DISCLAIMER: THE FOLLOWING "Bulls & Bears Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Bulls & Bears Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Dagen McDowell hosted for Brenda 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 Price Headley, investment strategist for BigTrends.com
Buy in November and sell in May? You bet'cha. Over the past 50 years the Dow’s average return in those six months is up over eight percent. Go the other way, and you're up only half a percent.
But this past six months has turned that notion on its head, with the Dow (search) making a huge 16 percent run in that time.
Price thinks the next six months is going to be even better than the previous six. He added that the market has been strong in a typically weak time for a reason-improving economic news.
Gary B. charted the Dow’s performance for the past several years and agreed that buying in November and selling in May usually works. However, the Dow isn’t usually up 16 percent like it was in the prior six months He thinks it will be lucky to be up 5 percent by May.
Tobin totally disagreed with the Chartman. He said now is the time to buy and own stocks because the tax cuts are working and creating better economic numbers. Now he admitted investors just cannot buy any stock, but there are a lot of companies that are growing and whose earnings are getting better, and those are the ones to buy.
Scott is happy but nervous. He said all the news for stocks has been great. But what concerns him is that everyone is bullish, the market has come so far so fast, and what can be done for an encore after the great economic numbers last week. He still owns stocks, but advised to be cautious.
But Pat’s not bullish and doesn’t see a lot of stocks he likes now. He said the key question concerning the market is always, what is the market expecting. When the huge economic growth numbers were released last week, the market didn’t react positively. Instead, it sold off. He said this means all that great news was expected. Pat thinks that stocks have gotten ahead of themselves and will only head lower.
So which are the best stocks to buy in November and sell in May? Tobin, Scott, and Price all gave their best picks.
Tobin chose Genesis Microchip (GNSS), which is going to power many new flat panel monitors made by Dell (DELL). He said sales of flat panels are going to increase from 2 million to 25 million units in just a couple of years. Price wasn’t as excited about it and thinks Dell will try everything it can to keep Genesis Microchip’s prices down. Scott said there is a tremendous growth potential for this company because everyone is going to have HDTV and LCD screens. (Genesis Microchip closed on Friday at $16.54.)
Scott likes Shaw Group (SGR), which builds and upgrades power grids. The stock has nearly doubled since the East Coast black out. He thinks as the company upgrades power grids, it will head even higher and get to $20. (Shaw Group closed on Friday at $13.65.) Tobin agreed and also thinks Shaw Group will hit $20. Price is worried about its earnings, which have dropped 79 percent, and thinks there are better opportunities elsewhere.
Price picked online broker, AmeriTrade (AMTD). He said it had record earnings for the quarter and the year. Also, he thinks as more investors enter the market, AmeriTrade will start stealing business from the bigger brokers. Scott said if the bull market continues, AmeriTrade will continue to head higher. He thinks it’s too expensive right now and would rather buy Instinet (INGP). Tobin recommended this stock several weeks ago and said as long as the market is going up, own AmeriTrade. (AmeriTrade closed on Friday at $13.71.)
Gary B. and Pat each picked a Dow dog that's about to turnaround and run with the big dogs.
Gary chose Coca-Cola (KO). His chart showed that since its March low, Coke recently consolidated its gains and resumed heading higher. He thinks it will hit $55 in about a year. (Coca-Cola closed on Friday at $46.40.) Pat said Coke has unbelievable brand strength and no one can copy its business, but it is missing out on new trends like fruit juices and sports drinks. He thinks the stock is a bit overvalued.
Pat picked Johnson & Johnson (JNJ). He said the company is very diverse and is like owning a healthcare mutual fund. It is also incredibly profitable and has a strong drug lineup. He admitted that J&J had some problems with its stent (a type of heart device that opens arteries), but these problems are overblown. Gary’s chart showed that Johnson & Johnson has been in a two-year slump and doesn’t look like it is getting any better. He thinks if it breaks through a support line in the upper $40s, it could fall to $30. (Johnson & Johnson closed on Friday at $50.33.)
Price's prediction: Rates stay low and push Dow to 11,000 & Nasdaq to 2,500
Gary B's prediction: California fires ignite Home Depot (HD); up 35 percent in 6 months
Tobin's prediction: Nortel (NT) will be a "treat" and double by next Halloween
Pat's prediction: The best offense is a good defense; Raytheon (RTN) up 20 percent in a year
Scott's prediction: Russia fizzles but China sizzles; buy China Petroleum (SNP)