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Jim Rogers, market circulation and Goldman’s picks
By Rob | April 29, 2008
“All the panic looks like a bottom. I have bought in the last four to five weeks. I’ve been buying shares in China for the first time in a long time.” Jim Rogers, 04/29/2008
You want to see something cool? Look at railroads, particularly Union Pacific (UNP). That sucker is up 12% since April, due to the messed up rise in oil and how that relationship benefits railroads. Then check out Mastercard and Visa (V), both doing phenomenally well. At the same time we are getting a correction in the aggries like Potash (POT) and Monsanto (MON), oil, steel, and coal ETF (KOL). One of my favorite darlings Parexel (PRXL) is coasting along, but this is a future growth story that not many are aware of. At the same time this rotation is putting tech and financials in a much better position. RIMM, JNPR, VMW, and AAPL are continuing to do well. Solars are also standing up well. Those of you who missed on the dry-shipping rally at DryShips (DRYS) which went for 37% in April - took a breath today - the stock is down 5% and the rest of the dry-shippers are getting nailed too. Pay attention to Chinese internet’s - those are up a lot, specifically BIDU, SOHU, CTRP and SINA.
From Goldman’s report this morning:
It looks like metal stocks will continue to do well and the BRIC countries are have a lot more demand coming. Supply constraints in Chile (labor strikes and power) and Australia (mine floods) have significantly improved copper and met coal fundamentals. So I expect metal demand to recover in 2H08, followed by increased 2009 commodity prices. Two stocks I like here are Freeport McMoran (FCX) and Vale (RIO). However, those are currently correcting and will become a good buy in a few days, not right the moment.
On the Gold front Goldman put out this note that was quite puzzling this morning: ” We now expect gold prices to average $965 in 2008 ($910 previously) and $955 in 2009 (up from $870). We believe gold prices could test the $1200/oz level in 2H08 due to increased inflation pressures. We have lowered our 2010 gold forecast to $875 (from $940), factoring improving US macro economic fundamentals and a stronger USD. We have also increased our long-term gold price to $600/oz (from $550), reflecting improved fundamentals. ”
Solars: Goldman maintained its buy rating on SunPower (SPWR) at $104 and I agree here, we are going to go even higher, regardless of the problems SPWR is facing.
Last, 3 oil stocks that are expected to do well in the near term according to Goldman are : ConocoPhillips (COP), Valero Energy (VLO), and Frontier Oil (FTO). Conoco’s fundamental outlook in terms of comparative per share growth and ROCE is on-track to improve in coming years and that its shares are very inexpensive relative to other integrated oils. Valero and Frontier are recommended given our outlook for rebounding refining margins.
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