Three Stocks Set To Climb Higher
Last week I made the case for a rally. And we’re in the midst of one as I write. Not a bad call if I do say so myself…
As a matter of fact, the markets were able to turn on a dime and recover the losses from earlier in the week. That’s a very strong sign the market is finally done with the heavy bleeding.
How did I see this coming?
The Fed, if you recall, told us they’d leave interest rates near zero until sometime in mid 2013… giving the markets and businesses the opportunity to work through the stagnant economic mire.
My bullish call was based on the Fed’s new policy. We’ve gotten, in effect, a QE3 without QE3.
And it was time to go shopping for deals once again…
I told you I’d clue you in on what I bought last week. While each has seen quick gains from the rebound, I believe they’re still poised to head much higher.
Below, I’m going to give you the names of the stocks I bought, how they’ve performed since I purchased them, and what made them attractive buys.
Let’s get started…
Harman International Industries (HAR)
Purchased for $29.57 on 08-09-11. Gain of 18%.
Along with most stocks sold off in the recent market meltdown, Harman lost over 35% of its stock value in late July. The two big attractions of this stock were its valuation and cash.
You see, even after the recent recovery, HAR has a P/E of just 8.6. That’s quite low for a company slated to grow earnings by 43% over the next year.
In addition to being a great value, I was impressed by their cash position. Harman has over $13 of cash per share. Having lots of cash on hand can be useful if the economy tightens, or if the company wants to grow without taking on added debt.
Cheniere Energy (LNG)
Purchased for $7.09 on 08-09-11. Gain of 17%.
Cheniere Energy is an oil and gas exploration company based in the US. There are two great reasons for buying LNG. First, their price action over the last two weeks was directly related to the selloff in the energy markets. And second, they’re an excellent speculative play.
With the energy markets recovering, LNG’s price is coming along for the ride. But what’s great about Cheniere is they take great role as a speculative investment in my portfolio.
And for investors still not holding LNG, the big news is yet to come…
You see, they’re very close to gaining approval to export natural gas to other countries. And in some other countries, natural gas is selling for two to three times what it sells for in the US. No question about it, if LNG gains approval to export natural gas, their share price is virtually certain to soar!
Bank of America Corp. (BAC)
Purchased for $7.05 on 08-09-11. Gain of 6%.
The primary reasons behind the purchase of controversial Bank of America are two-fold.
The first reason is the most important… BAC is getting their financial house in order. The most recent and aggressive selling has been over concerns about their capital reserves.
But the bank is working fast to resolve their issues.
Many are worried BAC’s reserves aren’t large enough relative to the amount of toxic mortgage assets on their balance sheet. To meet new capital requirements, the bank has gone on a selling spree. In fact, their latest announcement has been they’re looking to sell $1 billion in Merrill assets to Blackstone Group (BX).
The second reason can be seen on the chart above. The stock is simply oversold! And the recent selloff was a great entry point.
Here’s the thing… if you’re looking for a financial sector recovery, Bank of America will be a great stock to own.
I simply had to buy this company. BAC is doing everything it can to raise the cash needed to protect the bank and its shareholders. Over the long run, this important financial institution will end up worth a whole lot more than $14 a share!
Any of these names could be great additions to your portfolio. They’re all still great buys at current prices, and are poised to move much higher from here. Take a closer look at HAR, LNG, and BAC.
Category: Stocks
