It is an interesting time in the markets what with the major correction last week. Sectors that are clearly in trouble are financials and retailers. Oil and technology have done quite well again in 2007. At this point we start wondering what sectors would do well for 2008. Hell you wonder if you had only invested in emerging markets you wouldn't have to rack your brains for 2008. I haven't given a lot of thought to what sectors would do well but I have been thinking about individual companies.
Countrywide (CFC) comes to mind. The stock is trading at 8.42 down from around 40 it was trading at last year. This company is trading at a third of it's book value. They claim they will be profitable in their fourth quarter and for the year 2008. If the market only believed this, these guys would be at 3 times their current stock price. The mortgage mess hasn't cleared but if people think that there is hope it will clear in the next 6 months to a year, then this stock is an excellent buy. An argument put forth is "there is no reason to catch a falling knife". Just get the stock on it's way up. True - You will limit your gains but it feels more sure. Besides who is to say it won't dip further. This is where your analysis of the company's financials will come into play. The stock is hit such a low that the financials are creaming buy. Just go to Yahoo Finance and look at their revenues and profits for the past few years. Revenues for 05 - 15.6 Bil (profit 2.5 Bil), 06 - 24.9 Bil (profit 2.6 Bil) and 07 (first 3 quarters) - 18 Bil.
Company's market cap - 4.87 Bil.
Fed is making an increasing amount of money available to being auctioned off. Stock feels like a buy.
Sunday, January 06, 2008
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