Market Priced for Perfection
5-30-07: There are not many value stocks out there these days. Most of the well known stocks are priced for perfection. For example, the energy sector such as ConnocoPhillips (COP), ExxonMobil (XOM) and Chevron (CVX) are all at or near all time highs. We are reluctant to accumulate more shares at these prices. We believed the run could be nearing its end. To this degree, we are taking profit whenever we can. In our view, the current market is very risky and investors should be anticipating a slight correction over the horizon. On a related note, several of our recent predictions were correct.
We accurately predicted JSDA was risky and due for further decline. A few days later, Barrons came out with an article which essentially confirmed our analysis. JSDA is now at $18 per share from $21. Arun Network (ARUN) which we predicted was a strong growth prospect recently announced a great third quarter. The stock is now trading at $18 per share. When we first analyzed ARUN, it was $14. Research in Motion (RIMM) provided a disappointing outlook during their last quarter earning. As a result, RIMM’s share dropped to $135. We viewed the drop as an opportunity to buy as business remain sound and revenue stream is predictable. RIMM is now trading at $165 per share. NTAP is another stock we currently like at current level. Entry price for NTAP is sub $30.
The Federal Reserves meeting minutes will be released today. Investors are waiting to see what the FOMC discussed at the last Fed meeting. Most are hoping to get a clue as to the direction of short term interest rate. Hopefully the meeting minutes will keep the party going.
Comments
I agree about oil being at their all time high. I believe they will still grow as demand for oil will still rise over the years. I expect the oil stock to hit 100's in 1-2 years and split if they still report strong earnings.
Posted by: shraz | May 30, 2007 12:51 PM