Stock Ideas

Hey everyone, just writing because I was curious if there are any stocks you all have been watching or think are good picks.

Today on CNBC someone recommended Terex Corporation. I don't know if any of you have heard of this company but it looks like a solid company. P/E of 6.75, recently reported great earnings, was trading in the 70's just a couple months ago and is currently at $47. They are a "diversified global manufacturer of capital equipment focused on delivering reliable, customer relevant solutions for the construction, infrastructure, quarrying, surface mining, shipping, transportation, refining and utility industries." Should rebound nicely when the markets turn around and confidence jumps back in because this stock seems pretty cheap with such a low P/E...and their wasn't much of a spike after reporting good earnings.

I also like LDK Solar. They make the "solar wafers" which are apparently the main component of solar cells. It's a pretty volatile stock, but should be interesting to see what happens as earnings are released in August.

V also beat expectations by a decent amount but the stock doesn't seem to want to get back up to upper 70's. $70 seems to be some pretty good support so watch when it gets close, could be a good time to buy.

Just some thoughts

Today... we wait.

Housing sales hit ten year low today? Everyone is saying the market is still weak. A cabot letter got me thinking. They say that they look at high volume trading with a price jump as an indicator that the institutions, that (arguably) control the market, are buying back in. I don't mean to sound like a retard, but how exactly does one do this? Create a watch list, and on your preferred financial website there is a place to watch the volume? So as far as an indicator of when to come buy back in, we have a) Andrew says the next time there is "really bad news" (would the economic reports on the housing market count?), and b) when we see a rise in price of the stocks on our watch list in congruence with an increase in trading volume? So I think we know when to get back in, but who should we be watching? Financials still? Banks? Insurance? How about adult education like ITT and strayer and all those. They seem to be back on the rise, and should benefit from the restoration of the credit market (student loans). Value Line was hot and heavy on them at the beginning of the year, but of course they were hurt by all of this economic turmoil. Any opinions about this sector? 

The House That Paulson Built

"Obviously, it will go on beyond months with some of the issues in the housing market, but I believe we can get to the point within months where we turn the corner on housing," Paulson said in a televised interview with Fox Business Network.

This is the turn that must take place before a market recovery in financials and when we should be looking to get back in. The bad news that comes out hurts these companies unfailingly and the bad news will keep coming until we make it around the bend. The question is: How to spot stability in the housing market? We can look at foreclosure rates, new home purchases or a number of other indicative numbers but by that time it may be late in the game.

I think that the next significant drop in the market on bad news is the buying opportunity we have anticipated. I don't mean that the next day in the red will signify the proper re-entry point. Paulson even said that it will be a matter of months (and he is supposed to sound hopeful). So don't rush it, but the next terrible day on the Dow and I will be looking agressively for buying opportunities. This may not be this week or the next, but it is coming and coming soon.

The Price of Oil and World Events

About a month ago Andrew recommended to me the book "Fooled by Randomness." Although he might be better at describing the central points of the book, the main thing I take from it is that people look for connections in everything, when in fact pure randomness is actually controlling a large part of what is happening.

Something that hit me just now was the fact that no matter if the price of oil goes up or down by 3 cents or $3, there always seems to be a consensus as to why it made that move. Today oil is down because fears have been eased surrounding tropical storm Dolly. Previously there was news about Iran (I think concerning there missile program). And before that, around the time oil started making its fall, America reported good numbers around its supplies (which is pretty legit). I don't really have any idea as to whether there is good correlation between these world events and the price of oil...but I suspect that "Oil falls as there are more sellers than buyers" would not make the top headlines. Or how about..."News concerning sh*tloads of new drivers in Asia means we need more oil." That might be the most accurate.

Alternative Energy/Financials

Well there's no doubt it's good to see financials recovering a little. I think it's probably too early to say we've hit bottom and the worst is over. Like it was posted earlier, there is a good chance more writedowns will come and rumors of bankruptcy for various banks will probably continue. I didn't get a chance to really follow what was happening in the markets today, but my impression of these last two days is that people are recognizing the sell-off is overdone and confidence is creeping back....lets just hope oil stays under control to keep this going!

I like the idea of watching wind power related stocks as well. I feel like solar energy has been hyped up so much that other alternative energy methods have been neglected slightly. As for the list Cramer (ahem) I mean Andrew provided, I definitely think the companies like Owens Corning and Thomas & Betts that produce the electrical components for wind power will benefit from an increasing interest in this form of alternative energy, but I like Woodward Governor and Broadwind Energy for some good possible gains. Broadwind has clearly ran up significantly over the past year which means it will probably be pretty volatile, but it sounds like their company is pretty focused on only manufacturing parts that go directly to creation of wind turbines. Woodward, from a technical perspective, has a pretty attractive chart and has made solid gains over the past ten years, maybe indicating it is a well run company. Again, I haven't really done any research but I plan on looking more into what makes these companies possible winners. That's just my thoughts.

I'll definitely be watching Yahoo closely tomorrow, this fiasco has been going on for so long now--I think Icahn's patience is wearing thin and Microsoft has billions in cash sitting around and has the ability to make it happen, and clearly wants to make a move...problem is ordinary investors will miss the big gain if your waiting for news...so invest now if you're feeling lucky...or wanna gamble.

JPM

JP Morgan is a perfect example of the current oversold market.

JPM reports earnings 52% down from last year and the stock shoots up as they beat analyst expectations. There are huge buying opportunities in the financials but they are still not doing well.

YHOO

Yahoo sent out a letter to shareholders stating that they would sell to MSFT at $33 per share. With Carl Icahn buying up shares in YHOO and putting on pressure to sell, I think the $23 the stock is trading at now is looking cheap.

I look for a deal with MSFT to still take place and when it does to see YHOO see huge single day gains. This would be similar to the last time MSFT made an offer and the stock skyrocketed in a matter of hours.