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; Pat Dorsey, Morningstar.com director of stock research, Bob Olstein, Olstein Funds president, and Gary Kaltbaum, Kaltbaum & Associates president.
Trading Pit
Through the roof! That's one way to describe the housing market of the last five years — and many believe it's been the foundation of our economy. But now there are more and more signals that the market is slowing down. So what happens to stocks and the economy if housing falls?
Gary Kaltbaum: This has a potential for big problems. Things have changed over the past few years. More people have tied their wealth to housing and are using their homes as ATMs. More people are much more leveraged than they used to be in the past. If things turn south, there will be direct effect on the economy, which will have a direct effect on the stock market. Both will head lower. The economy is consumer driven and if people feel poorer, they are going to spend less.
Gary B. Smith: People are more leveraged, but most people take out a mortgage and if the price of their home goes down, they don’t panic because most are not planning to sell it anyway. Yes, maybe your net worth goes down, but that has no effect on the market. If we’ve been in a housing boom for the past five years, and there’s a direct correlation, why haven’t stocks gone straight up? If home prices go down, there will be less speculation in the housing market, and more money will find its way into the stock market. I’d actually like to see the housing go flat for a little bit.
Pat Dorsey: The only people that will shift money from the housing market to the stock market are speculators, and speculators make up a very small percentage of investors. Consumer spending will slow. Right now I see a direct parallel to what happened a little while back in the United Kingdom. Housing prices over there peaked after a massive run-up and consumer spending has slowed markedly since then. A housing slowdown over here will hurt and will not help the economy.
Bob Olstein: Housing is causing the economy to slow down and will continue to do so. But corporate coffers are filled with cash and they will spend the cash to pick up the slack. Acquisitions will replace the fuel previously provided by housing. P/E ratios have declined and the slowdown in housing has already been discounted by the market. Stocks are better investments than real estate. Most people use real estate for their homes, and that’s it. It’s not going to change the stock market. There’s not going to be a real estate crash. There may be crashes in certain areas, but overall, real estate market will not crash.
Tobin Smith: I’m not worried. A crash in housing might happen if unemployment went sky high, but more and more people are working. Interest rates are historically low. And we’ve already had a crash in many sections of the country over the last 6 months. So it’s already happening and stocks have gone up! And if we were going to have a major crash, it would have already happened.
Scott Bleier: Housing has corrected in the last year and the stock market has gone higher. The economy continues to do well and more people continue to work. The correction in housing is overdue and is healthy for the industry and the overall economy. Plus, a slowdown will mean more people will be able to buy homes.
Lightning Round
Are the stocks in the news ready to make you money?
First up, Apple (AAPL). French lawmakers are trying to force Apple to open up its iTunes music service to competitors. (Apple closed on Friday at $59.96.)
Gary B. Smith: Bull. Steve Jobs hates the French. Enough said.
Scott: Bear. The iPod is a commodity product and the stock’s worth $40.
Tobin: Bull. We sold at $65 because we thought it would come down. But in the $50 to $55 range it looks good. The surprise is when their new Macintosh systems, new iPods, and new phones come out. The stock will pick up again.
Bob Olstein: Bull. It’s coming into interesting territory. People are missing the point, it’s not the iPod, it’s the Macintosh that’s going to be big.
Pat Dorsey: Bear. It’s come down, but not far enough. I need it to head to the high $40s for it to be interesting.
Next, Google (GOOG), which wants in the news business and just got into the S&P 500. (Google closed on Friday at $365.80.)
Tobin Smith: Bear. The question is what’s the business value when you take in all the competition. They never had competition before. When you start spreading out, Microsoft (MSFT) and Yahoo! (YHOO) are going to be tough competition. I think if the stock gets under $300 it will start to get interesting.
Pat Dorsey: Bear. This company is going to face a lot of competition coming forth, not just from Microsoft but other providers that want to get in the online market.
Scott Bleier: Bear. It’s still over-owned, and after this S&P halo comes off, the stock will fall to $300 or lower.
Gary B. Smith: Bear. Even with Friday’s big day, the mojo is gone from the stock. The uptrend line is broken. I’d be out of it right now.
Bob Olstein: Bear. Don’t even ask me!
Nike (NKE) is the world’s largest maker of athletic footwear and apparel just reported big profits under its new CEO. (Nike closed on Friday at $85.96.)
Bob Olstein: Bull. Excellent company, a little pricey here but I think it’s 10 percent undervalued.
Gary B. Smith: Bear. I didn’t like it a few weeks ago around the Olympics. And I don’t like it now. I think it’s stalled and is going nowhere.
Tobin Smith: Bull. I love it because Gary B. didn’t like it at the Olympics. They were going to lose market share in something they don’t have any market share in. LeBron James and their other athletes will keep going, and it’s probably worth $120.
Pat Dorsey: Bear. I don’t think it’s overvalued, but it needs to fall 15-20 percent to get interesting. Adidas and Reebok are going to be very tough competitors.
Scott Bleier: Bull. It’s been consolidating in the $80s for a year, and is ready to pop to above $100.
Finally, Sirius Satellite Radio (SIRI), the new home of shock jock Howard Stern, announced it now has more than 4 million subscribers. (Sirius closed on Friday at $5.03.)
Scott Bleier: Bear. This company’s not going to make money. Thirty-five bucks and accumulated loses. Nobody’s going to make money on this except Howard.
Pat: Bear. I wouldn’t touch it, but XM Satellite Radio (XMSR) is getting interesting.
Gary B. Smith: Bear. I think the stock goes up for Bob’s great-great grandkids. So maybe he should buy it for those kids.
Bob Olstein: Bear. You cannot be serious!
Tobin Smith: Bull. I am serious. We were the first independent research firm to have a buy on this stock. We have a buy because the company will start to make serious cash flow in 2009. Once you start using Sirius Satellite Radio, you love the service. And you’re going to see the portable part of this business become a big part of the service.
Chartman
Gary’s got 3 stocks he says are so good Bob's gotta put them in his fund! But will Bob love them?
Gary B. Smith: General Motors (GM). The stock bottomed in December to March, and then broke above a long downtrend. Right now is the perfect time to buy. (General Motors closed on Friday at $22.65.)
Bob: I think GM still has problems and we don’t buy stocks that have a potential for bankruptcy. If you’re going to buy anything in GM, you go to the debt.
Gary B. Smith: Sony (SNE). It started making a nice run in December and is now cooling. Buy this stock right away before it takes off again. (Sony closed on Friday at $45.56.)
Bob: Gary you’re picking good companies, but it’s 60 times earnings and we don’t buy companies—normally—at 60 times earnings.
Gary B. Smith: Altria Group (MO). The stock just pulled back to its multi-year uptrend and is ready to head higher. Buy it now! (Altria Group closed on Friday at $72.94.)
Bob: You’ve finally picked at undervalued stock. It’s 10 percent undervalued. But the problem with this stock is lawsuits, and I’m worried about Europeans wanting to get some of Altria’s cash.
Predictions
Tobin Smith's prediction: Nasdaq up 20 percent to 2750 by Thanksgiving
Pat Dorsey's prediction: Buy the Nasdaq stock (NDAQ)! Gains 50 percent in a year
Scott Bleier's prediction: Get in Intel (INTC); moves up 50 percent in 1 year
Bob Olstein's prediction: Del Monte (DLM) is a peach! Stock makes 40 percent gain
Gary B. Smith's prediction: Automakers rev up! Toyota (TM) up 20 percent in 2006
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cavuto on Business
Neil Cavuto was joined by Jim Rogers, “Hot Commodities” author; Herman Cain, radio talk show host; Danielle Hughes, CEO of Divine Capital Markets; Rebecca Gomez, FOX Business News correspondent; Jim Fisher, portfolio manager at Univest Corp., and Morris Reid, Democratic strategist.
Bottom Line
Neil Cavuto: A booming economy, soaring stock market and more than 95 percent of Americans gainfully employed. That's America right now. But you'd never know it from listening to liberals! Why all the gloom and doom from liberals?
Herman Cain: Neil, it’s real simple. The cut-and-run group who wanted to cut and run last December, has now become the bash-and-trash group. Every metric of the U.S. economy points to the fact that the economy is stable and growing. Liberals are desperate for a campaign message. They can no longer trash the economy because people are waking up to the fact that job growth is up.
Danielle Hughes: Look, liberals aren’t lying just because they’re not saying anything specific about the economy chugging along. The problem is people want eyeballs. We want shock value. That’s what sells and gets people excited. The market is doing well. Employment is doing well. That’s not a big story. So we’re looking at other issues like Iraq right now.
Rebecca Gomez: I don’t know why anyone is surprised. It’s their jobs to do this. One party bashes the other to get votes. It may not be big news to Dani, but for the people who have jobs and are buying homes, the economy is fantastic news to them.
Jim Rogers: The economy has been very strong, as anyone knows with half a brain. But most politicians don’t have half a brain as you very well know. The Democrats and the Republicans have both learned the economy gets more votes than anything else. Liberals were too early with their message, though. If they keep it up eventually they will be right — the economy is going to slow down later this year.
Jim Fisher: I agree with Herman. The media is supposed to be putting out the news, not wishful thinking. For the past year everything has been very positive and very solid and it has not translated into the media. It’s deceitful, and it’s nothing but spin.
Neil Cavuto: Morris, the economy and the type of growth we’re seeing is almost identical to the underpinnings we had in the ‘90’s when Clinton was in office. Back then it got a great deal of praise. Now nothing. Why is that?
Morris Reid: I think it’s two things. One is Bill Clinton was very focused on workers. If you look at what’s going on from a worker’s perspective, a lot of these people are losing jobs. I think it depends on your perspective. If you’re in management, it looks pretty good. If you’re a worker, it doesn’t look as stable.
Neil Cavuto: Herman, you can take that a variety of ways. How do you take it?
Herman Cain: You’re right. You can take that in a variety of ways. In the macro, if 4.8 percent of the people are unemployed, then that says that nearly anyone who wants to work can work. Yes, you may have a handful of people who may not like their job, but there is no excuse for someone who is not lazy, who wants a job, not to have a job.
Morris Reid: I don’t agree with that at all. Herman, that’s not true. The fact is the 30,000 people from Ford being laid off want a job. The 8,000 people at Kraft being laid off want a job. They’re not lazy.
Herman Cain: I didn’t say they were lazy.
Jim Rogers: There are plenty of jobs out there and they’re getting those jobs.
Herman Cain: This may come as a shock to some people, but you may have to pursue a different job or industry. You may have to go back to school.
Jim Fisher: The Clinton administration did not see unemployment levels at the levels we’re seeing it now. It’s the lowest it’s been in six or seven years.
Neil Cavuto: Well, a couple of years in the Clinton years it was a lower rate, but on average you are correct. The rate now is below the average during the Clinton years.
Jim Rogers: We also had a bubble. Do you want another bubble? The consequences of a bubble aren’t very nice.
Neil Cavuto: Would you say the economy is better or worse now than it was in the 90’s?
Jim Rogers: It’s better than it was in the 90’s, but it is going to get worse.
Danielle Hughes: It is better than it was in the 90’s because we have a heightened sense of what was and is reality.
Neil Cavuto: Wait, you are saying the economy is better now than it was when Bill Clinton was in office?
Danielle Hughes: It doesn’t matter who is in office. The fact is the economy is a function of not just the President. It really has to do with the American worker.
Rebecca Gomez: We also have to keep in mind that people are not getting their news from the traditional media. Look at how popular blogging is today.
Morris Reid: There’s a greater level of anxiety in this market and economy than there was during the Clinton administration. The fact is there’s more job outsourcing now. I don’t see how you all can sit around and say the American workers are having a good experience.
Neil Cavuto: Wait a minute. When this outsourcing thing was going on during the Clinton years I didn’t hear anyone, or you in particular, Morris, jawboning about the fears of the future then. All of a sudden, a Republican is in office, and now it’s fair game.
Morris Reid: The fact is people have anxiety about this economy. Whether it’s the Clinton administration or the Bush administration, there’s a greater fear. If you talk to the average American, they’re not looking forward to the future as they were in the Clinton administration.
Herman Cain: The few people who have the anxiety are listening to the Democrats in Congress. That’s what’s creating the anxiety.
Jim Rogers: Herman, there is the whole war out there; so there is some anxiety.
Herman Cain: But it’s not because of the economy, Jim.
Jim Rogers: That’s a good point.
Head to Head
Neil Cavuto: Gas prices headed higher all over again. But don't blame the oil companies. Who are the real gas gougers? It's our government! The same guys who accused big oil execs of price gouging are taking more than four times what oil companies make on every gallon of gas you buy — in federal and state taxes! Are gas taxes out of control? Jim Fisher?
Jim Fisher: Definitely. The Congressional committee that hauled these oil executives in made it a dog and pony show, and a bad one at that. Five states increased their gas tax after that. They do that behind the scenes. They would rather the American consumer think it’s big oil trying to rip off the consumers. And that’s just not true.
Rebecca Gomez: The other thing is these states and cities are smart. They’re saying that these gas taxes are going to clean up the environment, control pollution and enforce all these clean air laws. But when you look at the breakdown, a lot of that money goes to pay for transportation and highways. And some of it is even used to pay for budget deficits in the schools.
Jim Rogers: I’m against all taxes. I’d rather spend my money than let Bill Clinton or George Bush spend my money. But if we have to have taxes, we should have consumption taxes.
Danielle Hughes: That’s right. And we have to look at what exactly the government gets. The government is taxing oil companies on their income. They’re taxing investors on their dividends of that income that they get when they own stock in oil companies. They’re taxing consumers at the pump on the federal level, on the state level, on the sales tax level. And they’re giving $11 billion of incentives to big oil.
Neil Cavuto: So, are the oil companies villains?
Danielle Hughes: Not in my mind.
Jim Rogers: Neil, the oil companies didn’t raise the price of oil. The markets raised the price of oil.
Herman Cain: But the dirty little secret is that the forty cents we’re paying at the pump is almost $60 billion. Of that $60 billion is $6 billion in pork. So what they don’t want you to know is that the pork barrel spending is 10 percent of what we’re paying at the pump. So you could cut it 10 percent and never miss a beat, if you got rid of the pork barrel spending.
Neil Cavuto: But I guess it’s easier to vilify the oil companies, right?
Jim Fisher: They are a big target. And during the years when they weren’t making any money we didn’t hear anybody say: “Let’s help the oil companies.”
Neil Cavuto: Jim is right on this. This is a price determined in the markets. And convincing people of that is a moot point.
Danielle Hughes: That’s right. It’s so expensive to actually go out and drill for oil. And that’s why you saw so much consolidation in this industry.
Jim Rogers: Everybody complains when the house prices go up, but they don’t blame it on the homebuilders. It’s the market that drives up the prices of housing, just like the market drives the price of oil.
Neil Cavuto: Very good point.
Jim Fisher: It’s definitely the market. And let’s take a look at Europe. They pay a lot more for gas than we do. So I don’t complain about what we’re paying now.
Herman Cain: As I said, a lot of the taxes we are paying on gasoline are going to pork barrel spending. It’s easy to bash the oil companies, because that’s class warfare.
Jim Rogers: Herman, it’s not just the gas tax that’s going to pork barrel spending. Everything is going to pork barrel spending. Don’t blame it on oil taxes. Blame it on all the taxes and the politicians.
More for Your Money
Neil Cavuto: We all hope it's a safe hurricane season, but we know it'll likely be a busy hurricane season. Our gang has stocks they say could get a boost ahead of this hurricane season. Dani, to you first…
Danielle Hughes: One of our picks is Cheniere Energy (LNG). We do own this stock. They are owners and operators of liquid natural gas receiving plants in Louisiana and Texas, along the coast. The real play here is in the natural gas prices that rise when the flow is threatened by hurricanes. Last year, they moved from around $10 in August up to $15 in October, because of the natural gas prices rising. This stock will rise too. Cheniere Energy closed Friday at $39.47.
Jim Fisher: I like Dani’s sector pick, but I don’t like the company because it doesn’t really make money. Its cash flow is decreasing. Dani is right, though, that if there is a devastating hurricane again, natural gas prices will go up again. One of the companies we have that I think will benefit more than others is ConocoPhillips (COP). It’s one of the largest natural gas providers in North America with a geographic presence all over the world. ConocoPhillips closed Friday at $61.76
Jim Rogers: You’re not the first person to realize that oil prices have gone through the roof as well as natural gas prices. This is a little late to be buying these stocks. Especially given the fact that American hydrocarbon companies are losing reserves.
Jim Fisher: That’s why we like ConocoPhillips. It’s going to own 20 percent of LUKOIL in Russia. Russia has the largest natural gas reserves in the world.
Neil Cavuto: Herman, what do you like?
Herman Cain: There’s a whole lot of hauling going on. I picked AMERCO (UHAL), not only because of the devastation in the Gulf that can cause a lot of people to have to move, but last year nearly 15 percent of the population moved from one place to another. As long as the economy is strong, the employers are going to move their good employees to other locations. AMERCO closed Friday at $97.94.
Danielle Hughes: Herman, this stock has already made its move. This stock was $3 back in 2003.
FOX on the Spots
Rebecca Gomez: No bust for housing; home sales stay strong!
Jim Rogers: Iraq will ask U.S. to leave before '08, and we will
Herman Cain: President Bush finally uncaps his veto pen this year
Jim Fisher: Economy stays strong; Dems disappointed in Nov.
Danielle Hughes: Bet on Las Vegas Sands (LVS); stock up 30 percent in 1 year
NOTE: Dani’s firm owns shares in LVS.
Neil Cavuto: The market is poised to hit a record and no one will talk about it. Why cover good news, when bad will do.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Forbes on FOX
Flipside: The Iraq War Is Why Our Economy and Market Are so Strong!
Mike Ozanian, senior editor: By taking the fight to the enemy in Iraq and Afghanistan, we haven't been attacked again since 9/11. And if you look at the devastation we had in this economy after 9/11.
David Asman, host: You're talking about the $1 trillion loss in our economy after 9/11.
Mike Ozanian: That's right. And despite the huge positive impact the tax cuts have had, I believe the war on terror and keeping the enemy on the run in Iraq and Afghanistan is the number one reason our economy has been strong.
Lea Goldman, staff writer: I disagree. First of all, every dollar we spend on the war is a dollar diverted or dollar borrowed from somewhere else. We've taken our eyes of the real issues at home like soaring health care costs and our reliance on foreign oil. We've spend billions and billions overseas and we're not getting our best investment on our money.
John Rutledge, Forbes contributor: The money we're spending in Iraq is chump change. What matters is the security in the Gulf. The stock markets and land values in the Gulf region have tripled since this war began. That means investors are betting that our action in the region will lead to long-term stability.
Quentin Hardy, Silicon Valley bureau chief: I wish I would have a bought a condo in Dubai, because I don't feel good about this war back here at home. Remember, Al qaeda waited seven years between the 1991 attack and 9/11. So there is no guarantee that we won't be attacked again. And since the Iraq War began, terrorist attacks worldwide have tripled. Also, our war has helped push up oil prices and has cost us dearly in loss of lives and cost to rehabilitate thousands of wounded military personnel.
Rich Karlgaard, publisher: What gets economies to boom is when you get money flowing into investments. That's been happening in the United States and around the world for the past five years because people aren't afraid a terror strike isn't going to obliterate their investments. So, whether it's the war, the Homeland Security Department, the NSA, the wiretapping, this investment has been a good one for the economy.
Victoria Barret, associate editor: I think this is too early to tell if this has been a good investment on the economy. The spending we are doing in Iraq is directly impacting our economy. It shows up in GDP growth and it's spending we are not doing elsewhere like building better roads, schools or a better health care system. All of those things would be simulative.
Mike Ozanian: What good would better bridges and roads serve the nation if were under siege and under attack. That is the Bill Clinton philosophy: don't do anything when our ships are being attacked, when the World Trade Center was attacked the first time or when our embassies are attacked in Africa; and just hope it will all go away. Well it didn't go away and 9/11 was the tragedy that resulted from that philosophy.
Lea Goldman: Infrastructure does matter. And the next time there is an electrical blackout in New York City you'll have to remember that.
Mike Ozanian: We're currently spending 4 percent of our GDP on national defense. When Clinton was President we were spending 3 percent, so President Bush has not increase it that much. He is just taking the fight to the enemy which what you have to do.
Rich Karlgaard: This reminds me of the debate during the Cold War when Ronald Reagan took defense spending from 3 percent of GDP to 6 percent of GDP. Everyone in the early days of his administration warned that it would wreck our economy, but our economy boomed and our asset values doubled under Reagan. It was a great investment for humanity to end Soviet communism and it was a great investment for our economy.
In Focus: Home Prices: Heading Higher or Lower?
Rich Karlgaard: Home prices will be up around 5 percent one year from now because the economy is strong. The only part of the market that will go down is condos.
Quentin Hardy: I think prices are going down because interest rates are going up and the oversupply of housing on the market is at a 10-year high.
Mike Ozanian: Home values will go up about 5 percent. Unemployment is at 4.7 percent and incomes are rising. We've never had a big drop in home prices when the economy is as strong as it is right now.
Lea Goldman: I say down. It's all about interest rates. And we are expecting the Federal Reserve to hike rates at least two more times. Homes are sitting on the market longer. Property taxes are also rising.
John Rutledge: High-end home inventories are rising very fast and that over supply will suppress home sales. So prices will fall slightly over the next year. Stay in your house, but if you're going to invest new money buy stocks where profits are rising 10 percent a year or more.
Lea Goldman: I think people are already taking money out of real estate investments and putting it into stocks and that is exactly why home prices will go down.
Informer: All-Time High Stocks?
Victoria Barret: I think the Dow will hit an all-time high this year and the one stock that will help it do it is Intel (INTC). The chip maker is doing a better job of taking on its smaller rival AMD. And Intel is trading at the lowest-multiple in 10 years.
John Rutledge: I don't think Intel is the company it use to be when it was run by Andy Grove. I do agree that the Dow will pass its high this year, but American International Group (AIG), not Intel, will help do it. I own it and think it will keep heading higher.
David Asman: But what about the investigations by the SEC and the New York Attorney General's office?
John Rutledge: I big company takes a lot to kill. The scandal is not enough to kill the AIG franchise.
Mike Ozanian: I think Petrohawk Energy (HAWK) will hit a new high. The economy remains strong and that will keep demand high for oil and gas, which will help the stock.
Rich Karlgaard: I think this "Hawk" has flown too high. This is a bet that oil and gas prices are going to head higher. That is a bet, not an investment. I like Garmin (GRMN), which is a global satellite navigation company. I recommended it for Steve Forbes' stocking stuffer back in December at $66. It's now over $80 and I think it will keep going to $100 because satellite navigation will be in just about every electronic device.
Victoria Barret: I actually received the Garmin device as a stocking stuffer. I love it and I am dependent on it, but the device is very expensive and the stock has had a huge run up. So I question how much more it can go up in the short term.
Lea Goldman: I like American Science & Engineering (ASEI). It makes security x-ray equipment. I recommended it before and think it will keep heading to new highs.
Mike Ozanian: I think this stock has had its day. Its growth rate is starting to fall. I wouldn't buy it at this price.
Makers & Breakers
Baker Hughes (BHI)
Scott Kays, president of Kays Financial: Maker
Baker Hughes supplies the tools to the oil and gas drilling industry. Oil companies are going to be drilling all out even if prices fall to $50 a barrel, which I think they will. The drillers have to have the tools that BHI offers. I own the stock and think the stock could reach $90 by next year. (Friday's close: $66.84)
Rich Karlgaard: Breaker
I am a reluctant breaker because I like this venerable company that's been around for decades and was the source of Howard Hughes' wealth. But the stock has triple over three years and older companies just don't do this, which means the stock is overpriced.
Victoria Barret: Maker
I am an enthusiastic maker. This company is in the right place at the right time. And it is increasing prices and it has a great backlog.
• Jack Henry & Associates (JKHY)
Scott Kays: Maker
This is a data processing company for financial industries. The key here is reliable, rapid earnings growth. 60 percent of its revenues are recurring. No debt on the balance sheet. Lot of cash and growing 18 percent a year. I own the stock and think it can hit $30 in 12 months. (Friday's close: $22.82)
Victoria Barret: Breaker
The company is having a tough time finding new customers and the stock doesn't trade cheap enough for me to ignore that.
Rich Karlgaard: Breaker
Some believe the company is protected from its rivals, but any data driven business is vulnerable to disruption and competition from China and India.
Scott Kays: Jack Henry has such a wide range of products. There is great cross promoting possibilities to help revenues. Banks need its service to stay on the cutting edge of technology with things like ATMs and Internet banking. I think growth will be very strong.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cashin' In
Our “Cashin’ In” crew this week: Wayne Rogers, Wayne Rogers & Company; Jonathan Hoenig, Capitialistpig Asset Management; Jonas Max Ferris, MAXfunds.com; Dagen McDowell, FOX Business News; Mike Norman, BizRadio Network, and Charles Payne, Wall Street Strategies.
Stock Smarts: Stock Market Crash?
A super-charged bull run has brought stocks to their highest levels in nearly six years.
But should we be more concerned than ever about a stock market crash?
Mike Norman: As investors are giddily pushing stocks up to highs, things are not that rosy beneath the surface. The economy is weakening. The stock market is getting riskier. Consider this: the dividend yield o the S&P 500 is about 1.5 percent. You get 5 percent in cash. Not to mention the fact that we have such problems as Iran and Iraq, the president’s low approval ratings and (higher) energy prices.
Charles Payne: The economy is slowing, but that is what we want! The only thing the stock market is scared of is the economy getting too strong. And investors are not “giddy”. The market is not shooting straight up. It is moving up real nice and slow in an orderly fashion. Investors will get giddy when the Fed says, “we’re done” (raising interest rates). This is still not the kind of market where you can just throw darts, but there are a lot of opportunities out there.
Dagen McDowell: The Fed is getting ready to end the interest rate hikes, and maybe the U.S. economy is slowing a bit, but look at what is happening overseas. You have spending from consumers picking up in Europe and Asia — there’s a lot of good news out there.
Wayne Rogers: The economy is bumping along at a pretty good level. People (companies) are making money. The stock market and the economy are in pretty good shape. Is the economy slowing down a little? Yes. But that doesn’t mean there is going to be a stock market crash.
Jonathan Hoenig: Markets generally don’t crash, and the truth is, a crash isn’t where people lose money. Remember the NASDAQ didn’t go from 5,000 to 1,200 in one day. There are some striking similarities between now and 1987. We have higher commodity prices, the dollar could keep sinking, and interest rates are rising. If you are worried about a crash, then put a little more of your money in cash. But I don’t think you ‘sell the market’ when it’s at six-year highs.
Jonas Max Ferris: We are getting bogged down in the details. There is really only one reason for a crash, and that is if stocks go up huge before. 1987 and 1929 were the only years when you saw crashes, with the market dropping 20 percent or so in a day. Stocks have to go up about 100 percent in the years leading up to a crash, and we don’t have that right now.
Money Mail
"With GM buying out so many workers, are other companies going to take similar steps to try and save money?"
Jonathan: This might be a trend for the companies that are in bed with the unions, and that’s terrible. And the stock is terrible, basically where it is at 1973. GM right now is throwing just about everything at the wall. But the unions have crushed this business and will crush any business they get their hands on.
Wayne: Whether or not this happens to other companies depends on the individual labor contracts. But GM has already signed its death warrant. Any company that has a huge pension problem with its workers is going to have to deal with it.
Mike: I’m a contrarian and I like GM here. They have $180 billion in revenues, and I have to believe that they can make a 2 percent reduction in costs from those numbers. And GM is the largest seller of vehicles in China. That’s where its future is. You’ve got to take a shot at GM at these levels.
Dagen: If you aren’t bullish on the American economy, then how can you expect people to go out and buy their cars?
Best Bets: Stocks Gone Wild
Forget about the wild partying during spring break… What could be better than making some wild profits from our crew’s stock picks? They came up with the “stocks gone wild” that have been hot and could stay sizzling.
Jonathan: IHOP Corp (IHP)
Friday's close: $48.60
52-Week High: $53.80
52-Week Low: $37.97
YTD: UP 4.1 percent
Charles: CheckFree (CKFR)
Friday's close: $50.44
52-Week High: $55.42
52-Week Low: 32.33
YTD: UP 9.9 percent
Wayne: Norfolk Southern (NSC)
Friday's close: $53.30
52-Week High: $54.93
52-Week Low: $26.90
YTD UP: 19.3 percent
Fund Face-Off: Best New Funds
Dagen and Jonas highlighted some new mutual funds that have been open for less than one year.
Dagen: Vanguard Diversified Equity Fund (VDEQX)
Minimum Investment: $3,000
Since Inception (12-19-05): up 3.0 percent
Jonas: Ariel Focus Fund (ARFFX)
Minimum Investment: $1,000
Since Inception (2-6-06): UP 3.3 percent
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