Brenda Buttner was off last week. Terry Keenan guest hosted and was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, CEO of ChangeWave Capital Partners; Scott Bleier, Fox Business News contributor; and Gregg Hymowitz, founder of EnTrust Capital.
Trading Pit
The Nasdaq is down 12% since the beginning of the year. We keep hearing it's got to get better for tech, but every time tech takes a step forward, it seems to take two steps back.
Last month on the show, Scott said that the Nasdaq was headed for 2,400. But a few weeks later, he shifted gears and said the Nasdaq would fall to 1,500. He said he changed his outlook because the market conditions changed. He stressed it is very important to remember this and that investors must also adapt to changing market conditions.
Gregg doesn't care on what exchange stocks are listed. He thinks that the individual investor must be very company specific.
Tobin said there is a big problem with tech stocks. For the first time, there is now real legislation about changing how people account for stock options. Most tech companies have huge stock option expenses, and if those expenses are taken out of their earnings, the companies would have no earnings.
Gary B. charted the Nasdaq 100 (QQQ), and determined that he would avoid tech until its current downward trendline is broken.
Pat said investors can buy tech companies, but he advised to buy companies with proven track records.
Stock X-Change
Gregg, Tobin, and Scott all stayed put and each picked his favorite tech stock.
Gregg started things off and selected Dell (DELL). He said he's not crazy about tech right now, but if he had to buy one stock, he'd buy this company because it is the market leader. Scott said he'd wait until Dell got to $20 before buying it. Toby said he thinks it's fairly valued at $25.
Toby picked Barra (BARZ). This company makes software that allows banks and insurance companies to build models and manage their risk.
He selected Barra because it is now in a "sweet spot" from preventing problems like the recent bad risk exposure of J.P. Morgan. Scott likes the company and said it has performed very well. Gregg doesn't like that the company is not cheap.
Scott chose circuit maker, Genesis Microchip (GNSS) because it makes chips for products like flat screened televisions. Gregg said he read up on the company and could not even determine what it does, so he'd defer to Toby. Toby not only knows what Genesis does, but said it is one of his best performing stocks, and it is fairly valued right now.
Chartman
Gary B. and Pat came back for another round of technical analysis versus fundamentals. This time the duo duked it out over two companies Pat found with near perfect fundamentals.
First up, they reviewed freight-forwarding company, Expeditors (EXPD). Pat said the company has a great business model and has highly motivated executives and employees. As a matter of fact, the CEO of the company has not had a pay raise in 10 years because most of his pay comes from pretax profits. This wasn't enough to sell the Chartman though. Gary B. advised not to buy Expeditors until its price fell to the low $40's, or made a new high above $60.
Pat also picked lawncare specialist, Toro (TTC) as another stock with near perfect fundamentals. He really likes this company because it is the leader in its field and has made some smart cost-cutting moves. Pat thinks this stock could go up 40% in 2 years. But again, the Chartman wasn't totally sold. He said the stock is acting strong, but is very extended right now. He'd wait until the stock fell down to $50 before he bought it.
Predictions
Gary B: Home Depot (HD) leads Dow; up 40% this year
Pat: Home Depot has topped out for year
Tobin: Gets worse for JDS Uniphase (JDSU); down 20% in 2 months
Gregg: Media stocks win; Liberty Media (L) up 50%
Scott: Philly Defense Index (DFX) up 30% this year
This index's price can be found by going to Yahoo! Finance (http://finance.yahoo.com) & typing in the ticker ^DFX.)
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