Sunday, December 11, 2016

"A wild ride on Wall Street this week as stocks jet to new highs and sector rotation continues to whipsaw the healthcare stocks and bolster the financial stocks."

Dow Jones Industrial Average 19,756.85 (UP and New High)
S & P 500 Index 2259.53

You know that stocks are up near a peak when everybody is talking about the stock market and buying things because everything is going up. The Trump rally, I guess you can call it, with very favorable business and personal tax laws coming and many roll backs of stifling banking and energy regulations.They will probably also allow companies to repatriate cash back into the US with a one time lower tax rate consideration to fuel some capital investment and job hiring here in the USA.

With all the excitement going on we still need to stay the course with our Value investing discipline and pick out some good stock names.I will present them in no particular order.

J.C.Penney Company Inc.(symbol JCP, $10.21) . You are looking for excitement and I bring you an old line brick and mortar retailer! This is a recovery of business story. The company is going to earn $.0.07 cents per share this year and 2017 the earnings are projected at $0.68 cents per share for a forward PE of 14.60. The stock is up YTD 53.3% , so this is no joke. I think the stock can get to the $15 -16 dollar range by the end of the 2017 year which is a nice gain from here.

Rio Tinto PLC (Symbol RIO, $41.15) is a recomendation I heard this week on CNBC's Sqawkbox show in the morning and it came from Robert Bishop from Impala Asset Management who use to be a CIO for George Soros's fund. There was also an upgrade this week on the stock from Credit Suisse. Bishop thinks that Rio will double its earnings this year and that the price of the stock should double. A pretty simple formula. The company is going to earn $0.03 cents this year and is projecting a $3.70 per share earnings for 2017 which is a forward PE of 11.14. The stock of the company is up 48.98% YTD. This mining company is a major producer on Iron Ore.

The GoodYear Tire and Rubber Company (Symbol  GT, $32.18) is a company that is doing very well in the high-end tire business. The company is going to earn $1.21 per share this year and projecting to shoot up to $4.34 per share next year. That would be a forward PE of 7.41. The stock this year is down 0.47% YTD.
I could see this stock moving to the $55.00 - $60.00 price area, a very nice gain. 

Gilead Sciences Inc. (Symbol GILD, $72.70) are a prime target in the Pharma-Healthcare area which has been punished because of talk from the US President Elect to rein in the prices of drug medications. The company has over 30 billion in cash and is going to earn $10.78 per share this year and projecting earnings of $10.86 per share for 2017, that is a forward PE of 6.69. The stock is down 26.96% YTD. This stock should be trading at $120.00 per share based on future earnings and their ongoing profitable business.

 "I put in a picture of a young Sophia Loren just to see if you were paying attention"

So don't go crazy borrowing any money and pouring it into this hot market. Just invest the way you normally would and continue to read my blog and look for good opportunities. Please feel free to leave a comment if you have a good value investment idea. I will post it.

Have a great investment week and get ready for the holidays,


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