Brenda Buttner 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 Dave Nelson, CEO of DC Nelson Asset Management.
Trading Pit
2002 is almost over and most investors will be glad to see this year in the rear view mirror.
All the major averages are down double digits again. But are there any good signals of a rally for 2003?
Dave is glad to see 2002 go, but is not sure if 2003 will be any better.
Gary B. believes we are in a huge bear market, and will continue to be in one next year. He even thinks that the market will be down 4 years in a row. The Dow has not done this since 1929-1932.
Pat says that while 2002 was bad, it did teach us some good lessons. Investors refocused on things that are truly important like good corporate governance, cash flow and to move away from quarterly earnings.
Tobin agrees with Gary B. that there is going to be more pain to come. Toby thinks the Dow will hit 8,000 by January 15. He says the problem is that investors are not buying stocks right now because they know stocks are going to get cheaper.
Scott believes investors are bearish because they are scared.
Stock X-Change
Before you return that ugly tie or flannel pajamas, there may be some stocks you own that you should get rid of first. Scott, Tobin and Dave returned with their suggestions.
Dave says that it's time to let go of Eastman Kodak (EK). The stock is one of the best performing Dow stocks, but he points out that film sales around the world are plummeting and that Kodak's own digital sales are cannibalizing its business. Tobin thinks investors could have made money shorting the stock from $60 to $30, but is not too sure the stock is a short now. Scott believes Kodak is a buy in the $32-34 range. (The stock closed on Friday at $35.64.)
Tobin says to give the boot to Cisco Systems (CSCO). He suggests that if you own it, sell half of what you own when the stock hits $15. Tobin doesn't think that Cisco is a bad company. The problem is that the stock is being priced as a growth company, which it is no longer. Scott feels that if you own the stock don’t sell, but recommends not to buy it either. Dave agreed with Toby that the stock is a market performer and is no longer a growth stock.
Scott recommends investors say goodbye to General Electric (GE). He feels that the company is good, but its stock is highly overpriced. Tobin does not like the stock and Dave admits that his firm does own GE, but keeps selling it.
Chartman
It's a Christmas clearance sale!
Gary B. and Pat each picked a stock so cheap, it's at a clearance price.
Gary B. likes Lowe's (LOW). While it has been a rough year for the stock, he feels that it is at the right price to buy. But he recommends selling the stock if it goes below $35. (Lowe’s closed on Friday at $36.80.) Pat does not like Lowe's. Even though it is a strong competitor for Home Depot (HD), it's just not profitable enough to beat them.
Pat says that McDonald's (MCD) is a bargain buy. He likes that Mickey-D's is a huge brand, with great locations and is expanding globally. He predicts that the stock could nearly double. But the Chartman does not think so. The charts tell him McDonald's broke its uptrend and is now in a freefall. He believes you’ll be able to buy it cheaper later.
Predictions
Dave: A biotech boom when science wins the "Clone Wars!"
Pat: Bed Bath & Beyond (BBBY) a screaming sell!
Scott: Broadcom (BRCM) runs up 50 percent in 2003!
Gary B: Golden time to buy AngloGold (AU)? At $34!
Tobin: Amerisource Bergen (ABC) up 25 percent by spring!
Get all the stories you need-to-know from the most powerful name in news delivered first thing every morning to your inbox