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The market rallied 345 points yesterday and is down near 200 points today. What does it mean? Folks, don't believe what you read in newspapers or on television. If they know so much, why aren't they rich from the stock market? The answer is they are not. There is no one on this planet that can figure out the day to day gyrations of the stock market. The best minds that we have known and we know a few who have been right up there at the top have never been able to figure out the day to day gyrations. Only in the newspapers will you read that yesterday's rally was about short covering, or a deal with Iraq in the United Nations. It's not that easy. You have got to be right on individual stocks. That's where you are going to make your money. Now there are expensive markets, and there are cheap markets. There are expensive stocks and there are cheap stocks. We try to find the cheap stocks that are going to get expensive. That's all we want to do. With that in mind, let's talk about a few stocks: Foot Locker (Z) $9.30 If you look at a $1 plus in earnings this year and next, you will realize that this stock should sell at $15 to $20 per share over the next 6 to 15 months. The stores are out there, walk into them and see for yourself, what's going on. This seems like an easy play for us. We are going to star this stock as one of our favorites. BJ's Wholesale Club (BJ) $17.49 This stock should double because of the discrepancy between its current PE ratio and that of the industry and where it normally trades. The stock has gotten cheaper. That happens in bear markets. This is another company that you can walk into the stores yourself and see what we see. We think astute investors will want to own both Foot Locker and BJ's in this environment. Tommy Hilfiger (TOM) $8.65 The stock is down to $8 and change. They are absolutely giving it away. There are no balance sheet issues. There's lots of cash and Tommy Hilfiger is a brand name. We have been in the stores; this one is going to work out big from here. We'll go one better, this stock is going to work out big from the original $12 price we talked about it at. You have to take a look at this stock folks. Walt Disney (DIS) $16.25 In the aftermath of September 11, 2001, business is down big at all the theme parks. It's obvious why. The company should now have fairly easy comparisons going forward with the previous quarters from the aftermath of September 11th. Michael Eisner, Chairman is under the gun and he knows it. He's got to become completely proactive immediately with this company and that's what we see happening. Tyco (TYC) $13.45 Tyco is going to bounce around here. With somewhere between $1.50 and $2.00 in earnings next year, we say the stock should sell at 15 times $2 or $30 per share in the next year. That's more than a double in a bear market. There will be lots and lots of ups and downs in this stock before it happens. If you want to trade it go ahead. We would rather just wait out the double. However once the profit becomes massive, by that we mean in the $20's we will probably bail out. Electronic Data Systems (EDS) $13.35 There is going to be lots of ups and downs in this one also as good and bad news becomes available. Look in the paper today and it talks about an informal inquiry by the SEC into their accounting practices. This inquiry is automatic in view of the publicly disseminated information that's been out there recently. This market is going to continue to trade with very wide ranges. In the bear market of 1973 to 1974, there were six major trading rallies before the market finally bottomed. Yes you could have traded any of these rallies. We don't know anyone capable of it, but you could have done it. The big money was made by buying great stocks in that environment and holding a year or two until they worked out big. Our favorite example is McDonalds, the hamburger people. During that bear market, McDonalds's stock fell by close to 70 percent in value, while the earnings tripled at the same time. Let's repeat that. The stock was down 2/3rds in price while the earnings tripled. God bless you if you tried to trade in and out on McDonald's during this period. The stock went up 50 times since that bottom in that bear market. We know, we checked the 35 year chart on McDonald's. Your Friends At StocksAtBottom.com JOIN NOW |
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