Bonus Weekend Reading — Predictions

By Travis Johnson, Stock Gumshoe, January 27, 2008

Every year I like to grab a big ‘ol pile of the investing magazines and see exactly what predictions they make for the year ahead. Many of them have “buy lists” of a dozen or so companies that they believe will succeed … and, to tell you the truth, it sometimes seems to me that a few of the newsletter editors do little more than parrot the entries from these lists.

So in the interest of sharing a few ideas with you that you might not have yet run into (and there are a few magazines that I haven’t hit yet this year), I’ll share the buy lists for 2008 here of a few of the most popular mags. I don’t have time to comment on any of them at the moment, though there are many stocks in these lists that I find appealing as well, even if some of them are still a bit pricey even after their recent dips. I do hope that if you have opinions on any of these stocks — or a “top ten” list of your own, you’ll add it to the pile here so we can all make ourselves a touch wiser.

Without further ado, the lists:

Fortune

Barron’s “ready to bounce” stocks for the year ahead:

  • American International Group (AIG) (Ken Fisher is also looking for a bright 2008 for this cheap and embattled insurer)
  • Bear Stearns (BSC)
  • Comcast (CMCSA)
  • Comerica (CMA)
  • SunTrust (STI)
  • Gannett (GCI)
  • Kohl’s (KSS)
  • Legg Mason (LM)
  • Micron Technlogy (MU)
  • Southwest Airlines (LUV)
  • Starbucks (SBUX)
  • Time Warner (TWX)

SmartMoney‘s “Where to Invest 2008”

BusinessWeek’s predictions are a lot harder to look at with any seriousness, since they issue predictions by sector for Environment, Energy, Banking, Agribusiness, falling Dollar, Infrastructure, Tech, Housing, Canadian, European, and Indian Stocks … in addition to options strategies, inflation hedges, and inverse funds. And each of those different sectors or strategies has a half dozen ways to profit, so we can’t say they’ve got a “best for 2008” list unless you’re willing to give them a “top 50” list. Though it might be worth noting that these are the hot and talked about ideas of 2007, too, not a lot of contrarian thought in here (except for finding a few good values in banks) … they didn’t list a homebuilder or a retailer that they recommended buying, nor did they go out on a limb and say that China is going to keep up with its exponential growth. I’d say that safe and diversified is the kind way to describe their 2008 investment outlook, which is a nice way to invest but a pretty boring way to make predictions.

All of these mainstream magazines, by the way, tend to be much better at reporting the progress of their picks than are many newsletter editors, even when they make bad picks. The bonus of being an underpaid journalist, no one really expects you to be a great stock picker.

For the record, the stocks on those lists that sound most appealing to me so far, just on a gut reaction, are Genentech, Legg Mason, Starbucks, St. Joe, and Erste Bank.

And I think there are a few interesting magazine lists that I haven’t gotten to here … if you want to share a list — yours or someone else’s — go right ahead and add it below with any comments you might have (though please don’t copy and paste copyrighted material). I’ll see if I find a few more to share in our next installment of the Gumshoe’s Weekend Reading.

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10 Comments on "Bonus Weekend Reading — Predictions"

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Dividends4Life
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January 27, 2008 9:17 pm

It would be interesting to revisit this post in a year and see which ones actually panned out.

Best Wishes,
D4L

Duangtip Gupta
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Duangtip Gupta
January 28, 2008 1:18 pm

Or to revisit their last year’s lists and see how they are doing now.

G IMBURG
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G IMBURG
January 28, 2008 9:26 pm
MY PROBLEM IS I BELIEVE THE U.S. ECONOMY IS IN FOR A ROUGH PERIOD IF NOT A RECESSION. The CPI index was abnormaly high,the dollar is falling,and the unemployment rate has risen to 5%. Tech stocks had a rough begining in 2008. The total of major banks probably have more billion type writeoffs to announce. My suggestion is to find stocks that are recession proof. Heavy equipment companies cannot keep up with foreign demand. Energy has risen and seems to continue an upward trend. Investment in these sectors and foreign growth would lessen risk and give a chance for growth… Read more »
Gravity Switch
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January 28, 2008 9:47 pm
Thanks for the comments, folks. Imburg, the only thing I can say is that we may or may not be in a recession, and it may or may not get worse before it gets better … but for long term investors, the middle of a recession is often a really good time to be investing. Investors generally buy stocks with an eye on the economy as it will be six months from now, or a year from now, not as it is today. That said, things could definitely get ugly this year, especially with so many people so scared about… Read more »
Pearl Little
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Pearl Little
January 28, 2008 10:43 pm
From around 1966 or so until 1984 or so the stock market didn’t move much. That wasn’t a 6 month recession, it was more like a 20 year stagnation. I’m not saying that could happen again. Things are different now. However, it is a possibility. On the one side the sovereign funds still have a lot more they want to invest in the stock market, so that should keep it volatile at least. On the other hand, they will eventually have invested everything, and then what? Or how about the aging population problem? These things could bring about a very… Read more »
ghayos
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ghayos
January 29, 2008 2:10 am

dksc,,,,,,,,,,,,,,,,,,,,whats the future and when?

G IMBURG
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G IMBURG
January 29, 2008 10:15 am

Just a comment on energy.My belief is that the world growth, particularly China and India are reaponsible for crude prices and the demand keeps rising. Coal prices will probably rise if exports increase.New legislation for clean energy is a compelling reason to look at these stocks. Notwithstanding a recession,or stagnation,electricty use will not decrease and there are some exciting alternatives to using crude products and nat gas to create electricity.Many of these new energy types are clean and in their infancy with years to grow.The only problem is selecting the right growth stock.

Gravity Switch
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January 29, 2008 10:36 am
Pearl, and Imburg, more good points from both of you. I guess that’s why the market moves both directions, there’s room for many different predictions. Personally, if I thought that we were primed for a few decades of US stagnation (and I don’t) I’d probably focus on investing in large multinationals with good dividends and, in an attempt to find some real winners to boost my portfolio, in growth stocks that are non-cyclical, including perhaps some medical growth names (mostly devices and biotech). It’s worth remembering that during that stagnant period you note, almost all of the returns from the… Read more »
advantedges
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January 31, 2008 6:17 am
Gumshoe First, your blog above regarding the US Market for 2008 may be correct long term,,,,however, tell that to people who are losing money now!….Yes, it may be a good time to buy for the long term, however, please read the IBD take on the markets – they suggest that the market will tell you when the correction is over, and not to try to second guess,,,,, Meanwhile, Japan and Korea are signaling that there may be hope yet for the global markets, both being up today. Watch those markets closely, as they may be part of a new global… Read more »
G IMBURG
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G IMBURG
January 31, 2008 10:18 pm

Let me flip this controversial remark into the mix.Its my belief that trying to capture dividends is a zero sum game.Typically,when the company issues the dividend, the stock price adjusts downward to compensate for the loss of earnings, and the dividend may be a taxable event. This may even result in loss if the stock price keeps falling. I winessed this in PCU, Southern copper. Your right,different strokes is what makes the market move in both directions. Better to come to the market as a predator rather than prey because the game is surival of the fittest.

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