Wednesday, December 26, 2007

Stock Outlook 2008

As another year comes to close, we can't just sit back and rest on our gains from the year that was 2007. Sure, Evergreen Solar (eslr), Ormat Technologies (ora), Yum Brands (yum) and the almighty Google (goog) were all great plays for this past year, but you have to ask yourself, what is next? What will be the best bull markets of 2008?

I believe 2008 will be the another year of the green! Alternative energy and any pollution reduction company will reign supreme as the governments around the world, (maybe even ours here in the states) begin to make these pressing issues a priority. It seems like you can't turn around these days and not hear something about climate change, pollution and expensive dirty energy. Stocks like Zoltec (zolt), which is one of the leaders in producing carbon fibers used in Wind Turbines, and Evergreen Solar (eslr) are going to continue their run in 2008 as more and more investors realize the explosive growth these industries can provide. With oil prices continuing to climb, manufacturing cost dropping due to government subsidies and a general increase in demand, the whole sector should do well. Solar, Geothermal, and wind power are the future, and now is your chance to make some green off of these clean renewable energy companies.

The next year will also be another year to watch China continue to expand at a insane pace. While I am not too fond of Chinese stocks, I think that Yum Brands is a way to get great Chinese exposure without investing in Communism. Kentucky Fried Chicken is opening up a store a day in China, and will only benefit even more with the buzz and increased traffic from the coming Olympics. There is a lot of opportunity in the Chinese market, but I just have something against a country that censors it's own news and internet. Enter at your own risk...

Two picks that have turned a bit soar since I recommended them, Boeing(ba) and Royal Bank Of Canada(ry), I still believe will do well in 2008. Sure, these are two of the less exciting stock picks out there , but that doesn't mean there not worth owning over the long term. Boeing has orders lined up for years to come with countries around the world, and Royal Bank Of Canada was brought down somewhat unfairly by the downfall in US banks. They both pay a dividend, BA at 1.78% and RY at 3.98% yields. Not only that, but both companies just raised their dividend in their last quarter, which shows the confidence the management has in their future income.

My last two are Vacso Data Securities (Vdsi) and Google, no real surprise there, I have been behind these two for literally years now, and I think they will continue to vastly outperform the market. Vasco is still looking cheap here after it's big fall, and Google will dominate in 08 with it's mobile business, the ever-growing monster that is Internet and those other 100 projects they are working on.

So, am I still worried about subprime, a weak dollar, a possible recession and falling home prices? Well of course, but these stocks are all long term investments, and can be bought over time and many different prices just like any other stock out there. Just remember, never buy all at once, and always do the proper research before you ever buy a stock. It also helps if you really are interested in what the company itself that you are putting your hard earned money into, this can make the research much less tedious.

Happy investing in 2008 from all of us at Stock Picky!

For more information on any of the companies above just click the company's name in the above article.

Sunday, December 16, 2007

Making A List, Checking It Twice

With the Fed's decision to only cut interest rates by 0.25%, we should all be reminded that it is certainly not wise to buy all at once. No matter how great your stock is, there are other factors out there in the market that could affect your stocks performance, even if the company is raking in the money. What you need to realize is the difference between a stock that has been taken down along with the market, and one that truly does deserve to go down based on it's future earnings and fundamentals.

So, when you have a great company that you have invested in, and you believe can be even better in the future, you need to stop and take a look at the bigger picture. All stocks take unjustified hits from time to time. This is were following the general stock market can help because on some days, almost everything goes down. Remember, long term investing allows you to purchase shares of a single company at many different prices over time to build your position in the stock.

As long as the long term story of a company is still in tact you can feel at least a bit more confident that you are making a good financial choice when you add to your investment at a lower price, and in turn lower your cost basis. (Cost basis is simply your break even point on the stock)

Even though the market is very unpredictable, one thing is for certain when you look at the scheme of things. While the banks, mortgage companies, and many other business maybe in trouble , there are way more companies that are thriving in a booming global economy. Just because the "precious" United States hits a financial speed bump the rest of the world will just look on and continue to expand at it's rapid pace.

Now for my prediction for next week, and the week after that, and the year after that... BA, GOOG, CECE, VDSI, and YUM! Merry Christmas From Stock Picky!

Wednesday, December 5, 2007

Tapping The Earth With Ormat

Ormat Technologies NYSE: ORA is in a perfect situation as alternative energies begin to take flight. Just like the red hot solar stocks, Ormat is a play on the growing demand for alternative energy. What makes them unique is that they use geothermal power and other eco-friendly sources to generate revenue. In case you aren't familiar with the geothermal process, it is basically capturing the heat given off from the earth and turning it into electricity. The great part about this process is that it emits little or no emissions.

Not only this, but they operate in countries all over the world, so you certainly don't have to worry about any kind of "slowdown" here in The States...

Geothermal is not the only part of Ormat though, what I really think could be huge is the Recovered Energy Generation potential. What Ormat has done, is made it possible to take the heat that is waisted on a typical power plant, and harnessing it back into energy. That's right what a simple concept that should be adapted by power plants all around the world that are just literally blowing off steam...

Ormat Technologies is a small company that just became public in 2005, so it still has plenty of upside potential. They even have rather unique dividend policy, in which they are aiming to pay at least 20% of their annual profits through quarterly dividends. Which is just another potential huge reason to own this company, as it continues to earn more money in the future.
Now, it does have a sky high P/e ratio of 83, so it is by no means inexpensive, but there are a lot of people out there that see how explosive this company could become with climate change and pollution coming to the front lines. Ormat Technologies Inc. reported 3rd quarter 2007 earnings of $0.41 per share on 11/6/2007. This beat the $0.31 consensus of the 7 analysts covering the company.

As a fair warning, this is a small company with a high p/e ratio which can be the recipe for disaster. While I think that Ormat is a great long term investment, as always the best idea is to not buy all at once. I would buy a little bit here, and then wait until after the fed meeting to see if you can get in at a lower price. As I write this Ormat Technologies is trading at $50.11...