Stocks to Invest in 2009 (Energy and Dow Industrial Stocks)

February 15, 2009

2009 is the Year of the Ox according to the Chinese Astrology, but for the stock market participants, 2009 will be the Year of the Stock Trader.  You are going to see some volatile days with very big news revolving around long term oil prices, viability of the United States stimulus package, increasing unemployment, California running out of money, and whether the housing market will ever bottom out.

My strategy this year will be taking positions in companies that are being oversold and doing it incrementally instead of “going all in” like they say in poker.  If you normally invest in $3000 chunks, break that into $1500 chunks and reserve a bit of money in case that stock you love falls another 10% so you can cost average and spread around your funds to different sectors.  2008 showed us that no sector is immune to the slaughter in stock prices although some stocks only fell 40% compared to 80% from yearly highs.

With oil hitting $150/barrel and even though it’s sitting at barely 25% of that value, I am a big fan of energy and commodity stocks.   Knowing how important natural gas, coal, solar, and petroleum will be through every developing nation, it’s a golden opportunity to take a position while these prices are so depressed.  Banks and housing stocks will have many more tough times ahead of them and a lot of infrastructure stocks will follow the health of the economy.  Most of the ten investments below are ones that I believe will have a better chance to go up than down in the next few months.  If they do go down any further, just add more shares!

  • Alcoa (AA)
  • Procter & Gamble (PG)
  • Wal Mart (WMT)
  • Garmin (GRMN)
  • Diamond Offshore Drilling (DO)
  • Transocean (RIG)
  • Devon Energy Corporation (DVN)
  • Nabors Industries (NBR)
  • General Electric (GE)
  • Perdigao (PDA)

Most of these are large companies with none being small cap stocks.  6 of the 10 corporations have some kind of ties to the energy industry and all are well off their yearly highs.  I threw in some Dow Industrial stocks too for some dividend plays that shouldn’t take too big of a hit if the market tanks any further.  Take your 30% gains when they come and be a happy investor!!!

Disclosure: I have current ownership in Transocean.


Income Investing with Dividends

April 26, 2008

At the upcoming Federal Open Market Committee meeting on April 29, the Fed is expected to cut its federal funds rate by another quarter point, to 2%. These days, I can’t even find any 6-month CDs that yield more than 3.5%. In such unyielding times, a safe place to park extra cash may be in dividend-paying stocks.

The basics of dividends were explained in a previous entry. It is not always easy to discern between a risky stock that boasts a high dividend just to attract investors and stock in a company that can genuinely has free cash flow to pay back to investors. Furthermore, decent dividend-paying stocks tend to be larger-cap companies that probably won’t be seeing explosive growth, but pay off in the longer term.

Here are some of my personal picks for attractive dividends, intrinsic value, and stability.

  1. Linear Technology (LLTC)
  2. Southern Copper (PCU)
  3. Alliance Resource Partners, LP (ARLP)
  4. DPL Inc. (DPL)
  5. Diamond Offshore Drilling (DO) – Just declared a special dividend for shareholders as of May 2; I wouldn’t rely on them in the long term.

Dividend reinvestment plans (DRIPs) are offered by companies as a way for shareholders to reinvest their dividends and directly purchase more shares with no commission cost. It is a good way to let a retirement account run on auto-pilot, but discount brokers charge so little for commission these days that if you are an active trader, it may better to direct the dividend investment yourself.