Top Stocks

Do the market's troubles this year signal a big buying opportunity, or an opportunity to get out before the real pain? It depends on whom you ask.

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Some of the market's top minds are offering very divergent opinions on that topic. On the bullish side, for example, is Charles Schwab Chief Investment Strategist Liz Ann Sonders, who was on target with her calling of the start of the recent recession, and the turnaround that began last summer. Now, Sonders says, the market's troubles offer a chance to buy. “I’m not a market timer, so I’m not telling clients to back up the truck and load up,” she tells Kiplinger magazine. “But to me, this smacks of a buying opportunity. I think we can have an up year, but there could be a decent amount of pain between now and then.” Sonders says she's highest on healthcare and technology stocks, and she's skeptical of gold -- at least on a fundamental basis.

 

Top fund manager John Hussman thinks differently. Much differently. “We continue to observe a clear deterioration in leading indicators of economic activity,” Hussman writes in his latest market commentary on Hussman Funds’ web site. He thinks technical factors may drive the market higher in the short term. "[But] the historical evidence suggests that fundamentals have ultimately trumped technicals when we’ve observed similar warnings from economic indicators in the past. … My impression is that the economic cold water could hit investors very abruptly, so that gains achieved over several weeks may be suddenly erased in a matter of a few days.” His advice to those looking to the market to fund major expenses over a short period of years: “Get out.” His advice to those who have a long-term, diversified, disciplined system, however: “Stick to your discipline.”

 

 

 

Investors are understandably scared of the sovereign debt crisis unfolding in Europe. Amid their angst, however, they are ignoring a more likely, and significantly larger, debt catastrophe that is about to hit the nation with the second-largest economy in the world: Japan.

Two decades of stimulative, low-interest-rate fiscal policy have made Japan the most indebted nation in the developed world, and as new Prime Minister Naoto Kan recently said, in his first address to Parliament, that situation is not sustainable.

Japan has little choice but to raise interest rates substantially, with dire consequences far beyond its shores.  

Thursday night's bad economic news out of Japan means Toray Industries (TRYIY) goes on our watch list.

As a Japanese company, Toray moves with Japan's stock market. But much of its business and most of its growth are outside Japan. (For more on the bad economic news out of Japan, see my post).

Toray Industries was founded in 1926 as Japan's first maker of synthetic textiles. Today, the company is still weaving and knitting exotic textiles -- including for two of the global growth stories of the next decade.

 

The deal finally got done. Late Thursday night, Walt Disney (DIS) announced the sale of Miramax to a consortium led by L.A. billionaire Ron Tutor.

Disney said the $660 million sale to Filmyard Holdings is expected to close by the end of the year.

• Related: The real Miramax price: $600 million
  

The sale came almost 24 hours after the supposed final deadline for negotiating the deal, and one day after Disney spent close to the same sum it made on Miramax -- $563 million -- for social-media gaming developer Playdom.

 

Goldman Sachs (GS) has had months to think about the new financial regulations the government is implementing. And by "think about," I mean "find loopholes in."

The company has come up with a way to get around some restrictions on trading, Charlie Gasparino reports on Fox Business. The company is turning some of its traders into "asset managers."

See, proprietary stock-trading operations are a no-no under the new financial reform legislation. And Goldman has a huge prop-trading desk. So it is simply moving about half of those operations into its asset management division, Gasparino reports. 

BP (BP) has already ousted its chief executive in favor of American-born Bob Dudley. Now some observers wonder whether the British company should take on a more American name -- for its gas stations, at least.

BP gas stations still aren't too popular in parts of the country. People aren't quick to forget a disastrous and damaging oil spill, it seems.

So now some station owners are thinking a name change on their signs would be better, according to The Associated Press. Perhaps a change to Amoco, which at one time meant American Oil Co. 

Nobody can accuse Disney (DIS) chief Bob Iger of being stingy.

When he sees something he believes will help the venerable entertainment conglomerate evolve -- be it Marvel, Pixar or his latest bauble, social-media gaming developer Playdom -- he pays top dollar.

Over Iger's five-year stint in the top seat, Disney's acquisitions have totaled nearly $13 billion. Disney believes that's a small price to pay for a portfolio of brands that will help it attract a different generation of tech-savvy customers. 

 

By Rafi Mohammed, TheStreet

 

Ford's (F) second-quarter pre-tax operating profit of $2.9 billion -- its best results in six years -- was recently announced with a "you ain't seen nothin' yet" sense of optimism. So what is Ford's "secret sauce" to higher profits? The return to its road-tested bag of pricing tactics.

 

In my first pricing book, The Art of Pricing (Crown Business, 2005), I used Ford as the poster child of the outsized profits that can be garnered from straightforward "better pricing" initiatives. In an interview with Lloyd Hansen, at the time the vice president of revenue management at Ford, he recalled the "Aha!" moment that led him to realize that pricing would be a powerful strategy to focus on.

 

By Jason Notte, TheStreet

 

As white earbuds yellow, dancing silhouettes slow and play lists share space with phone contacts, consumers are tuning out Apple's (AAPL) iPod.

 

A bouncy Apple announced better-than-expected quarterly earnings last week but missed a beat: iPod sales fell 14% from the quarter before and 4% from a year earlier.

Though iPod revenue actually rose 4% from last year, it tumbled 17% from the previous quarter, when it dropped 19%.

 

By Jim Cramer, TheStreet

 

Why in heck is Ethan Allen (ETH) still in business? How can we afford to make furniture anymore? How can we do custom design. Isn't it too expensive? Upholstery? Must be all Chinese by now, no?

 

The answer is that Ethan Allen can stay in business, unlike pretty much every other furniture-maker in the U.S., because Farooq Kathwari runs the company and he won't let it fail. The man's been in charge for 25 years, a period during which pretty much everyone else went under.

 

He's having a pretty darned good year, too -- one that's much better than last year (admittedly easy comparison) and one during which the gross margins are looking really amazing. He used the Great Recession to close a huge, unwieldy distribution and manufacturing system -- it is a domestic, vertically integrated company -- and streamline the whole process from the creation to the stores. It has also shifted toward the high end, to custom design, and now makes more than half of the product with cloth -- upholstered -- not just its hallmark wood.

 

 

Listening to the Potash of Saskatchewan (POT) conference call Thursday, I kept thinking that someone was going to yell, "Cue the plague of locusts!"

In Russia, grain production will fall by 20% because of drought, the company said. Canadian wheat production is forecast to be down 20% because of flooding during planting season. In India, after a string of bad harvests from insufficient monsoon rains, too much rain is rotting crops in storage. 

The company forecast that China would have to import about 75% of its soybean needs in 2010 and 1.7 million tons of corn. India could hit record levels of grain imports. 

 

Goldman Sachs (GS) employees will need to keep their potty mouths in check from now on.

The Wall Street company is trying to clean up employee e-mails and recently told everyone to keep the salty language out of all electronic communications, according to The Wall Street Journal.

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Telling a trader to keep it clean is like telling a fish to stop swimming, but Goldman has to try, because coarse e-mails keep biting it in the, uh, well, let's just move on.

 

The question is not whether Blockbuster (BBI) will fold but when.

The Dallas-based movie-rental chain has struggled mightily against upstarts Redbox and Netflix, but Wall Street is openly predicting that the home-entertainment veteran is headed to the movie palace in the sky. 

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Blockbuster recently made a list of brands that analysts think will vanish by the end of 2011, according to 24/7 Wall St.