| FORBES.COM INVESTMENT GURU WEEKLY WEEK OF JULY 16, 2007
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SPECIAL OFFER
JOIN FORBES GURUS AT THE 29TH ANNUAL MONEY SHOW -- SAN FRANCISCO
Forbes Gurus invites you to join them at this year's Money Show San Francisco, July 26-28, 2007, at the San Francisco Marriott located in the heart of downtown San Francisco. Join over 50 of the country's premier policy analysts, advisers and money managers who will share their best strategies for taking advantage of economic, political and market opportunities to grow your investment assets. You can choose from over 150 educational workshops and 15 panel presentations. The show also features a state-of-the-art exhibit hall with more than 125 of the finest financial companies in the country displaying their cutting edge products and services. For complete details or to register for FREE admission, call 800-970-4355 (be sure to mention The Investment Guru and priority code #008701), or visit The Money Show--San Francisco's Home Page to register today! | Sector Screen: 12 Unloved Consumer Stocks
Shares of consumer discretionary companies are suffering from neglect these days, but a wave of investor capital may be on the way.
Matthew Rand Despite Wal-Mart's cheery June results, most retailers had a lousy month. On Friday the Commerce Department said that retail sales were down 0.9%, sending shivers down many investors' spines. Economists have been pounding the table about consumers living beyond their means for years, and with the subprime mortgage mess now front and center in the media, there is an "I told you so" attitude that has been spooking Wall Street. When consumer spending slows down, it often hits consumer discretionary stocks hardest. These stocks represent the fun and often frivolous items people "want." Things like entertainment, home decorations or gourmet food. With investors skittish about these stocks, this might be a good contrarian time to buy into the sector. Forbes built a screen, using FactSet Research Systems, to identify cheap but growing consumer discretionary stocks. Click here for 12 unloved consumer discretionary stocks. Adviser Soapbox: 12 Big Dogs With Dividends
Not all large-caps have enjoyed their day in the sun. Here are 12 laggards that pay you while you wait for a rebound.
George Putnam, The Turnaround Letter
Consensus thinking isn't normally our bailiwick, but every now and then we do agree with a widely accepted opinion. A case in point is our view that large-cap stocks are likely to outperform for a while. But then when we look at which large-cap stocks to buy, our contrariness kicks in again. Most investors want to jump aboard the stocks that have performed the best recently. We prefer to focus on the worst performers. That led us to look at the stocks in the S&P 500 index that have performed the worst over the last three years. Click here for 12 underperformers that currently pay a dividend. Guru Picks: Bullish Gurus Trade Big Gainers
Top investors at Marketocracy couldn't be more bullish. Despite lofty multiples, they're buying into this rally with a vengeance.
Matthew Rand; data provided by Marketocracy
After a shaky Tuesday, the market rallied at the end of last week, with the S&P 500 finishing up 1.4% and the Nasdaq up 1.5%. The best investors at Marketocracy were bullish, buying into the rally. In fact, most of their new buys were stocks that have already posted big gains in 2007. The biggest new m100 buy last week was Hanarotelecom, a South Korean voice, broadband and Internet services provider. The company's stock is up 82% in the past 52 weeks, roughly 20% off the highs above $11 that it made in May. The m100 also bought into a diamond retailer and a waste management company. Click here for their entire list of buys and sells. SPECIAL OFFER
VALUEFORUM.COM--THE PREMIER DISCUSSION COMMUNITY FOR VALUE AND INCOME INVESTORS
Join a select group of value stock and income investors at the premier online collaboration community for rating and discussing investments. In 2006, the average ValueForum member gained 20.86% compared to 15.07% for the S&P 500 in the annual stock-picking contest. There are over 125 discussion topics and 1,000 rated stocks. Click here to tap into a stream of investment ideas and discussions from extraordinarily sharp individual investors just like yourself, and test your own ideas against peer review by the community. | Adviser Soapbox: July's Most Attractive Stocks
These stocks will heat up your portfolio and steer you clear of the market's summer doldrums.
David Trainer, New Constructs July's list of most attractive stocks has some firecrackers that will add razzle-dazzle to portfolios in the traditionally slow summer trading season. All of our firecrackers are scrutinized to help better understand the true earnings of the companies. Pushing aside Wall Street research and company press releases, we look at the official filings the company has submitted to the SEC. Attractive stocks have high-quality profits based on rising returns on invested capital and positive economic earnings. Click here July's most attractive large- and small-cap stocks. Adviser Soapbox: Early Earnings Pretty But Not Predictive
So far so good for the current earnings season. But don't read too much into the results from early reporters.
Jeffrey Kleintop, LPL Financial Earnings season is now under way, and companies have posted 9% earnings-per-share growth compared with the second quarter of last year. The first quarter ended the series of 14 consecutive quarters of double-digit earnings growth, after tying the record for the longest stretch of double-digit earnings growth since World War II. Like the first quarter, the second quarter is likely to post single-digit earnings gains. History shows us that the earnings growth from the first 50 or so companies in the S&P 500 to report tells us little about the rest of the earnings season. The early reporters tend to post much stronger results, but not consistently and by no consistent amount. However, they have given an indication of the magnitude of the earnings growth rate. Click here for more on earnings predictions. Adviser Soapbox: Best Small Stocks For Second-Half Gains
On average, large-caps are beating small-caps. But who says you need to pick average stocks? Instead, try these five.
Richard Moroney, Upside With the second half of 2007 likely to be dominated by concerns regarding slowing corporate earnings growth and the risk that rising interest rates will compress price-to- earnings ratios, Upside's growth-at-a-good-price approach should remain effective. It's Quadrix overall scores have worked well this year, and both its buy list and best buy list are outperforming the S&P 600 and Russell 2000 indexes. Click here for Moroney's top picks for the second half of 2007.
SPECIAL OFFER Adviser Soapbox: Be Like Lou Piniella. Buy Growth Stocks
The Chicago Cubs may have turned a corner under a new manager. Growth stocks are turning too.
Ken Farsalas, The Oberweis Report
Not since Don Zimmer in the late 1980s have the Cubbies had a manager willing to shake things up and lay down the "my way or the highway" law. While the team struggled during the early part of the season, "Sneaky" Lou worked behind the scenes to change the face and attitude of the ball club, his ball club. Growth stocks are also on a sneaky winning streak this year after a long Cub-like slumber. Since the dawn of the value cycle following the Nasdaq collapse in 2000, growth stocks have massively underperformed value stocks. The numbers are shocking: The Russell 2000 Value Index returned 16.2% annualized from 2000 through 2006 compared with -0.2% annualized for the Russell 2000 Growth Index. Value also beat growth six out of the last seven calendar years. Be like Piniella, shake up your portfolio and buy growth stocks. Click here for five recommendations. Stock of the Week: Harmonic Changes Channels
Already powering a high-definition satellite TV service, Harmonic looks ready to win more set-top box market share.
John Dobosz
Paul McWilliams, editor of Next Inning Technology Research, recommends buying shares of Sunnyvale, Calif.-based communications equipment maker Harmonic. Harmonic designs, makes and sells products and systems that deliver broadcast and on-demand video services, including digital video and high-definition television services. It also provides Internet access and telephony, as well as selling video- processing products such as encoders, decoders, multiplexers and descramblers. Its "edge" products enable channel-switching on the network, rather than at the set-top box. McWilliams believes that Harmonic will produce results that are substantially better than what the Street expects. Click here to find out why. SPECIAL OFFER
CANADIAN ENERGY TRUST BUYING OPPORTUNITY
Forbes fixed-income expert Richard Lehmann is outspoken in his bullishness for Canadian energy/royalty trusts. These closed-end investment trusts produce a steady stream of earnings from natural gas and oil distribution royalties. Now the Canadian government wants to tax them and prices are dropping as investors head for the exits. With yields soaring over 15%, Lehmann sees great opportunity in a select few trusts.
Click here for Richard's timely Canadian trust picks today! | Adviser Soapbox: Gusher Ahead For Independent Drillers
Be careful buying major integrated oil companies at today's prices. The best buys are the independent energy producers.
Peter Way, Block Trader' Oil & Gold Monitor
The majority of big oils have demonstrated their inability to maintain reserve levels by internal exploration and discovery, simply because the volumes required are so large. That means they are headed toward merger and acquisition campaigns to shore up their needs. The independent exploration and production (E&P) companies are the logical targets and beneficiaries of this consolidation trend. This is reflected in the difference in prospects for the group seen in its reward-to-risk trade-offs map. More than a dozen of these E&P names meet our policy hurdle for investment attractiveness. That compares with only one in the big oils group. Click here for Peter Way's E&P buys. Adviser Soapbox: Flying Close To The Sun
A more efficient solar cell is driving triple-digit percentage annual gains in sales and profits.
Jim Collins, OTC Insight
For June, the average gain for our OTC Insight model portfolios was 1.21%, while the Nasdaq Composite lost 0.50% and the Russell 2000 Index fell 1.59%. Editor Jim Collins' stock pick this month is a company that engages in the design, development, manufacturing and marketing of solar electric power products primarily in the U.S., Germany and Asia. It offers solar cells, solar panels and inverters, which convert sunlight to electricity compatible with the utility network for residential and commercial applications. For the quarter ended April 1, 2007, it reported net income of 29 cents per share, compared with 4 cents per share reported in the prior year. Total revenue increased 339%, to $142.3 million, compared with $42.0 million reported last year. Click here for Jim Collins' energy pick.
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