Top Stocks

If the economy is to recover, steel is not an optional industry.

It's an essential industry right in the core of the auto, infrastructure and manufacturing industries. It's hard to think of an industry that does not use steel or metal products somewhere. 

Luckily, this industry has shown signs of recovery. 

Just look at the chart of the steel industry index price change vs, the 20, 50 and 100 day moving averages and Trend Spotter in the last 2 1/2 months:

 

By Peter Morici, TheStreet

 

The U.S. economy is growing only moderately and the job market remains sluggish, but stocks keep roaring ahead, as they should.

American companies are fundamentally undervalued, and unless upheavals in the Middle East or a European debt crisis derail global growth, the Dow Jones Industrial Average ($INDU) is headed for 13,000.

 

Growth in the range of 3% to 3.5% in the United States and about 10% in China is great for U.S. equities. American companies may not add employees in large numbers, but they can boost profits with only moderately expanding domestic demand, thanks to breakneck productivity advances. And America's larger companies -- those of the S&P 500 ($INX) -- earn about half their profits abroad, where they are poised to win big.

 

Investors should rebalance toward U.S. equities. Don't abandon emerging markets, but put new money into U.S. companies with global reach.

 

Apple continues to crank out iEverything devices at a furious pace, but many investors shy away from the company's lofty valuation. Foolish tech expert Eric Bleeker's advice? Try TriQuint.

 

Rex Moore, Motley Fool Top Stocks editor

 

In early November, I recommended that readers buy Cirrus Logic (CRUS), as smart-phone designers increasingly adopted its audio-chip designs to save both power and space. But Cirrus isn't alone. Companies providing radio frequency components are also winning big, including RF Micro Devices (RFMD), Skyworks (SWKS), Anadigics (ANAD), and TriQuint (TQNT). I believe that several of these companies are solid buys, but today, I'm recommending TriQuint, and announcing my intent to buy its shares for my "Bits Portfolio."

 

Why RF?
In mobile devices, radio frequency chips ensure reliable connections to the towers streaming voice and data signals. TriQuint and the other companies making these RF chips face a huge opportunity as the mobile world shifts from old-fashioned feature phones to technologically advanced smart phones.

 

By Scott Moritz, TheStreet

 

AOL's (AOL) push for national news with The Huffington Post deal puts pressure on Yahoo's (YHOO) local strategy.

 

AOL agreed to buy The Huffington Post for $300 million in cash and $15 million in stock early Monday in the online portal's boldest bid yet to expand its content offerings. AOL acquired TechCrunch late last year as part of an eager bid to get its traffic volume up and cash in on growth in online advertising.

 

The move comes as Yahoo struggles to reverse its revenue declines and prepares to announce a revamped focus on delivering personalized news on mobile devices.

 

The Yahoo project, called Deadeye, will take user preferences, locations, social-networking choices and topic interests to customize its customers' media content, according to a report Monday in The New York Times.

 

Overwhelming force. That's what the charts said this weekend. As long as you aren't buying anything defensive except HMOs, you've seen nothing but up. Nothing.

 

Mind you, I am not predicting. I am simply pointing out that in 32 years of investing, I cannot recall a more bullish time, a time when as long as you don't own a food, drug or utility stock, you've been making money. No, make that coining money.

 

Two groups really stand out: semiconductors and oil and gas. I keep harping on these two sectors because, without owning some of them, you can't keep pace and there's no way you are going to beat the benchmarks. If you are overweighting them, you have to be thinking, even in February, that you might have to be defensive simply to protect your lead! Yes, the gains are that pronounced.

 

The lead rotates in these groups. Last week, thanks to JDS Uniphase (JDSU) and ARM Holdings (ARMH), you had anything broadband and Apple (AAPL)-related roaring, particularly around tablets and smart phones.

 

By Don Dion, TheStreet

 

Here are five ETFs to watch this week.

 

1. iShares Dow Jones U.S. Broker-Dealers Index Fund (IAI)

 

NYSE Euronext (NYX) and IntercontinentalExch​ange (ICE) are slated to report their earnings this week, providing further insight into the state of the broker-dealers industry. Together accounting for more than 10% of its index, these two companies' performance will influence the action of IAI in the coming days.

 

So far, investors have seen mixed earnings results from IAI's other major positions, including Goldman Sachs (GS),Morgan Stanley (MS), Ameriprise (AMP) and CME Group (CME).

 

In the coming days, investors holding this fund will want to maintain a close watch. IAI is bumping against a level that has been a sufficient point of resistance since late 2009.

 

By Jeff Reeves, Editor, InvestorPlace.com

AOL users and investors awoke to big news this morning: The giant online portal  has agreed to buy out the 6-year-old news website The Huffington Post for a cool $315 million.

 

The move is interesting for a number of reasons. It's the latest move by AOL chief exec Tim Armstrong to right the struggling web-content arm of his company, and it's a deal that has some observers calling the politically active Arianna Huffington a sellout.

 

But perhaps most interesting is the fact a fledgling website like HuffPo was seen by AOL not just as a buyout target but as a strategic partner that can revitalize a company many times its size.

How? By keeping the feisty Huffington at the helm of content rather than forcing her to bend to the wills of her new corporate bosses.

 

Just like clockwork, the fearful trade of last week gave way to solid gains and new milestones. The S&P 500 gained nearly 3%, crossing the all-important threshold of 1,300. Anyone selling based on events in the Middle East missed out on a nice run.

 

This week we turn our attention to base building.

 

The moves above Dow 12,000 and S&P 1,300 are significant from a technical and psychological level and come after several months of impressive gains for the market.

 

Historically, these milestones are followed by sideways trading, and that is what I expect this week. The best way to play a sideways market is with a long/short exchange traded fund.

 

My choice would be ProShares Credit Suisse 130/30.

 

It's no secret that I've become increasingly skeptical about the quality and longevity of the current market rally. My recent columns and blog posts will attest to that. But I won't deny positive signs when I see them. And I see plenty of good things among retail and consumer stocks right now.

 

Just look at the recent action in the Retail SPDR (XRT), which holds stocks like GameStop (GME) and JC Penney (JCP). The XRT is up 4.6% from its Monday low and looks to be in the midst of initiating a new uptrend. Various technical indicators are moving into positive territory for the first time since December.

 

Although there are concerns about rising input prices -- especially for cotton -- pressure margins in the sector, fourth-quarter earnings have been solid. And compared to more defensive consumer staples stocks, retailers are moving higher at a pace not seen since last September. Can the momentum continue?

 

I dropped Ctrip.com International (CTRP) from the Jubak Picks 50 long-term portfolio on Jan. 18, but this the first time I've had the chance to explain why in detail or to actually remove it from the portfolio. I'll be working on explaining other sells and buys from that group over the next week or so as well.  

What worries me about Ctrip.com International in the long-term? Growth. 

Oh, not the top-line growth of revenue. That continues to hum along. In the third quarter of 2010, reported on Nov. 2, Ctrip.com, the largest travel agent in China, reported total revenue of $129 million, a 48% increase from the third quarter of 2009. 

No, it's the growth in costs that troubles me, because it makes me wonder if Ctrip's operating margins -- which ran at a 38% level for the third quarter -- are sustainable in the long term. 

 

Are Verizon (VZ) shares set to plummet on the iPhone curse?

That's what SmartMoney's Jack Hough says. AT&T (T) shares have dropped 17% since it started carrying the iPhone, he writes, while Verizon shares rose 9%. Maybe it's time, he says, for investors to sell Verizon and pick up AT&T.

I'm still not sold on an iPhone stock curse, but I'll give Hough a chance. Here are what he describes as the three foundations of the iPhone curse:

1. High investor expectations. The iPhone and hype go hand in hand, no matter who the carrier is. AT&T shares rose 22% between the time Apple (AAPL) announced the iPhone in January 2007 and the device's launch, Hough writes. AT&T shares began sliding in October when reports surfaced that Verizon would soon get the iPhone. 

By Matt Brownell, MainStreet

 

E-book sales are set to get bigger and titles to get cheaper over the next two years, according to a new report from the Yankee Group, a Boston research and consulting firm.

 

Released this week, the report projects big gains for the e-book market: Consumers will purchase 381 million e-books by 2013 -- quadruple the total purchases made in 2010 -- and bring total revenue to $2.7 billion that year, according to the report. Calling it "the next big gold rush," researchers project e-book sales will grow at an even faster rate than that of mobile apps over the same period.

 

The projected sales explosion likely comes as no surprise to retailers like Amazon (AMZN) and Barnes & Noble (BKS), whose respective Kindle and Nook e-readers lead the field. Both companies have said their e-readers are their best-selling products of all time, and Barnes & Noble announced in December that its e-book sales now exceed those of print books.

 

By Gary Gordon, TheStreet

 

The media remain hell-bent on describing U.S. economic acceleration, Dow 12,000 and marginal labor market improvements. The analysts seem equally giddy, reiterating quotable notables like "Don't fight the Fed!" or "Don't fight the tape!"

 

I agree that there are reasons to be hopeful. We've been privy to robust corporate earnings as well as strong corporate balance sheets, share buybacks and a variety of key acquisitions. Yet I don't agree that investors can disregard the impact of world central bank policy. I certainly don't think we can cast aside the tale of the emerging-market tape.

 

It may seem as though developed-world stocks have decoupled from developing-world equities. The past three months have been dreamy for high-beta U.S. sector ETFs but nightmarish for three-quarters of the BRIC emergers -- Brazil, India and China.

 

A standard way of judging the market's valuation is by looking at historical price-to-earnings data. You can also go a little deeper by using the cyclically adjusted price-to-earnings ratio, or the CAPE. As you'll read below, the Fool's Matt Koppenheffer has CAPE fear.

 

Rex Moore, Motley Fool Top Stocks editor

 

For long-term investors, pondering the question "Will the market go up?" is a guilty pleasure, like gorging on In-N-Out double-doubles. And yet we still do it. OK, maybe you don't, but I do (both, actually).

 

A key component to this question is whether stocks are overvalued, undervalued, or reasonably valued. If the answer is "undervalued," we can feel pretty good about being buyers, while if they're reasonably valued selective stock-picking can usually uncover some bargains.

 

By TheStreet Staff, TheStreet

 

Here is this week's roundup of the dumbest actions on Wall Street.

 

5. Bing's hand caught in the Google jar

One upshot from the so-called Searchgate drama between Google (GOOG) and Microsoft's (MSFT) Bing may be that search quality is only as good as Google makes it.

 

Google, which controls two-thirds of the total search market, created traps for Bing using phony words assigned phony search results. Using a mishmash like "delhipublicschool40 chdjob" as a search term, Google affixed an Ohio credit union site to the results that came back. Soon after, says Google, Bing's results for that query also turned up the same credit union.

Embarrassing for Microsoft, certainly, and scary for the rest of us since the perceived competition for the best search engine turns out to be little more than No. 2 copying No. 1. (Microsoft publishes MSN Money.)