Friday, March 21, 2008

Dirt Cheap Stock Picking: Chapter 4

In this environment, one can easily take lousy stocks for "dirt cheap" opportunities. But if current trends continue, and that's big a "if", then the "second coming" of commodities should be a boon all commodity-levered stocks. Potash (POT) and Monsanto (MON) are among great agri-stocks that have lost some steam lately. First Solar (FSLR) and SunPower (SPWR) as well as Ormat (ORA) are great plays on alternative energy possibilities. Coal stocks can see another rise when steel price recover from recent decompression in the commodities prices. Peabody (BTU), Fording (FDG), Patriot (PCX) and even the mining equipment maker, Joy Global (JOYG), are among my favorites. I have to give a big word of caution: commodity plays are subject to the global expansion that has been going on for a while now. As the saying goes though, when US gets a cold, the world catches pneumonia, so a global recession, which is likely at this point, can put a damper on these price for some time. Global engineering and construction plays like Flour (FLR) or Foster Wheeler (FWLT) may have a better time since oil and commodity money flows to large projects as governments try to boost the infrastrcuture necessary for production of commodities.

1 comment:

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