DISCLAIMER: THE FOLLOWING "Cost of Freedom 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 "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Scott Bleier, HybridInvestors.com president; Mike Norman, BIZRADIO talk show host; Tom Gardner, The Motley Fool co-founder, and Adam Lashinsky, Fortune magazine senior writer.
Trading Pit: Booming Economy Causing Immigration Crisis?
America's economy has been booming, but Mexico's has not been good at all. Millions who can't find work there are breaking the law and coming here illegally. Are we a victim of our own success?
Gary B. Smith: Yes! We provide the greatest economic opportunity. This is the only country in the world where you can literally start at zero and become a corporate CEO. You don't find people in the U.S. migrating to Mexico or Cuba. We're a victim of our own success and probably rightly so. We want to welcome people with open arms, but we don't want to be so porous that we don't have a country.
Mike Norman: Our economy is the greatest in the world. But Mexico is not a poor country. It has a trillion dollar economy, which is the same as Canada. You don't see Canadians coming over here illegally. The problem is that Mexico is horribly corrupt and all of the country's wealth is controlled by a handful of people.
Tobin Smith: Yes Mexico is a corrupt country, but the problem is that it has no middle class. If you want to work hard and start a business over there, you can't. Why would you want to be a painter in Mexico, when you could just cross the border and make five times more over here? This is the real issue and we have to help Mexico because the country is as corrupt as they come.
Tom Gardner: Our immigration laws make it too tough to get into this country legally. People have to take a test that I think most Americans wouldn't be able to pass. We need a lot of these people to be working here in the U.S. The key thing is to address the tough immigration laws. I don't think we should crack down on the people that are here already. We need to pass laws that make it more difficult than just crossing the border, but not substantially.
Adam Lashinsky: There is no question people are flocking to the U.S. because of our great economy. Legal and illegal immigrants want to come to the U.S. all the time — during good and bad economic times. However, I don't think we are a victim of our success. We want everyone that comes here to do it legally, but the brutal fact is that the people who are coming illegally are helping our economy.
Scott Bleier: People come here from all around the world during every type of economic environment — because even at our worst — America is better than where the immigrants come from. It's always going to be better here than it is in Mexico or the Fujian Province in China. So we are going to get these people whether it's good or bad for our economy. It just so happens that we're in a great economy right now, so we're getting more illegal immigrants.
Stock X-Change
These CEOs make big bucks, but can the companies they run make you big bucks?
Adam: I really like Genentech (DNA). CEO Arthur Levinson made $109 million last year and the shareholders have made way more than that. It makes cancer-fighting drugs and keeps coming up with more. The estimates keep going up and I think this is a great one to buy. (Genentech closed on Thursday at $81.68.)
Mike: Everything Adam says is correct, but the stock already had its move. It's expensive and I would stay away from it.
Tobin: It's pulling back right now. I would only buy if it were $5-10 cheaper.
Scott: It's fully priced.
Tobin: Go for Goldman Sachs (GS). Its CEO, Henry Paulson, Jr., made $45 million last year. This is the world's greatest hedge fund. People say that they can't invest in a hedge fund and I say invest in Goldman Sachs. The stock is worth $50 more. (Goldman Sachs closed on Thursday at $159.43.)
Scott: This is already priced for the three-year bull market that we've been in. It needs a whole new bull market to go higher.
Mike: I love Goldman Sachs, but it's already had a big move.
Adam: I liked it more at $100.
Scott: My pick is Johnson & Johnson (JNJ). William Weldon is the CEO and he made $15.6 million last year. This company is a wonderful creator of wealth and user of capital. It has blockbuster drugs across the product line. The stock has pulled back from its highs and now is the perfect time to buy. (Johnson & Johnson closed on Thursday at $57.91.)
Adam: It is a well-run company, but has slowing revenues and slowing earnings. Plus, I think it has a poor product line. I wouldn't rush out to get this one.
Tobin: I don't think the CEO is making enough money.
Mike: I like it because it is undervalued.
Merck (MRK) is a stock that took a lot of heat the past year and a half with all the lawsuits. However, its CEO managed to keep the stock stable. CEO Richard Clark made $5.5 million last year and he's earned every penny. The company is out of the woods and the stock is discounted. This is a money machine. (Merck closed on Thursday at $33.94.)
Tobin: The problem is that Merck has two other drugs that are going off patent and also being hit.
Scott: There's too much of an overhang. Plus, there are too many other great stocks out there.
Adam: I don't like it.
Chartman
A Bulls & Bears ritual: the "New Guy" takes on the Chartman with his favorite stocks! This time, the Motley Fool's Tom Gardner enters the Chartman Challenge.
Tom: I really like UnitedHealth Group (UNH). Overall, healthcare insurance companies have been beaten down. UnitedHealth is down 20 percent from its high this year. It has a great balance sheet and this stock is going to be a market leader over the next 5 years. (UnitedHealth closed on Thursday at $53.50.)
Gary B.: UnitedHealth is causing a lot of pain right now. It has gone straight down since the end of last year and looks like it could keep going down. If you want to buy, wait until it pulls back to the uptrend it has been in since 2003, which right now is about $50. This will limit some of the risk.
Tom: My second pick is Sierra Health Services (SIE), another healthcare insurance company. I like people to invest for the long term in great companies. Sierra is a great business based in Nevada. It's serving the southwestern United States, which is where a lot of people are moving to retire. The stock is down 10 percent from its high, so now's a great time to buy. (Sierra Health Services closed on Thursday at $40.20.)
Gary B.: I love that the stock was in an uptrend up to late last year, but recently the stock is dying. I would wait until it shows some strength and breaks through its current downtrend.
Tom, you should really be looking at Starbucks (SBUX)! In February, the stock broke out and is still heading up! Right now, it's close to an all-time high. This is one that is strong and getting stronger. What's not to love? (Starbucks closed on Friday at $38.29.)
Brenda: But their coffee is way too expensive.
Tom: It's an expensive cup of coffee at Starbucks, but it's one that people love. I love the business because of its tremendously loyal repeat customers. It's beginning to expand in China and is going to be bigger there than here in the U.S. within 15-20 years. This will be great for long-term shareholders.
Predictions
Tobin's prediction: General Motors (GM) up 50 percent by Christmas!
Gary B.'s prediction: Gas goes up to $3/gallon; Exxon Mobil (XOM) up 20 percent
Adam's prediction: Bausch & Lomb (BOL) a bargain; gains 50 percent in 6 months
Tom's prediction: Select Comfort (SCSS) up 20 percent in each of the next 5 years
Scott's prediction: Taiwan Semiconductor (TSM) gains 40 percent by next April
Mike's prediction: Summer Swoon! S&P 500 falls 10 percent by end of summer
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cavuto on Business
Neil Cavuto was joined by Jim Rogers, "Hot Commodities" author; Paul McGuire, nationally syndicated radio talk show host; Stuart Varney, FOX News Business correspondent; Bob Beckel, Democratic strategist; Meredith Whitney, executive director at CIBC World Markets; Jon Najarian, CEO of InsideOptions.com; Patricia Powell, CEO of Powell Financial Group; John Layfield, host of the "John Bradshaw Layfield Show."
Bottom Line
Neil Cavuto: Are illegal immigrants driving up the cost of health care in America? Nearly 12 million illegal immigrants receiving free health care in hospital emergency rooms across the country. So, who's picking up the tab? Paul?
Paul McGuire: You have to pick up the tab, Neil. And every single one of us who has to pay the higher cost of health care. We pay the ticket for the illegal immigrants and their health care.
Jim Rogers: He's right. But many millions of Americans do not have health insurance either. But this is about Washington D.C. politicians with these absurd regulations. It's not the immigrants. And it's the trial lawyers.
Neil Cavuto: And you don't think 12 million immigrants tax that system?
Meredith Whitney: They definitely tax the system. But 28 percent of Americans don't have health insurance either. What trial lawyers and uninsured people do is raise the premiums for the rest of us. So at some point it creates a disincentive and deters people from buying insurance in the first place.
Neil Cavuto: Would the problem be mitigated somewhat if the illegal immigrants weren't here?
John Layfield: If they were legal, yes. We can't round up 12 million people and send them back home. There are 12 million people getting health care for free. That has to drive up health care costs.
Patricia Powell: It's a $70 billion problem every year. And if we don't do anything about it our system will implode. Right now we're paying about $6,000 per person in this country for health care. If it grows, as the government predicts, to $12,000 per person in the next ten years they'll be more and more people sliding off the roles.
Jim Rogers: Yes, but it's not the immigrants who are causing that problem. Forty million Americans don't have health insurance either.
Paul McGuire: Here in California the health care system has already collapsed. Our system has a $1.4 billion deficit. If you go to an emergency room here you're going to wait for three hours while illegal immigrants come in and get treated for colds, flu and prenatal care for their babies for free. And guess who's paying for that, the California taxpayer. Eighty-four hospitals are closing their doors California. In the last year alone, six emergency rooms have closed.
Stuart Varney: Look I am 100 percent legal. I'm a legal immigrant. It costs me a small fortune to buy health care insurance for everyone in my family. Now, if I were 100 percent illegal, I'd get it all for free. But let's get some perspective here; we spend $30-40 billion treating illegal immigrants in a system that spends over a trillion dollars on health care. It's not that big a deal. If you stopped that spending on illegals, it wouldn't bring down the cost of health care very much at all.
John Layfield: Politicians are just gutless. And the reason they're gutless on this issue is because the Hispanic vote is a swing vote. Our politicians refuse to do anything except put a band-aid on things.
Stuart Varney: What you cannot do is deny people, legal or illegal, health care when they're at an emergency room. Nor can you send back 12 million people.
Paul McGuire: You're telling me you cannot deny people who come in to the emergency room for a cold?
Stuart Varney: Yes. This is the United States of America.
Paul McGuire: So when an illegal immigrant comes into the emergency with the common cold, I have to wait 3 hours while an illegal gets an Advil at no cost?
Jim Rogers: Wait, Paul. There are four times as many Americans who do not have insurance. They're going to the same emergency room. You have to wait for them too. What is your plan? You're going to send them out of the country?
Paul McGuire: No. Eighty-one percent of native-born Americans have health care.
Jim Rogers: And twenty percent don't.
Paul McGuire: No. If you remove the illegal immigrants there is no health care crisis.
Meredith Whitney: Where are they supposed to go?
Paul McGuire: Why don't we just open up our borders and give the entire world health care?
Neil Cavuto: Patricia, is there something to this notion that there is a limit to our system?
Patricia Powell: We have to stop people from riding for free.
Neil Cavuto: But let's mention Paul's example. Someone comes into the emergency room with little more than a head cold. But then there's Paul on that line and he has a severed limb. He's not going to go ahead of the line?
Patricia Powell: Of course he is. They're going to do triage, and he's going to go to the front of the line. They're going to take the most serious case first.
Neil Cavuto: Paul, you're saying that's not happening right?
Paul McGuire: That's exactly right. I was in the emergency room two weeks ago. One of my family members was seriously ill. We had to wait in line three hours. They demanded proof of insurance. All the illegals who had no insurance and were there for prenatal care, influenza, and the common cold were treated for free.
Head to Head
Neil Cavuto: Are Democrats sabotaging progress in America to win votes in November? First, Senate Democrats block a bill on immigration reform; then they kick off a two-week break alongside protesters. Are they trying to sabotage progress in America so Republicans can't get the credit? Jim?
Jim Rogers: That's what politicians do. Is it good for America? No. It's terrible for America. The Democrats have stopped Social Security reform. They've stopped immigration reform. They started protectionism, and that will ruin everything. This is a disaster.
Meredith Whitney: George Bush started protectionism with the steel tariffs. So it's on both sides.
Bob Beckel: Look, this is a Republican self-inflicted wound. The Republicans came back in December, a special session, with their felon and immigration bill, and they thought they had themselves a great political issue. It did not have to be a big issue, but they made it into one. What Harry Reid did was stop amendments that would've weakened the McCain-Kennedy bill, which is the only workable bill. The House bill wants to send 12 million of these illegals back.
Neil Cavuto: Both sides end up looking bad here. Do you think, Meredith, that no matter how they play it, it's going to look worse for the Republicans because they're the party in power?
Meredith Whitney: It's hard to say who looks worse, right? You go down the list of bad things associated with the president. But the Democrats haven't done anything either. These politicians are more worried about their self-preservation than enacting any real progress for the future.
Stuart Varney: Neither party should be putting party interest above national interest. At this moment the Democrats should be ashamed of themselves. They have blocked immigration reform to scoop up the Hispanic vote. They blocked Social Security reform with no plan of their own. They've undermined our foreign policy and the morale of our troops. They blocked further extension of tax cuts. They want the economy to falter. It's all for party political advantage.
Bob Beckel: Stuart, does that mean we shouldn't send you a voter registration card for the Democratic Party because I had you on my list?
Stuart Varney: I am a green card holder. I am not a citizen. I do not vote, and I do not want to see illegal immigrants get the vote.
Bob Beckel: Are Democrats making politics of this? The answer is yes. Did Republicans make political hay out of health care reform when Clinton was in office? The answer is, yes. We do politics up here. That is the nature of the game. It's an election year.
Pat Powell: The Democrats did the nation a favor by blocking this legislation. We need immigration, and we population growth for the economy to grow. We don't need illegal immigration. I don't think we've had a rational debate on this, and I think the Democrats have inadvertently done us a favor by stopping this bill.
More for Your Money
Neil Cavuto: The stocks these guys like so much right now they just bought them for themselves. Should you buy them too to get more for your money? Mr. Najarian, what do you have?
Jon Najarian: I like railroads a lot right now, and I like Norfolk Southern (NSC). Trucking coal across the country will be in big demand throughout the year. This stock at $54 a share is a deal. Norfolk Southern closed Thursday at $53.84.
Patricia Powell: This was a better deal a year ago. It was a great idea, but a year too late.
John Layfield: I like VeriSign (VRSN). They have $800 million in cash. The cell phone content space is huge. This is a company to own. VeriSign closed Thursday at $24.51.
Jim Rogers: John, why are you buying stocks at 40 times earnings?
John Layfield: I don't think the run is over in the cell phone content space. I think it still has plenty of legs.
Patricia Powell: I like Goldcorp (GG). The run in gold is not over. It's just in the early stages. Goldcorp closed Thursday at $29.99
Jon Najarian: Well, Pat you're a year too late too. The stock is un-hedged. It's going to be pulling back down. It's a dangerous stock.
Jim Rogers: I haven't bought them recently, but I do own bankrupt bonds in United States airlines. You might make a lot of money if you buy these.
John Layfield: You don't make money disagreeing with Jim for very often, but I disagree with him here. Short-term and long-term rates are going up. And with oil prices up above $70 a barrel this is not a place I want to be.
FOX on the Spots
Pat Powell: Housing boom is over; foreclosures ahead!
Jon Najarian: Oil to $80 on Iran face-off; buy Evergreen Solar (ESLR)
NOTE: He owns shares.
Meredith Whitney: Wal-Mart bank gets nod; great news for consumers!
Jim Rogers: Military types say Rumsfeld must go; he will
John Layfield: Hillary ain't no Bill; no shot at White House!
Neil Cavuto: I predict the Democrats will continue gaining by doing nothing. Many tell me they need to offer an alternative. I say they don't, and won't, and will, as a top Democrat recently told me, "Run the clock out." I guess good for Democrats, bad for the country, but welcome to politics.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Forbes on FOX
Flipside: Iran's Military and Nuke Build-Up: Good for America!
Quentin Hardy, Silicon Valley Bureau Chief: The more we press Iran, the more they have to build up their military. And all Iran has is oil. So the more you cut off aid and back them into a corner, the more they have to pump oil to help pay for it all. The more they pump, the more supply there is and then prices drop. They say they can survive an embargo but they can't. Iran has 40 percent of its population below the poverty line and has 16 percent inflation.
Elizabeth MacDonald, senior editor: The Iranian mullahs know that to stay in power they have to keep the oil prices high. Look what happened in the mid 70s when oil production hit a 27-year low. The Shah was deposed. In 1997 when oil prices plummeted you had the reformer Mohammad Khatami come to power. Even in the Soviet Union you saw a reform of power when oil prices collapsed. So Quentin's line of argument I don't agree with.
Steve Forbes, editor-in-chief: Quentin's idea is interesting. The worries about Iran have inflated oil prices about $15. There is real uncertainty. The bottom line is when we have a confrontation, which we will have, we can then really deal with the crisis and the price of oil will come down. The longer we let it fester the higher prices will stay.
Victoria Barret, associate editor: I don't think Bush's hard stance on Iran will lead us to lower oil prices because I don't think that OPEC would allow that to happen. But I do think that Quentin makes a compelling argument. Iran's economy is in shambles. It's estimated that $200 billion left the country. The IMF says that Iran has the highest brain drain of any country. The people and the capital are leaving the country at a time when the crazy guys running the place ran on a populist message. They said they were going to shrink the gap between the rich and poor. They said they'd bring prosperity to Iran and they are not doing that. They're focusing on antagonizing the West. We need to exploit that and befriend ourselves to the Iranian people. Because this is a Democracy.
Steve Forbes: Iran is not a democracy, those elections were rigged. Candidates they didn't like were not allowed to run. It's an intensely unpopular regime. So the way to get the price of oil down is to deal with the crisis. The mullahs have to go.
Jim Michaels, editorial vice president: I think Bush's stance on Iran is the right one but the point is it's not going to bring down the price of oil in the immediate future. One of the reasons that the Iranians are making so much noise is to keep the price of oil up because it's pouring money into their pockets that they can use to make trouble for their neighbors. Long-term Bush's tactic may help bring oil prices down. Short-term it won't.
Quentin Hardy: Short-term the oil markets are reacting but they're not considering it will take about 5-10 years before Iran has a bomb. This week Iran did this Disney production about how they had refined Uranium. They completely alienated everyone in Europe, China and Russia. Aid, trade deals, all that stuff is going to go off the table for a while. Iran is going to have to pay more for everything so they're going to have to pump more oil.
Elizabeth MacDonald: Those lying, thieving, murderous mullahs that are running that death cult have got to go! But we're ignoring OPEC. OPEC has an invested interest in keeping oil prices high. Look at what is going on with Chavez in Venezuela. He wants to keep prices high so he can keep his oppressive regime in place as well.
Jim Michaels: They are a dictatorship and they can spend the money as they want it. They don't need to pump more oil, they probably can't pump more oil.
Elizabeth MacDonald: If the Iranians look out their back door and see the mullahs living in splendor while they live in squalor, the change may come from within.
Victoria Barret: This is no real democracy but it's not North Korea either. These people have tasted the democracy, they know what it is to vote. Granted their votes may have not yielded the leadership that they wanted. But we need to communicate to them that it's ok if you want to build up a nuclear arsenal, but it's going to cost you. We need to endear ourselves to these people.
Steve Forbes: The key reason that the mullahs are building the arsenal is to do the jihad overseas. They do mean what they say about 'wiping Israel off the map'. They're also doing it for the impression at home. They figure if they get the bomb they can do the Tieneman Square in Iran on a day-to-day basis just like Saddam did in Iraq.
In Focus: Time to Scrap Our In$ane Tax System?
Steve Forbes: We can get rid of our crazy 9 million-word tax code if we all take action. Politicians want you to think that there's nothing you can do about it. So write your Congressman and write letters to the editors. We can't take this anymore. We wake up in the morning and we're taxed. Turn on the telephone and the lights and we're taxed. It's time to scrap our current system and replace it with a flat tax.
Jim Michaels: People don't understand how inefficient this is. It takes $250 billion to collect taxes each year. That's an inefficient tax. It's too complicated and convoluted. If we got a simple tax system, that money would go a long way somewhere else.
Rich Karlgaard, publisher: Getting rid of our tax system would make things more efficient but it would also be more moral. The current tax code creates all of this incentive for political manipulation. If you like lobbyists, you'll like this tax code. It's doing horrible things to us, it's wrecking our democracy.
Mike Ozanian, senior editor: The flat tax is a good idea depending on what Steve's rate is. The main problem is the Federal Government is too big. They spend $2.5 trillion a year. The Federal government isn't supposed to clothe us and feed us and pay for our healthcare. It's spending over $8,000 per person. We have to starve that animal. That will get tax rates in line.
Elizabeth MacDonald: The tax code we have now is a congressional pork wagon that's running over taxpayers. The system is so complicated that even H&R block got its own taxes wrong last year. Congress had their own special IRS office to help them with their own taxes because they could not figure out what they wrote into the code. Even Einstein found the code too confusing.
Quentin Hardy: The problem isn't the IRS, it's Congress. The thing lobbyists love is a complicated tax code. And the Congress loves it the way it is. That's a big reason former House Majority Leader Tom Delay is in trouble.
Elizabeth MacDonald: This is a bipartisan issue. Democrats are also to blame because they ran Congress into the ground when it comes to the tax system in the 1980s. The big problem we have with illegal aliens can also be tied to the complexity in the tax code. Companies are hiring them to get a gimmick because they are being over taxed and over regulated.
Steve Forbes: Half of the lobbying in Washington revolves around the tax code. This year we're spending six billion hours filling out tax forms and for what? The rate I would set the flat tax at would be 17 percent after generous exemptions. A family of four would pay no federal income tax on their first $46,000. Mortgage deductions etc. all go because you don't need it. Go to www.chooseflattax.com and do your own calculating.
Mike Ozanian: The average person in this country has to work from January 1st to April 26th for free. All that money goes to the government.
Rich Karlgaard: Just remember that the graduated income tax has its roots in Marx and the flat tax has its roots in the bible. It's a profoundly more moral way to go about this. Eventually moral arguments get through.
Elizabeth MacDonald: I remember testifying before Congress about IRS reform but a Congressman said that the flat tax would never happen. There are too many vested interests in this whole body of Congress to have a flat tax. I found that appalling.
Steve Forbes: That's why we the people have to do it, Congress will never do it on their own.
Informer: Stocks About to Pop From Good Earnings Report
Mike Ozanian: I like Newmont Mining (NEM), they're the largest gold producer in North America. It's expected to report earnings of $0.33 a share on April 20th. I think it's going to be over $0.35 a share because of the way gold has been rising.
Victoria Barret: This company will probably get a pop next week but in the long run I think that gold is maxed out. A lot of people are looking at where the demand is coming from and what often doesn't get mentioned is that most of the demand comes from India for jewelry. Once the price hits a certain point the demand drops.
Mike Ozanian: Traditionally, gold to oil is at a 15:1 ratio. Right now it's 9:1. That means gold is going up further.
Victoria Barret: I like Nokia (NOK). They are the largest guys in the cell phone industry. It looks like they're going to get a pop when they report April 20th because their average price on cell phones is likely to go up because they're selling more expensive phones.
Mike Ozanian: I think I could make a phone in my garage if I really wanted to. It's a commodity business. I think the prices are actually going to go down.
Victoria Barret: It's near it's high and it's expensive, but that leadership position in the market will serve them well.
Rich Karlgaard: The global economy is growing and technology is back and the perfect play is Flextronics (FLEX), the company that does contract assembly of electronics parts. It reports April 27th. This company will report well because it's been underestimated and is still carrying the burden of the technology turndown.
Elizabeth MacDonald: This company has a lot of quality of earnings problems. They do things like give themselves insider loans and stock options. They're guilty of serial write-offs. They can't get a hold of their restructuring.
Rich Karlgaard: It's a stock that is predictable and cyclical and it's at the bottom of that cycle right now.
Elizabeth MacDonald: I like Tesoro (TSO), it's one of the best refineries in the world. It said it will miss its previous earnings target this time around. But after it reports on May 4th the stock will go up because refining capacity is so tight.
Rich Karlgaard: I think the expectations are already built into the run-up in the past two months.
Elizabeth MacDonald: Venezuela and Iran have problems getting refineries to refine their oil. There are not that many refineries out there. I think this is a pretty solid stock.
Makers & Breakers
• Evergreen Solar (ESLR)
Sara Nunnally, editor of Material Profits: MAKER
I love the solar industry right now. The great thing about this company is in the past five months it won four major contracts for over $380 million. I think this stock can just about double your money, I see it going up to $26 in one year. (Thursday's close: $14.04)
Elizabeth MacDonald: BREAKER
I was concerned when its sole silicon supplier bailed. That sent the stock down a bit. I think they need to diversify where they get their silicon from.
Rich Karlgaard: MAKER
There is going to be a day when silicon technology is going to transform solar and make it efficient. I think that day has arrived.
• Frontier Oil (FTO)
Sara Nunnally: MAKER
With $3 gas in the making you have to have a refinery in your portfolio before summer. It's heavily leveraged towards sour crude, which is tougher to refine, and that is really going to increase their profit margin. I think it will go to $84 in one year. (Thursday's close $57.31)
Rich Karlgaard: MAKER
I'm a reluctant maker. For the last year I've been predicting oil and gas prices are going to come down. I have to say I was wrong and I'm a maker on this stock because of it.
Elizabeth MacDonald: MAKER
I think geopolitical events and also the weather are going to keep oil prices pretty high.
David Asman, host: There have been a couple of downgrades of this stock. It's at an all-time high. Hasn't it reached it's height?
Sara Nunnally: I don't think so. Those same people that downgraded Frontier Oil also increased the earnings per share for next quarter. I think that shows a lot of faith.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cashin' In
Our "Cashin' In" crew this week: Wayne Rogers, Wayne Rogers and Company; Jonathan Hoenig, Capitalistpig Asset Management; Dagen McDowell, FOX Business News; Jonas Max Ferris, MAXfunds.com; Charles Payne, Wall Street Strategies, and Rebecca Gomez, FOX Business News.
Stock Smarts: Kill Ga$ Taxes?
There's pain at the pump, with gasoline prices starting to shoot up toward $3 a gallon again; some predicting even $4 sometime this summer.
Would scrapping all taxes on gasoline ease the pain?
Jonathan Hoenig, Capitalispig Asset Management: Well, it would bring gas prices down immediately. Supply and demand always fluctuates. If you want to talk about extortion and price gouging, the average American pays 46 cents per gallon of tax at the pump. In New York, you're paying 62 cents. If you want to lower prices at the pump, start by cutting taxes. Then we'll get the regulation. But tax is the best place to start, giving the average consumer real relief at the pump.
Dagen McDowell, FOX Business News: Jonathan, the only way you're going to cut demand in this country in the long run is with consistently high gas prices. If gas gets to $3 a gallon, let's keep it there. The government should hike taxes and keep it there. It's the only way to cut consumption.
Jonathan Hoenig: All you're going to do is make it more difficult for the person who is just getting by. You live in New York. Do you even drive?
Dagen McDowell: Short-term pain and long-term gain for this country. It weans us off oil from crazy countries.
Terry Keenan: Are you calling for price fixing?
Dagen McDowell: Yes. Jonathan, you always say this, but the government does try and change our behavior with the mortgage deduction. They should with gasoline.
Jonathan Hoenig: People like you enable them to do it.
Terry Keenan: Jonathan makes the point that in New York they have some of the highest taxes. And in California they have some of the highest taxes. That's where people drive the most. It doesn't seem to be affecting behavior much.
Charles Payne, Wall Street Strategies: It's not going to affect that. The only time we will stop using gas is when we run out of it. That's the bottom line. We're not worried about that. The reality is that Jonathan is sort of right. It's also like "V for Vendetta." We can't scrap the taxes on it. I'm sorry. We're lucky that they are where they are compared to the rest of the world. Every industrialized nation pays a lot more in taxes than we do. The fact of the matter is they will probably go up. This is why: gas is viewed almost like a sin tax. Using gas has become such a negative, bad thing. The world is so green if you use gas it's like smoking cigarettes and drinking alcohol.
Terry Keenan: I have seen a lot of Escalades around lately.
Charles Payne: There is a serious backlash against using a lot of gasoline. Now the government is in a position to pass further tax increases.
Terry Keenan: Wayne, should we scrap the gas tax?
Wayne Rogers, Wayne Rogers & Company: Most of that tax goes for improving the highways and everything else. You have to pay for it somewhere. If you scrap the gasoline tax, they will tax you someplace else. Every gas station has a sign out there that advertises the price of the gas on a per-gallon basis. If you separated the actual cost of the gas from the actual cost of the taxes, you would have a lot more public display of outrage about the tax part of it, but they don't do that. If you do that, that would make a big difference.
Terry Keenan: Do you think we should do that?
Wayne Rogers: Yeah, why not explain it to the public? It's crazy. Absolutely, explain it.
Terry Keenan: So that would get them off the oil companies' backs?
Wayne Rogers: That would help.
Rebecca Gomez, FOX Business News: That definitely would help because people see why we get some of the price increases we see, especially around the summertime. Look, why do we get the higher gas prices in the summertime? It's because there is more demand. They know they can raise the prices and people are still driving. Dagen, you were out at the auto show this week. You saw they are still making these big cars. People still have to drive. I'm from California. You don't have a lot of options. You have to get to work, you have to go to the grocery store, and you have to get in your car.
Jonas Max Ferris, MAXfunds.com: Along with putting the tax on the pump, why don't they put the departing chairman of Exxon's (XOM) departing pay package of almost $500 million next to the 30-cent tax? We'll see if the consumers get more outraged. If you, tomorrow, passed a federal law that all state taxes would be removed tomorrow, the price of a barrel of oil would jump $20. You know it would. Why would it jump? Because every trader would know, ‘Wow, consumption is going to go up. Airline tickets will go up; UPS shipping will go up, everything else.'
Jonathan Hoenig: I'm so glad you're not running the country, Jonas. I know you went to business school, but you don't know the first thing about economics. There are companies out there working on fuel alternatives. Look at Pacific Ethanol (PEIX).
Jonas Max Ferris: No. To your point, ethanol prices have jumped 50 cents in the last few weeks with no tax, because demand is there.
Jonathan Hoenig: Let them tax Twinkies, because we have enough fat people in this country. And let's tax smoking. The government's job is not to model my behavior, or live my life for me.
Terry Keenan: But Jonathan, to Wayne's point, our infrastructure is falling apart. These gasoline taxes support a lot of our highways. You're going to be taxed on your income. Do you want to be taxed on your income more than you already pay? Where's the money going to come from, Jonathan?
Jonathan Hoenig: How much of that 46 cents a gallon, Terry, do we actually think goes to paving the roads? I'll bet you it's less than 5.
Wayne Rogers: Jonathan, how much of your income tax goes to where it's supposed to go; 90 percent gets drained off by morons in Washington. 10 percent gets back to doing what it's supposed to be doing. If you're going to argue that point, you're going to have to argue about all taxes.
Jonathan Hoenig: I'm worried about the morons in Washington, too. That's why I don't want to send them any more of my money.
Rebecca Gomez: Everybody is with you there, Jonathan, as far as getting rid of these taxes. This is a very good point. If you look at the breakdown of where these taxes are going, they are supposed to be going for environmental protection, for possibly even the highways and so forth. But a lot of these counties, state cities are using these moneys to pay for their school budget deficit. They are not using the money where it's supposed to be going. Why don't you let us keep it and use it so we can spend it instead of Washington?
Dagen McDowell: If you set gas prices at $3 a gallon, if gas is below that amount, you just take the excess and cut taxes on Social Security and income. That's what you can do with the money, but still cut consumption. We are punishing those regimes that we fear.
Jonathan Hoenig: No you're not. You're punishing the guy who wants to take his family on a road trip up to Wisconsin for the summer.
Dagen McDowell: It is a worthwhile sacrifice for this country to wean us off the oil.
Jonathan Hoenig: I'm glad you make that decision on behalf of 300 million people.
Rebecca Gomez: I really don't think that will happen, Dagen. Some people will go to a smaller, more fuel-efficient car. Some people in this country don't have options. You lived in California; there are no options.
Dagen McDowell: We would force Americans to drive more fuel-efficient cars.
Terry Keenan: Not at $3 a gallon... At $6 maybe.
Dagen McDowell: People's behavior when it topped $3 last summer and buddy, people were out buying those hybrids.
Charles Payne: They were buying them for a little bit. Now they are figuring out the hybrids are a bad deal anyway. You start crunching the numbers - you're losing money. We're not going to wean off of gasoline until it's completely gone and we have a cheaper alternative. We talk about alternative fuel and alternative sources, but the reality is, ‘is ethanol is going to be cheaper, is fuel cell going to be cheaper? Solar?' They are not going to be cheaper.
Rebecca Gomez: Are the cars going to be cheaper as well?
Charles Payne: Here's the bottom line. I think gas can go up to $4 sometime this year. I think the majority of people will take it and go with it because the overall economy will be better and the pinch in the wallet will be that much lower. It will mitigate it. They will be complaining but they'll be driving out to Wal-Mart (WMT) and the family picnic.
Rebecca Gomez: You will be complaining about it as you're driving in your car.
Money Mail
Question: "How do we end up paying for social services for illegal immigrants? How can they get all the benefits?"
Dagen McDowell, FOX Business News: It adds up to billions of dollars a year. Illegals do pay some taxes, but that's payroll into Social Security and Medicare. But a lot of these social services that they get from the government are through their kids, like free school, and then you get free emergency room care at the state level.
Terry Keenan: Some of those kids are citizens, though.
Dagen McDowell: Right. That is where the net drain is. There is some research that says if you made illegals legal in this country; they would actually be a bigger net drain on the government. It's a lose-lose either way.
Jonathan Hoenig, Capitalistpig Asset Management: That research is whacked. You make illegals legal and they will be more of a benefit to this country than they already are. The problem isn't the illegals. The problem is the social service programs. If I'm a taxpayer, what's the difference if some of my money goes to an illegal or one of the special interest groups?
Terry Keenan: Because you don't think you will get it in the end anyway, right Jonathan?
Jonathan Hoenig: All this is, is the promise to tax a future generation backed by the barrel of a gun.
Dagen McDowell: Illegals are actually helping the Social Security system, because they are paying in and they will never collect on it. It's billions of dollars every year.
Wayne Rogers, Wayne Rogers & Company: I think Jonathan is right. We come down to the same thing again. It's our representatives in Washington. If we're going to sit around and tolerate it and not change the law accordingly, we get exactly what we deserve.
Jonathan Hoenig: But Wayne, you wouldn't say, ‘let's abolish the public schools,' which I certainly would.
Wayne Rogers: I'm not saying that at all.
Jonathan Hoenig: Then you're going to have a freebie, you will have people knocking on the door saying, ‘where is my freebie?'
Wayne Rogers: I understand that. It has to be controlled. That's all. The law has to state it exactly like it should be. It's a wonderful thing about this country. We're a republic; we can go out and vote those people out.
Question: "What does the Wal-Mart (WMT) move into the banking business mean for its stock?"
Wayne Rogers: I have no idea what it's going to do to the stock, by the way. I'm not a fan of the stock, as you well know. It's been flat for the last three or four years. I don't think they are going into the banking business per se. If they go into the banking business, I would be absolutely against it. Listen, when congress decided, once again, idiotically, to get rid of Glass-Steagall which came out of the Depression and the hearings, once you let the bankers get out of the business or every other business get into the banking business, which has its own special laws. And they are privileged. What business guarantees that $100,000 worth of savings is going to be financed by the FDIC? All of those kinds of things that go to the banking act and the way the banking legislation is written should not be privileged in the sense that it's going to help or hurt Wal-Mart.
Jonathan Hoenig: Government regulation makes it privileged. These representatives, these politicians who want to keep Wal-Mart out of the banks, this is criminal.
Terry Keenan: Do you want a Wal-Mart bank on every corner and the community banks out of business?
Jonathan Hoenig: Absolutely. They will have the highest rates and borrow at the lowest costs. It will improve the entire economy of the country just like Wal-Mart has.
Dagen McDowell: Wal-Mart says it doesn't want to get into retail banking. Bring it on. Aren't you sick of paying all those ATM fees? Those big banks are gouging. Bring Wal-Mart in.
Jonathan Hoenig: I agree. We see the big trend of the Internet banks taking on your small town community bank. If I can do an Internet bank and get 5 percent on my checking account, why do I want to give it to the guy down the street at 3.5 percent? It's what a competitive market is all about.
Wayne Rogers: First of all, the law is not talking about Wal-Mart going into the banking business. If it's an application under the industrial loan act, that's another thing. Target (TGT) is already in that. That's fine if it's limited to that. If you have Wal-Mart in the banking business and on every corner, Jonathan, you're a total idiot. I really thought you were a smart guy. To say that is idiotic. If you don't know what happened in the 1920's that led up to the passage of the Glass-Steagall Act and you're not familiar with that, go back and get an education my friend because you're wrong. You couldn't be more wrong.
Best Bets: Easter Stock Hunt
Wayne, Jonathan, and Charles are all back with their Easter parade of stock picks.
Wayne's Easter Pick: C.H. Robinson (CHRW)
Friday's Close: $51.43
52-wk High: $53.13
52-wk Low: $23.60
Wayne Rogers, Wayne Rogers & Company: I like C.H. Robinson -- they are a company that manages logistical solutions. The company has been in a strong uptrend. Profits are up 30 percent over the last year. I have owned this stock for some time. I still think it's got a good ride left in it.
Terry Keenan: It's your play on transportation. You like a lot of these stocks.
Jonathan Hoenig, Capitalistpig Asset Management: Wayne, you have ridden these transportation stocks so well. Don't you even get a little queasy when the stock goes parabolic? How much gravy is left here?
Wayne Rogers: I don't know, Jonathan, but if there's 10 percent, that's good enough for me. Not many people are doing that every year. I'm happy with that.
Terry Keenan: I think you've said that about a couple of his other bets, Jonathan.
Jonathan Hoenig: And been wrong on the sector, Terry.
Charles Payne, Wall Street Strategies: To Jonathan's point, I think he should use a really tight stop. We've had a buy on this stock for a little over a year too.
Charles' Easter Pick: Covad Communications (DVW)
Friday's Close: $2.38
52-wk High: $2.45
52-wk Low: $0.65
Charles Payne: I like Covad. This used to be a dinosaur egg, and then it shrunk down to a quail egg. I think it will go back to an ostrich egg. DSL…Voiceover Internet protocol… The company is really coming back very strong. It's a low-price stock. I recommended it in the last month to our clients. My target was $3, but I'm raising it to $5. I think this stock really is going to do extremely well.
Jonathan Hoenig: People love these little lottery ticket stocks, $2 stocks. I think low-priced stocks are generally low-priced for a reason. This is one of these scandal-ridden names that if they get a bid, it could be a $5 stock. It's not on my list right now.
Jonathan's Easter Pick: BE Aerospace (BEAV)
Friday's Close: $25.57
52-wk High: $25.99
52-wk Low: $10.15
Jonathan Hoenig: I'm piggybacking off the transportation idea with BE Aerospace. They make cabin interiors for commercial airlines and other business jets. Boeing (BA) has done so well and Northrop Grumman (NOC), all the aviation and even airlines have done so well. This is another one of those names that had a big move, but if the trend in transportation stocks continues, this is going to be a big beneficiary.
Charles Payne: I kind of worry with this stock, the insider selling. They are starting to bail out of this stock with parachutes on. It's one of these stocks with a great chart, the fundamental story behind it makes a lot of sense, but it's come a long way. I would be cautious with it as a new buy.
Jonathan Hoenig: When you want to upgrade your Gulf Stream, Charles, call them.
Terry Keenan: Wayne has a brand-new one. What do you think of this stock?
Wayne Rogers: I like it. I think Jonathan has a terrific pick there. And Charles' stock, too, if you want to shoot crap, that's a good crapshoot, too. He has the right play in that industry. But I like Jonathan's stock very much. I almost bought this stock myself about three months ago. It's a terrific stock.
Mutual Fund Face-Off: Fund Boo$ters
Looking to jump into a higher tax bracket? We have the funds that might get you there.
Jonas' Fund: Fidelity Convertible (FCVSX)
Min. Investment: $2,500
EXPENSES: $70 for every $1,000 invested
Jonas Max Ferris, MAXfunds.com: Convertible bonds do sort of well when the stock market is high because you have a lot of the upside in stocks, but a little less downside, which is what I like about it because we have had a little run-up in stocks lately. This was an area that got a little overbought by hedge funds, they're kind of out of this arbitrage area, but I think you can make about 10 percent.
Dagen McDowell: This fund is such a snore. Nobody ever got rich with bonds, not even convertible ones.
Jonas Max Ferris: Tell it to Bill Gross.
Terry Keenan: Jonathan is number two in the contest right now.
Dagen McDowell: For now. This fund also changes managers as often as I change my mind.
Jonas Max Ferris: Thanks for bringing it up. The new manager is really aggressive. He's going to be going into what are basically junk bonds convertibles, which should add a bit of extra color and risk for people who think it's so lame.
Dagen's Fund: Legg Mason Opportunity (LMOPX)
Min. Investment: $1,000
EXPENSES: $208 for every $1,000 invested
Dagen McDowell: You have to take a risk if you want big rewards. Bill Miller runs the Legg Mason Fund I picked for the Challenge. This is the Legg Mason Opportunity Fund. This is like giving Bill your money to take to Las Vegas. He runs the fund. It shorts some stocks. It also has a small percentage in hedge funds.
Jonas Max Ferris: I will highlight the ‘give your money to Bill Miller.' It's really "Arm and A Legg Mason." This fund is almost 2 percent a year. And for a $4 or $5 billion asset base, this is a huge profit margin. This isn't one of my favorite funds by them, but that fee will be hard to beat.
Dagen McDowell: Just like good shoes, if you want a good manager, sometimes you have to pay the price.
Jonas Max Ferris: I would buy Legg Mason (LM) stock because they're the ones raking in all the money off these huge funds.
Dagen McDowell: Bill Miller's performance record is phenomenal.
Jonas Max Ferris: I agree. Great manager. I think you can buy one of the cheaper classes of this fund, maybe. But 2 percent a year?
Terry Keenan: And this fund has Amazon.com (AMZN) and some of his traditional favorite picks from his other funds. Why buy this one?
Dagen McDowell: He can move around a lot more. He can short and use other investments.
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