Top Stocks

So far, 2010 has been very profitable for housing stocks. Take the SPDR S&P Homebuilders ETF (XHB).  This ETF is up over 30% year-to-date thanks to strength in its component companies. Or take building supply company Eagle Materials (EXP), which is up almost 50% since March 1. The Eagle Materials earnings report yesterday trounced forecast and sent the stock soaring.

 

But that’s only half the story. Bears are scoffing at soaring valuations for homebuilders and calling for a crash in housing stocks along with a rise in foreclosures and stalling real estate sales.

 

So is the bottom going to fall out of housing? Probably not. The fact is that we're most likely amid the beginnings of a sustained recovery -- and here are three top reasons why:

 

Johnson Controls (JCI) announced earnings of 43 cents a share (excluding one-time items) Friday. That was 4 cents a share above Wall Street estimates for the quarter.

Including special items -- since last year's second quarter included so many of them -- earnings per share climbed to a profit of 40 cents from a loss of 33 cents a share in the second quarter of fiscal 2009.

Revenue increased by 32% to $8.32 billion for the building management and auto supply company. Wall Street analysts had projected $7.92 billion.

 

Written by Douglas Estadt

Based in China, Zoom Technologies (ZOOM), is a fast-growing mobile phone company that manufactures, develops and sells electronic and telecommunication products. Having recently acquired Leimone Culture, a new brand of sleek handsets that now offer CCTV streaming content, Zoom is quickly delivering outstanding profits. For the fourth quarter of 2009, they reported : 

I adore Apple (AAPL) products (I'm writing this on a MacBook, in fact) but what kind of crazy world do we live in where Apple claims the second-largest market cap in the S&P 500?

Yes, that happened last week when Apple kicked Microsoft (MSFT) to the No. 3 spot. Well, kind of. See, the S&P doesn't count shares that aren't available for active trading, so that leaves out a big chunk of Microsoft shares (including those held by Bill Gates).

So, if you add those shares, Microsoft is still worth about $25 billion more than Apple, writes Linda Stern at CBS MoneyWatch.com. 

Remember how Warren Buffett called derivatives "financial weapons of mass destruction" that could ruin the entire economic system?

Well, it turns out that Buffett's Berkshire Hathaway (BRK.B) has a $63 billion derivatives portfolio, according to The Wall Street Journal. And Buffett has been lobbying Capitol Hill to protect that portfolio by exempting it from new rules in the financial reform proposals.

Since his "weapons of mass destruction" comments, Buffett has backtracked a little to make his position clear. Yeah, derivatives can be dangerous, but he still uses them. You just have to be careful.

Buffett has a lot at stake here. 

Written by Douglas Estadt

 

Probiotics are beneficial, live bacteria used as dietary supplements and food additives to improve intestinal health and digestion. Our friend, Dr. Eric Jackson, of Ironfire Capital LLC, joins us today to share some facts about CHBT which he learned during his China trip and meetings with management. Eric also explains why the expansion opportunity is so vast.

• By 2014, probiotics market in China is expected to reach $9 billion (CHBT is #1 producer).
• Top-line revenues have a CAGR of 35% for the last three years.
• Gross margins of 71% for the last two years.

 

I really get upset when people offer suggestions with no thought behind them. Everyone in Washington keeps insisting that to fix the financial markets we need more rules and regulations and a lot more bureaucracy. My idea is that all we need is for the alphabet soup to start doing their job.

Investing in publicly traded companies should be a level playing field. We should all be able to read an annual report, other public filings or press releases and narrow our investments to companies that are having real increases in their sales and earnings. The problem is the alphabet soup did not do their job. Financial statements and press releases were worthless.

Who is the alphabet soup? I'm talking about CEOs, CFOs, CPAs, CFAs, SEC and of course S&P. All these people had a fiduciary responsibility to make sure that the press releases and public filings on publicly traded companies fairly represented the true financial results of the companies they were responsible for. 

By Jim Cramer, TheStreet

 

This economy's just out-and-out strong.

Whether it be the turn in steel as articulated by Dan DiMicco of Nucor (NUE) -- he had to admit it! -- or the wood products rally spurred by the housing turn that the bearish media refuses to admit, or the decline in the credit losses that we have seen for a week, or the turn in auto builds or the aerospace boom or the PC acceleration, we are beginning to fire on all cylinders. Andrew Gould, CEO of Schlumberger (SLB), says the turn is at hand for drilling, even as the fire rages in the Gulf and some wells are poisoning water in a Southeast nat gas shale.

 

That's a lot of industries on the rebound.

 

By Hillary Kramer, InvestorPlace.com

Although Goldman Sachs (GS) was beaten down recently on news of a civil fraud investigation by the SEC, don’t count this Wall Street giant out. The fact is that the bad press has driven down shares to bargain levels, and my proven three-point stock screening system is clearly indicating that long-term investors could make the buy of a lifetime snatching up GS shares at current valuations.

• Find a better broker

Consider that Goldman is now trading at 1.3 times book with its current price of around $157. GS should trade at 1.6 times book -- putting shares somewhere in the $210 range. That’s a 34% return for anyone with the guts to buy in right now!

 

Still not convinced that Goldman is a buy? Check out these three reasons that GS stock is likely to surge over the next 12 months:

 

 

By Jim Woods, InvestorPlace.com

When you're looking for stocks to add to your portfolio, a good thing to ask yourself is "What are those who are 'in the know' buying?" Those in the know could be analysts, or they could be top stock advisors. The bottom line is that insider buying is sometimes a key indicator of success.

 

Company insiders such as CEOs, board members or other corporate officers are perhaps best able to assess their own company and its stock's potential, as they have the inside scoop on the goings on within their firm.

It's not always true, of course, but it's worth noting. To that end, here are five stocks seeing insider buying right now:

 

Written by Douglas Estadt

China Biotics (CHBT) is the largest provider of probiotic bacteria in China. Probiotics are beneficial, live bacteria that can be used as dietary supplements and food additives to improve intestinal health and digestion.

 

Our friend, Dr. Eric Jackson, of Ironfire Capital LLC, likes the stock for these reasons:

• By 2014, the probiotics market in China is expected to reach $9 billion
• The company shows gross margins of 71% for the last two years
• It's retail business can definitely grow from only 100 stores today. And CHBT’s biggest opportunities are in dairy and animal feed.
• All revenue is based on an old facility with limited production capability. The company opened a new facility in February and is expected to raise production quickly.
• China is a net importer because it cannot presently produce enough probiotics domestically.

To learn more about CHBT, view the video below 

Starbucks (SBUX) is back on track, recently reporting a better-than-expected quarter that showed customers are returning to stores and spending more money.

Starbucks also gave us a glimpse of another weapon in its arsenal, one that could prove to be a major business driver moving forward: Via instant coffee.

We tend to crinkle our noses at the idea of instant coffee in the U.S., but the product is better received elsewhere in the world. So Starbucks is taking Via global, and recently launched it in Japan -- the world's biggest instant-coffee market.

 

Where is the stock market headed in the coming weeks and months?

 

It's an interesting question, but a better one is, "where are the values right now?" And this week, a number of the investing gurus I follow said that -- while they're not finding nearly as many good values as they were a year ago -- they're still seeing opportunities in a variety of sectors, industries, or types of stocks.

 

Take value manager Whitney Tilson, one of the few who saw the housing meltdown coming. Tilson told Forbes.com that with the market up some 80%, the big bargains that existed a year ago have faded

 

The earnings news out of Microsoft (MSFT) Thursday was good, but good isn't getting investors very excited these days. 

Unless a company delivers great earnings and ups guidance as well, shares have been selling off on just good news this quarter.

That's the way this market is expressing its nervousness about the Greek debt crisis, monetary tightening in China, and the uncertainties of Wall Street reform during this earnings season. (For more on why so many stocks are selling off on good earnings news this quarter, see this recent post.)