Stock Smarts: Next $top Iran?
Iran is building nuclear bombs and harboring Al Qaeda – and the White House wants it to end. That’s the word from Washington. But even as the talk got tougher against Iran, the market moved higher last week. Will the rally continue if talk turns into action?
Wayne Rogers of Wayne Rogers & Co. says he thinks anything could happen in Iran with the fundamentalist regime that runs it, but he doesn’t see that affecting the market unless violence occurs here. He points out that we haven’t found Usama bin Laden or Saddam Hussein, or weapons of mass destruction in Iraq, and the market hasn’t been negatively affected.
Jonathan Hoenig of Capitalistpig Asset Management says he’s watching the market, and despite the Iran situation, a lot of things are working. He says if you are fast enough to react and trade you can make money in the hot spots. He mentions telecom, pipeline companies, some of the royalty trusts, even bonds.
Dagen McDowell of FOX Business says she thinks the market’s recent run-up shows that a lot of investors have become desensitized to global tensions and isolated terrorist attacks. And she says that investors know that going into an election year peace is on the agenda, not war.
Adam Lashinsky of Fortune magazine says this Iran tension is not a dominant theme in the stock market right now. Investors are still reacting positively to the end of the war in Iraq, and there isn’t any true feeling out there that the problems with Iran will result in war.
Hilary Kramer of A&G Capital says Wall Street is more focused on the war on the sluggish economy here rather than on the possibility of another war over there.
Be$t Bet: Rebound Stocks
They are among the worst performing stocks this year – but does that actually make them good buys right now?
AT&T (T)
Year-to-date: DOWN 25.4 percent
Friday's close (5-30-03): $19.49
Hilary says “Ma Bell” is poised to become the “big mamma” in this industry because size matters and AT&T has it. She says the company took $52 billion in debt and whittled it down to $12 billion and it is now pulling $37billion in revenue and getting into new areas that will help it profit. She says she thinks AT&T will start to move higher soon. Adam agrees with Hilary. He says AT&T is one of two remaining big long-distance telephone companies and when it’s cheap, like it is now, you can buy it. Jonathan says he’d rather own the debt than the equity in this company. Wayne agrees with Jonathan. He doesn’t see the stock going anywhere in the next year. He says the only reason he could see to buy this stock is if were a potential buy out.
Lockheed Martin (LMT)
Year-to-date: DOWN 19.2 percent
Friday's close (5-30-03): $46.42
Wayne is not wildly bullish on LMT, but he thinks the stock may still have some upside. Adam sees no reason to get into the defense sector right now. Hilary loves the stock. She says LMT is positioned to go higher.
Microsoft (MSFT)
Year-to-Date: DOWN 4.5 percent
Friday's close (5-30-03): $24.61
Adam says Microsoft is a buy right now. He says one reason the stock is a relative dog is that it didn’t fall as hard as other tech stocks. He says there’s nothing wrong with MSFT’s business. The company is in its fiscal fourth quarter -- traditionally its best -- and he says its server product is doing extremely well. Hilary is also bullish on the stock. She says the company has a great cash position. Jonathan says Microsoft is continuing its slow transition from a growth to a value stock. He thinks SAP (SAP) is a better buy. Wayne says he likes the company, but it’s too big and he wouldn’t buy the stock right now.
Mutual Fund Face-Off: Rebound Funds
They’ve had a rotten year so far, but Dagen and Jonas say the time has come for these mutual funds to take off.
Dagen – Oakmark International Fund (OAKIX)
Year-to-date performance (as of 5-30-03): UP 8.0 percent
Minimum investment: $1,000
Expenses: $13.10 for every $1,000 invested
Jonas – Vanguard Pacific Stock Index Fund
Year-to-date performance (as of 5-30-03): Unchanged
Minimum investment: $3,000
Expenses: $3.70 for every $1,000 invested
Money Mail
Wayne, Jonathan and Jonas answered some of your questions.
Question: “I have $1,200 to invest in tech stocks. Should I split it between Lucent (LU), Nortel (NT) and Sun (SUNW), or bet it all on the QQQs?”
Jonas says buy the fund and save on brokers’ fees. Jonathan says he’d put it all into Nortel right now because it’s the strongest of the three stocks mentioned.
Question: “My wife and I have some money to invest. Should we add to our stock mutual fund or buy a ski condo in Colorado?”
Wayne says if you love to ski, buy the condo since that adds a different kind of value to your life. He says it’s also a good time to buy another home since the borrowing costs are so low. Jonas says it’s those low borrowing rates that are pumping up prices in real estate, and he thinks it’s a dangerous time to buy real estate right now.
Question: “I own some shares in Disney (DIS). What do you think of it as a long-term investment?”
Jonathan thinks Liberty Media (L) is a stronger name in the media group right now, but he says if he were to buy any Disney it would be the Disney Preferred stock (DCQ) which he owns. Wayne doesn’t see massive growth in Disney. Like Jonathan, he says, if you own it, put a stop loss on it and let the market take you out.
Question: ”With Circuit City (CC) seemingly in disarray, do you think Best Buy (BBY) truly is the best buy?”
Jonas doesn’t like the consumer electronics group right now. He doesn’t like either stock. Jonathan says this is a really weak group and he’s not buying. Wayne agrees. He says it’s a commodity business that is under pressure, and he’s not interested in the stocks at all.
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