Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Bob, are there still any stocks left out there that are maybe worth wild?
Bob Lenzner, national editor: We did a study of how many stocks with a capitalization over a billion dollars traded at less than ten times earnings. We came up with 29. Some of those sturdy stocks are Pulte Homes (PHM), Lennar (LEN), ACE Ltd. (ACE), and Nationwide Financial (NFS). RJ Reynolds (RJR) has quite a high dividend and is selling at 6 times earnings.
Pete Newcomb, senior editor: You mentioned a lot of insurance stocks. What's this terror bill have to do with any of them?
Bob Lenzner: The terror bill is good for the causality stocks. The industry will have to eat the first $10 billion of losses but after that the government will come in and make up whatever the other losses are.
David Asman: All right. Pete Newcomb, a while ago you were speaking highly of AOL Time Warner (AOL). What's going on?
Pete Newcomb: Pittman is out and clearly the Time Warner guys are in charge now. Analysts think this shift is a good thing. I disagree. This is not a good thing for shareholders.
David Asman: Any change with the magazine stocks, the magazines that this company publishes?
Peter Newcomb: The magazine publishing has been their strong point up to now. But there's so much infighting that it's going to be a wreck.
Luisa Kroll, associate editor: I think that's one of the reasons this is going to work. Jeff Bewkes, who is the new Chairman of the Entertainment and Network group, has been a big supporter of decentralizing. Let HBO do its job. Let the magazines do its job.
Chana Schoenberger, staff writer: But they pitched the merger as this big synergy play.
Bob Lenzner: Pete says it's a buy at $6 or $8. But it's selling at $11.15.
David Asman: Okay so it still has some ways to go. Chana what have you got for us?
Chana Schoenberger: I've got some good chemistry. The chemical industry is just starting to see its first year after year gains. Chemistry is where companies go when they want to make things. So we're seeing basic chemicals like those used in packaging are picking up as consumer demand is picking up. The two biggest are Dow (DOW) and DuPont (DD).
David Asman: Luisa, you're going to be talking about REITS. What are they and why do you like them?
Luisa Kroll: They're real estate investment trusts. They are ways to play real estate and property values in the stock market. What's great about these is that they have to give back 90% of the income in the form of dividends. So if the stocks are performing that well you can get some cash coming back to you. Good reit sectors are industrials like Prologis (PLD) and Duke Realty (DRE) and Regional Malls like Simon Property (SPG) and General Growth Properties (GGP). Bad reit sectors are offices and apartments.
Makers & Breakers
Randall Eley, The Edgar Lomax Co.: SBC Communications (SBC) has no issue about its earnings. They are the largest operators of local and wireless telephone operations. It also has a 4% dividend yield.
Pete Newcomb, senior editor: The local carriers have really avoided the telecom shake-up so far but I think they're in for some bad news. The stock is going down about 20%.
Elizabeth MacDonald, senior editor: I like this stock. I think it's cheap. The price to earnings ration is at 14. They dominate in something like 13 states. If you have to buy telecom I would buy SBC.
American Electric Power
Randall Eley, The Edgar Lomax Co.: American Electric Power (AEP) is usually considered a high yield play but it's also an earnings play. It also has a dividend yield of almost 8%.
Elizabeth MacDonald, senior editor: I'm a maker on this stock as well. They dominate in 11 states and they've stayed away from the energy market manipulation scandals. I think their net income tripled and they're cash flow doubled.
Pete Newcomb, senior editor: I think this stock has been unfairly hammered because of all the worries around the energy sector. I like this stock.