Friday, September 30, 2005

RIM

Research In Motion looks like a pretty attractive buy right here. They are winning the NTP patent dispute, they are growing at 30%+ a year, and they are relatively cheap for a growth company (P/E < 30). The main concern with this company is the competition. Of course, the competition will get some of the market share, but I think RIM will remain the leader in the fast growing space.

I'm reluctant to buy now because the stock is still struggling (no clear bottom), and because I currently have SHLD. I bought an option on this stock when it was below 120. It still looks good in a market that seems poised to rise, so I'm reluctant to sell right now.

Wednesday, September 28, 2005

Markets

I'm changing my stance on the markets; I think we hit a bottom, and I expect the markets to rebound significantly over the next few months.

An opinion on Sears Holdings (SHLD). I've been tracking the stock the last couple of days, and there has been extremely strong support in the 120 area. I don't think 120 will be breached. The reason is because SHLD announced a 500 M buyback, and also, an insider has been buying large amounts of shares in the 119-120 range. What this means is that the company will probably repurchase shares at the 120 level. Therefore, I think SHLD would be a good buy there.

Btw, I bought PD. Its pretty high, but I still like commodoties over the rest of the other stocks.

Monday, September 26, 2005

Cameco



Despite the fact that all the momentum traders sold energy stocks today because the hurricane failed to deliver significant damange, energy stocks rose strong into positive territory at the end. The reason is because all the long term investors saw the buying opportunity and jumped in.

With the price of uranium increasing steadily every week with no signs of slowing down, it only makes sense that Cameco will also increase. I still maintain my 80 dollar target before the end of the year.

Also, with energy stocks displaying strength today, I wouldn't be surprised of oil prices rise to record highs and "shock" the investment community. I am bullish on energy stocks.

Disclosure: I am long Cameco

CML Heathcare



Being Canadian, the choice of health care stocks is limited. CML Heathcare stands out above the rest because they are the best in what they do. Technically, CML is in a long term uptrend, and just recently touched the lower trendline recently. I think this is an excellent buying opportunity. CML pays a 7% dividend.

Reason why I like heathcare stocks is because of the demographics. With the birth rate super low, there are a lot more old people than young people. With life expectancy expected to increase, and with all the baby boomers aging, the need for heathcare will grow long term. Heathcare stocks will directly benefit from this trend.

Gold



Gold broke out of a 3 year consolidation pattern. With Gold on a new leg up, it is now time to buy the dips. I would expect Gold to hit 500 in the near future, and then consolidate there for a few months.

Commentary: nasdaq



I still think the markets will fall more, despite the fact that Rita failed to deal significant damage. On a short term basis,the markets failed to rally significantly and hit the top trendline today. This is very bearish, because even the post-hurricane momentum players failed to push the markets up.

Also, I noticed that on every Fed meeting day, the markets fall. What this means is that the investment community are worried about rising interest rates, even though they tend to "forget" in between the Fed meetings. Rising interest rates discourages people from borrowing money, which will slow and reverse the real estate markets. Since a lot of people have bought houses with borrowed money, falling housing prices will significantly lower these people's total assets, while raising their total liabilities. High debt/asset ratios will cause many people to become insolvent, thus forcing them to sell assets, spend less, and file for bankrupcy. This will directly hurt the retail industry. Banks will also suffer, because people's bad debts will lead to massive write offs, which will lead to "disappointing" earnings. Bad earnings will cause bank stocks to fall, which will cause all the other stocks to fall. Thus, this will send the economy into recession.

I think the scenario described above is very plausable, and thus I am very reluctant to initiate many long positions.

Long term investment



Inco (N) is a nickel miner. I think this is an excellent long term play, because currently, Inco has excellent technicals, fundamentals and sentimentals. Technically, Inco just broke out of a 3 year consolidation pattern, and may hit a target of 75 within the next year. Fundamentally, Inco has a P/E ratio of just 10 with excellent growth prospects because of an increasing demand from China, India, Latin America and the rest of the fast-growing developing countries. Combined, this gives Inco a very high probability chance of rising whether or not the general markets go up or down.

Reason why I like Inco and the rest of the commodoties because I truly believe that China will pass America to become the largest economy in the world. If this prediction holds true, China will continue to suck in all the natural resources it could get, thus driving prices to insane levels. This is where the sentimentals come in; right now, the public and analysts in general are very bearish on commodities, as could be seen by the extreme low valuations of all the commodoty companies. What this means is that all the analysts expect commodoty prices to fall. However, I think this scenario is very unlikely, and I even expect commodoty prices to rise more. When they do, the public will go into a buying panic, and drive all the resource stocks to sky high levels.

Friday, September 09, 2005

Back from the dead

Sorry for the lack of posts recently, but the markets were not acting well (or at least I didn't believe the market strength so I mostly stayed out).

But I have been really impressed with commodoties, especially uranium recently. As expected, they are all breaking out into higher ground. The spot price of uranium rose above $30/pound recently, and that has inspired the uranium sector to begin their next leg upward. What does this mean? It probably means that Cameco will hit 80 over the next 2 months.

For the markets overall, I still think they will go down despite the recent strength. The markets love to rally whenever disasters strike (terrorist attacks, hurricane disasters). But is this justified? The damage caused by Katrina will set the economy back hundreds of billions of dollars, and will slow growth by 1%. Also, with record temperatures in the Gulf of Mexico (due to global warming), hurricanes are going to get stronger and more frequent in the future.

The S$P 500 double topped, and the nasdaq is no where near its august highs. I'm looking for weakness towards the end of september.