Recap of August 23: What’s Hot?

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Stock Smarts: What’s Hot?

So what is hot in the summer of 2003? Whether it’s Arnold (search) in California or low-riding jeans in the streets of America, there is plenty of heat. But what about Wall Street – what’s hot there that can help to make you money?

Charles Payne of Wall Street Strategies says in addition to technology stocks, which have been hot all summer, cyclical stocks, semiconductor stocks, and small cap stocks are very hot right now. As for what’s going cold, he thinks housing’s going to cool off. Wayne, and Hilary agree.

Hilary Kramer of A&G Capital says that the fact that the cyclical stocks are rising is a sign that the market is ready to rally. And she says financials are going cold.

Jonas Max Ferris of says there’s too much heat in the market. He says some of the hottest sectors, like biotechnology, could get cold very quickly, and that makes him a little wary of what’s hot right now.

Wayne Rogers of Wayne Rogers & Co. says he agrees there are areas of the market that may have heated up too fast, but there are some specific stocks that are hot for a good reason. In the retail sector Nordstrom (JWN) heated up before reporting strong earnings, and in technology Intel (INTC) surprised to the upside as well.

Jonathan Hoenig of Capitalistpig Asset Management says he’s worried about some of the things he sees heating up like commodities, and he’s very cautious on the stock market right now as a result.

Be$t Bets: Stocks Ready To Catch Fire!

“Get ‘em while they’re hot” – not always the best advice when it comes to stocks. But so far in 2003, the hot stocks have been getting hotter.

Which stocks are doing that right now?

Wayne: AirTran Holdings ()
Friday's close (8-22-03): $13.36

Charles thinks the stock is expensive and offers very little reward potential for too much risk. Hilary thinks the margins are too thin and is concerned about owning a stock in the airline industry. Wayne owns AirTran shares.

Hilary: Eli Lilly (LLY)

Friday's close (8-22-03): $62.80
Jonathan says Eli Lilly is a great company but he doesn’t see a catalyst that will make the stock move much higher here, and he says some of the smaller biotech firms with more “enthusiastic” pipelines have performed better in this market. Hilary owns shares in LLY.

Jonathan: Citigroup Investments Corporate Loan (TLI)
Friday's close (8-22-03): $14.11

Charles says he thinks TLI is a relatively safe play, but he thinks the market is on the cusp of a major breakout in the fourth quarter and he says if you are holding too many “safe plays” you could be left behind. Wayne says TLI is a good long-term play. Jonathan owns shares in TLI.

Charles: Corning (GLW)
Friday's close (8-22-03): $8.21

Hilary says Corning’s LCD market will help sales. Jonathan says Corning’s got everything that seems to be working these days: low price, high volatility and it’s a former high flyer. He says the stock could trade higher. Charles’ children own shares in Corning and so do some of his clients.

Power Plan: Fast Stocks!

He’s an adrenaline junkie who likes to drive 200 miles and hour. But what kinds of stocks does NASCAR legend Richard Petty like? Jonas and Hilary came up with some fast stock picks for the King.

Hilary: Anheuser-Busch (BUD)

Hilary says like NASCAR, BUD is the kind of company that benefits from a strong economy and more discretionary cash in consumer’s pockets. Jonas says BUD’s business isn’t growing fast enough for him.

Jonas says: Mentor (MNT)
Friday's close (8-22-03): $21.14

Jonas says Mentor makes a lot of money on elective surgery and just like with NASCAR, the more discretionary money around the greater the interest and the better this company’s profits will be. Hilary says this is an incredible company in a growing industry.

Cashin In Challenge

To find out who is ahead, check out the Web site at:

Money Mail

Charles, Jonathan and Wayne answered some of your questions.

Question: “How high will PetroChina (PTR) go, and when is a good time to sell?”

Wayne says he has a stop in at $28.10 and if the stock falls that low he recommends you get out, otherwise stick with it.

Question: “Are Hilary’s ‘Challenge’ stocks too aggressive for my 2-year old daughter’s college fund?”

Jonathan says Hilary is doing great, and he takes his hat off to her. He says more than the stocks she’s betting on though, he likes the way she has allocated her money evenly across the board in her Challenge portfolio, and he believes that no matter what you invest in for your daughter’s college savings that kind of equally weighted diversification is a good idea. Charles says he thinks Hilary’s stocks make a fine college investment with one exception. He would not invest in Raytheon (RTN); he would choose General Dynamics (GD), or Northrop (NOC) instead.

Question: ”I will net $100,000 on the sale of my house after putting a down payment on a new one. Where should I put the money?”

Charles says he would keep $20,000 in cash, put $20,000 in a conservative stock that reflects the overall economy like maybe a Citigroup (C), put another $20,000 into a riskier stock like a Corning or JDS Uniphase (JDSU) or Extreme Networks (EXTR) and he’d split the rest between a domestic index fund, a foreign fund (particularly one that is invested in Asia or China) and a convertible bond fund. Wayne says put it all into another house.