Top Stocks

By Robert Holmes, TheStreet

With stocks in a slump -- the benchmark S&P 500 ($INX) has fallen 5% from a peak two months ago -- individual investors are trying to figure out which companies may rebound because they offer value and which may continue their slide.

In this topsy-turvy world -- even hot-gadget maker Apple (AAPL) and defensive stalwart Exxon Mobil (XOM) are down -- emulating private-equity investors' approach to evaluating companies may be the smartest move.

Stocks are barely up so far in 2011 after two years of strong gains as higher commodity prices crimp corporate profits, consumer spending is lackluster amid high unemployment and the Federal Reserve is ending its second stimulus program this month. By focusing on corporate balance sheets and private-market valuations, investors may be able to navigate volatility in these summer months.

By Don Dion, TheStreet

Once seemingly impervious to weakness, the commodities space has recently been cast under an unsettling shroud of uncertainty, leading many investors to question the long-term strength and attraction of hard assets.

Although in the near term, those looking for direct access to energy, minerals, and individual agricultural products may face an uphill climb, there are a number of ways ETF investors can actually benefit from the recent upheaval in commodities. Below are a handful of funds that look set to benefit as resource prices remain subdued.

SPDR S&P Retail ETF (XRT): Throughout the final months of 2010 and first quarter of 2011, cotton prices stuck to a steep upward path, as evidenced by the rise of the futures-tracking iPath Dow Jones UBS Cotton Subindex Total Return ETN (BAL).

It's not who is the next E-Toys or Webvan, two of the most spectacular crash-and-burn dot-coms of a bygone era. It's who is the next MySpace, the social-media bomb that News Corp. (NWSA) paid $580 million for and has now reportedly sold for a mere $35 million in a hasty bid to get the darned thing off the balance sheet by the end of the quarter.

MySpace was all the rage at one point, before it was polluted by ads and superseded by super-slick Facebook. At the time News Corp. purchased MySpace, it was considered to be the coolest move by old media to capture the pizazz of new media.

We know we have a huge bubble going on for the moment when we hear that games maker Zynga could be valued at three times higher than Electronic Arts (ERTS). We know we have a huge bubble when the barely profitable LinkedIn (LNKD) garners an $8 billion valuation after eager investment bankers slap buys on it, no doubt in a pre-Spitzer attempt to wrangle more social-media business in the future.

Wherever you put your money, it’s important to stick to your investment discipline. As a value investor, I focus on three attributes: quality, growth and valuation. A quality company will have long-term-oriented, shareholder-friendly​ management; a competitive advantage that will protect its future cash flows from rivals; a high return on capital; and a strong balance sheet. Its business will also have a high recurrence of revenue, which will result in stable cash flows.

The sell-off in stocks and risky assets, which began with bank stocks back in February and spread like an infection in the months that followed, appears to be well and truly over. The end couldn't come soon enough. From its peak, the Dow Jones Industrial Average shed nearly 8% to its intraday low last week.

The catalyst for the rebound, as I've been discussing in my recent blog posts and columns, has been a turn in the economic data here at home as well as a vigorous response by European policymakers to the latest Greek debt problem. Home prices are moving higher again as sales perk up. And the index of leading economic indicators suggests that GDP growth is set to re-accelerate later this year. With sentiment so low, it's easy for the data to surprise markets to the upside. And that's precisely what's happening now.

As a result, the bulls have pushed stocks up and out of its two-month downtrend while haven assets like U.S. Treasury bonds plummet. In fact, T-bonds are falling with a violence not seen since last October -- a sign that investors are feeling confident. This, along with solid market breadth and other technical indicators, suggests this new uptrend has legs. Here's why.

Coca-Cola Co. (KO) is one of the most innovative companies on the planet. According to some accounts, Coke is responsible for the proliferation of the six-pack and even the image of the modern Santa Claus as we know it, thanks to its yearly holiday ad campaigns.

That spirit of innovation and creativity at Coke lives on in green business practices and environmentally friendly products for the 21st century. While Coca-Cola certainly does plenty of things to decrease its carbon footprint, perhaps none is more spectacular than its recent construction of a 3,600-square-foot living billboard.

Made from recycled bottles and thousands of tea plants, the billboard takes Coke's green streak to another level.

By Don Dion, TheStreet

Weeks of shaky action has taken its toll on investor confidence, leading many individuals to a "risk-off" mindset. Interestingly, as droves of people flee risky corners of the investing universe, many of these areas are starting to outperform.

For instance, Southeast Asia has become a shining region of the globe as developing nations including Malaysia and Indonesia pull ahead of developed countries such as the U.S., Canada, and the European Union. Using ETFs, investors have the opportunity to target each of these emerging leaders.

The Market Vectors Indonesia ETF (IDX) and the iShares MSCI Malaysia Index Fund (EWM) are the largest, most liquid options for individuals looking to take on exposure to these two Southeast Asian superstars.

When did we become so darned unimportant? When did we officially become an annex of Europe, trading with the worst of the worst, the lowest of the low -- Greece, Spain, Portugal and the like?

I think the answer is when we failed to create any jobs to speak of and became a suspect place in which to do business. It happened when our budget deficit became laughable, such that everyone knows that any other country with a balance sheet like ours would see its interest rates soar. I think we became this way once it was clear that China's tightening was more important than our loosening.

That's the bad news.

The good news is that with the sudden break in commodity inflation, we have a chance to create some wealth in the companies that export overseas and depend on emerging growth. That's because emerging-growth countries will stop being forced to slam on the brakes, as they have for most of this year.