Your Daily Profit
*****Graham Corp up 65%
*****Sell in May?
Oil is above $60 a barrel. Investors are buying on
the expectation that the end of the recession is in sight. And hopefully,
Daily Profit readers are benefiting via my recommendation of oil services
company Graham Corp. (AMEX:GHM).
Graham is breaking above $15 a share today. It’s now up 65% for those who have
been following me for a while.
Of course, oil stocks are up on expectations. A dose
of reality comes from the housing market today. It’s reported that home prices
fell in 134 of the 152 metropolitan areas the National Association of Realtors
tracks during the 1st quarter.
Sounds bad, but there is a silver lining. The number
of homes sold more than doubled in
rose 81% in California
and 50% in Arizona. These states were among the hottest real estate markets
during the housing bubble, and they suffered mightily when the bubble popped.
That homes are selling is far more important than the price they are selling
for. Housing inventory must get turned over for the economy to improve.
*****Nobel prize winning economist Paul Krugman
isn’t convinced the recession is nearing an end. He doesn’t believe economic
fundamentals support the recent rally and warns that recent economic data could
breed “a dangerous complacency.”
The fear, of course, is that we will have the
proverbial “double dip” of recession once government stimulus money (and
patience) runs out. Like in the housing market, first time buyers are assisted
by an $8,000 credit. That will boost sales, but for how long? The credit expires
December 1, 2009. And
it’s likely that the momentum of the credit won’t last that long.
Remember too that the IMF (International Monetary
Fund) believes that the world’s banks still have a lot of losses to take. In
fact, according to the IMF report released in late-April, banks aren’t even
halfway done writing off bad assets and loans. Look for more “surprise”
write-offs and charges to come from banks during the course of the year. One
thing that will be different from last year is, of course, that we now expect
these write-offs and can build them into banks’ stock prices.
*****The old saw says “Sell in May, then go away.”
Well, it’s May, and the rally we’ve enjoyed seems to be taking a little
breather. I don’t know if that means you should sell everything. But I do think
it’s time to be on heightened alert.
I’ll be monitoring the news flow closely. Investor
confidence may seem pretty strong right now, but it can change fast. Right now,
it’s tough to say
what might cause sentiment to shift. Some really bad
news out of the banking sector is the most obvious negative catalyst. But it
could be something completely new. My top candidates are insurance, commercial
real estate, and inflation.
appears to be a bargain shopper. Bloomberg is reporting that
government is stockpiling raw materials at what appear to be low prices. Oil
imports rose 14% in April.
also buying record amounts of copper and aluminum. You’ll recall these were all
resources that China was
consuming voraciously before market bust. Now
so stealthily trying to pick up those same materials on the cheap. Keep an eye
out on commodities plays during the next couple months.
You can expect
put these raw materials to work.
government is in the process of channeling $586 billion in stimulus money
directly into its economy. And that’s ramping stock prices.
I told you about one such stock yesterday, Fushi
Copperweld (Nasdaq:FSIN). To see TradeMaster analyst Jason
Cimpl’s video chart analysis of Fushi,
You’ll also find an introductory offer for TradeMaster Daily Stock Alerts
that includes a Chinese natural gas company. This company released stellar
earnings last night and is moving higher as you read this.
That’s it for today, I’ll talk to you tomorrow.
Yesterday I mentioned some sweet dividend stocks. A few of you wrote in to tell
me you lost the link on how to get the report.
Here’s that link again.
Graham’s a great oil sector play. If you’re interested in more profits from
oil’s run up, check out my new report, “Oil Shock 2009: Strike It Rich with 3
Stocks Under $5. It’s available
05-12-2009 12:02 PM