I have composed here a list of 17 stocks split up into 6 groups, where I talk about where I believe these stocks may be heading in the future as well in what economic conditions you may want to hold them. Keep in mind that I'm not saying that you should jump on some of these stocks, but you should find a good entry point before going long or short. I think the overall market direction in the next few years will be up, and I have mostly pointed out some of the stocks that I expect to see outperform or under perform others.
Buy & Hold
1. AAPL
2. GOOG
3. AMZN
These are 3 of the strongest stocks going forward. These are great buy & hold stocks for investors who don't like owning stocks with big daily fluctuations that they have to carefully watch on a day to day basis. These 3 stocks should provide slow but steady gains. Obviously you shouldn't buy these stocks at just any price and tell yourself you will make a gain no matter what price you buy it. You should still look for a good entry point. Although these stocks got damaged at one point or another in the past year or two, like nearly every stock in the market, these are strong companies that have continuously proven themselves, especially during this recession. These 3 stocks fell an average of -50% from their 2007 peak during the past 2 years. However, they quickly recovered their losses and are already back close to their 5 year highs, at the exception of GOOG which I believe is lagging a bit and may have some more upside potential. Fundamentally these companies remained strong during this recession. Were are just at the beginning of the recovery phase, and 2 of these 3 stocks have almost completely recovered their losses and back where they were at their 2007 peak. When the market will have completely recovered and at the expansion phase, I think these stocks will be worth a lot more
Outperformers
1. BAC - peak: $54.77, bottom: $2.53, today's close: $16.84
peak -95.38%; +565.61% bottom
2. MGM - peak: $96.40, bottom:$1.81, today's close: $8.30
peak -98.12%; +358.56% bottom
3. LVS - peak: $138.93, bottom: $1.38, today's close: $14.33
peak -99.00%; +938.40% bottom
4. WYNN - peak: $164.65, bottom: $14.50, today's close: $53.42
peak -91.92%; +268.41% bottom
5. C - peak: $55.70, bottom: $0.97, today's close: $4.77
peak -98.25%; +391.75% bottom
These are some of the stocks that were battered the most during this recession. The banks are in big part responsible for this big mess, and Las Vegas was one of the biggest victims of the worsed recession, since the Great Depression. These stocks were all down from -91.92% to -99.00% from their peaks. Today they are up between +268.41% and +938.40% from their bottom. These are very volatile stock with high betas, particularly MGM and LVS with betas of 4.29 and 4.68. These are great swing trading stocks. These are the stocks you want to keep an eye on, on a day to day basis. Two of my favorite stocks are BAC and MGM, that I will be constantly in and out of either. In the long term the whole market looks bullish, but I'm particularly very bullish towards these 2 stocks which I think are close to be guaranteed to continue much higher in the coming years. Although I'm short BAC right now, I don't intend to stay short for too long, and only until the uptrend resumes. I would never short any of the casino stocks because they are simply just too risky with very high betas, just like the casino itself. I think MGM has some good upside potential over LVS in the short term, until the month of December when the City Center is set to open. I expect MGM will be much higher long term, but I think LVS will prove to be more stable and perhaps provide greater returns starting 2010, and possibly outperforming MGM. I think the proof is that LVS has already recovered much more than MGM, which may indicate that LVS was more unfairly damaged than MGM which was close to bankruptcy just a few months ago. I think within a time horizon of 1-2 years, MGM will beat LVS, but with 3-5 years, LVS will dominate. Think of MGM as my temporary number 2 ranked stock, that may eventually go to 3. I have a tendency to trade more towards MGM than LVS, also because I know it better in terms of how its price action, even though they are very positively correlated. I personnally don't love the WYNN, but I had to put it in here if MGM and LVS were here also, simply because WYNN keeps beating my expectations and has had a great run lately. Finally C is the wild card, I was hesitant of putting it in this list but I still think this will trade higher within a few years, but I think this will take much more time than BAC, that I expect won't take too long before it starts hitting new highs and dominate the financial sector. BAC should start stabilizing once we enter the expansion phase, which I think is still a long way ahead. The moment BAC starts raising back it's almost non-existent dividend this should head much higher.
Underperformers
GE
EBAY
DIS
Here are 3 stocks that have historically underperformed and I expect the trend to continue. GE is a very popular name, and is the only stock to be still present in the Dow Jones Industrial Average since the beginning. This is the type of stock that I don't really see getting back to its past highs. GE is not a bad company, but it's not a great company also. I don't see much potential with this stock. EBAY is a company that I have never liked in terms of how they do business and as a stock. Even tough like most stock has recovered some ground, EBAY is still in a major down trend since 2004, when it peaked around $57.00. DIS on the other hand is a company I like a lot as a business but not as a stock that has historically disappointed. I'm not sure why, but DIS has always been a choppy moving stock. Even though DIS was in a major uptrend from 2002 to 2008, it never reached its highs again of 2000. Also despite this uptrend, it has only managed to produce a return of approximately 140% in 6 years, compared to stocks like AAPL with approximately 1800% in just 3 years from 2004 to 2007. Now 140% is still a big gain and better than a loss but that's assuming you bought at the bottom and held on. Where as if you had bought AAPL, there is a good change you made a big gain wherever you bought it in years before its peak.
Speculative
RIMM
RIMM is a company I like a lot, but I'm not sure about how much more it can grow as a company and continue to add to its share price. It has often beat my expectations, and did get hammered more than I would have liked. I think RIMM is a company that still has to prove itself, before it can go in the same category as AAPL and AMZN.
Insurance
AUY
AUY or any gold stock for that matter is always a good insurance stock. When there's a recession, people run to gold as it rallied to $1000, and is near that level today also. What I like about gold and gold stocks is that it's not just an insurance when things turn bad, but it's relatively a stable commodity, that is always good to have. I selected AUY, because this is a gold stock that has tendency to outperform other gold stocks. However it is more volatile than most gold stocks. I'm currently long AUY.
Recession
WMT
MCD
When there's a recession people spend less and therefore consume more at companies like Wal-Mart, McDonald's. Therefore this is when you should hold stocks like WMT, MCD. These are stocks that actually rised from 2007 to 2008. WMT has pulled back since, but MCD is stable. WMT is a not stock you would want to hold in a period of recovery where we are now. You may show interest in holding MCD though because of its relatively high dividend of 3.60%, without expecting too much movement in its share price. However
Oil Play
SU
CSIQ
When you see oil rally, my favorite stock to hold is SU. SU is like oil a seasonal stock. You want to hold it particularly during the summer and winter, when oil has the tendency to go up. When oil goes, energy stocks follow as high prices of oil raises demand for alternative energy such as solar energy. One of my favorite solar energy stock is CSIQ, which I believe will move higher not only because of rises in oil prices but also because of how the company performs by itself.
Current Positions:
Short BAC
Short TIF
Long AUY
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