in charge. He advised to keep an eye on the semiconductors because if they break out the market will head higher.
Scott cautioned investors about becoming overly bullish. Even though indications are that the market will head higher, he said investors should wait for the market pull back and then buy.
Pat said that Saddam is not a threat because his followers are motivated by fear, not by religious fervor like Usama’s followers. Pat thinks the economy is getting better. But he is finding fewer bargains in the stock market because in the last few months, stocks have gained a good amount and a lot are overpriced.
Stock X-Change
Scott, Tobin and Gary K. each picked the best stock to own for the rest of 2003.
Gary K. chose oil services company, BJ Services (BJS). He believes it has bottomed and is about to break out. He advised to buy on any pull back and thinks the stock could reach the mid $40s. (BJ Services closed on Friday at $38.50.) Tobin likes it and recommended it on the show several weeks ago. Scott doesn’t think BJ Services can go up too much more.
Scott chose Reuters (RTRSY), a British data services and financial news company. He said it has gotten hammered going from $30 billion in market value to $3 billion, but still has a strong position in its field. Scott said Reuters could be a $21 stock by the end of the year. (The stock closed on Friday at $14.15.) Tobin likes it, but thinks its competitor, FactSet Research Systems (FDS) is a better buy. Gary K. also does not like Reuters and agreed with Tobin that FactSet is a better play.
Tobin picked National Oilwell (NOI) because he thinks there is going to be a “pop” in oil drilling. This company drills shallow oil wells and due to oil prices, there will be a lot more of these wells being used. He thinks it will reach $40. (National Oilwell closed on Friday at $23.18.) Gary K. likes it, but Scott thinks it’s too expensive.
Chartman
Internet stocks are making a comeback! So Gary B. and Pat came back to look at Gary’s three favorite internet stocks that are up over 50 percent since the beginning of this year.
The first chart Gary B. chose was Yahoo! (YHOO). This chart really appealed to him. It put in a double-bottom and broke above a two-year base it began in the beginning of 2001. He thinks the stock will double over the next year. (Friday’s close: $25.04) Pat said Yahoo’s ad revenue is rebounding and its 250 million users are a huge asset. But even though it’s a highly profitable company, Pat thinks it’s still too expensive.
Next, Gary B. picked Amazon.com (AMZN) because its chart is strong and keeps going up. He thinks it has a good shot at reaching the mid $40s (Friday’s close: $30.97). But if it breaks below the current uptrend it began in late last year, he would sell. Pat said Amazon is making smart moves and has profitable divisions, but it is $2 billion in debt and is overpriced by $20.
Lastly, Gary chose Juniper Networks (JNPR). He loves this chart. In fact, he said it’s almost perfect! Juniper broke above a base it began late last year and Gary thinks it’s going to the mid $20s. (Friday’s close: $12.00) Pat said Juniper is a well-managed company and is stealing business from Cisco (CSCO), but Cisco will win out in the end. He thinks it’s about 30 percent overpriced.
Predictions
Scott's Prediction
IBM (IBM) buys Sun (SUNW) at a 50 percent premium
Gary B's Prediction
Sell tech in May and go away; Nasdaq down 10 percent by October
Pat's Prediction
Gary B. is right about tech going lower; sell Advanced Micro (AMD)
Gary K's Prediction
Qualcomm (QCOM) in trouble; heading down 25 percent
Tobin's Prediction
Dell (DELL) better off without the “Dude”; up 33 percent by year-end
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