Category: Stock Option Investment Advice

Best Buy (BBY) is a specialty retailer of consumer electronics, home office products, home appliances, and entertainment products in the United States, Canada, and China. One of their competitors, Circuit City, recently declared for bankruptcy and is currently in the process of liquidating their inventory. Most investors expected this event to be a catalyst of Best Buy’s stock; however, the current recession has had a prominent effect on the retail sector causing retail sales to steadily decline. One of the hardest hit areas of the retail sector is the consumer discretionary area. Consumer discretionary items refer to products consumers do not need, but are products they want to buy when they have extra money. During a recession people have very little money that can be spent on discretionary items which is why these companies tend to struggle during recessions.

Still reeling from the effects dealt by the current economic crisis, the financial sector took another blow this time landing where it hurts most, close to its heart! This was bitter to no end as it points to one of its big boys in the community being the culprit of a fraudulent (Ponzi) styled scheme. The accused is former NASDAQ chairman Bernard Lawrence Madoff and until recently chairman of Bernard L. Madoff Investments Securities, the vehicle he used to siphoned $50 Billion from unsuspecting and clueless investors.

In the wake of the subprime lending crisis, many stock investing positions are selling far below their fair value. The year 2009 will exciting for investors who know how to sort the wheat from the chaff. Opportunities will abound, but not every stock is bargain. Some companies are still overvalued, even at their current price. Here are a few companies to avoid when revamping your portfolio.

During a recession, the types of companies that usually perform well are grouped in a category called Consumer Staples. These companies make products people will use no matter what the state of the economy, and are usually located in what is known as the Fast Moving Consumer Goods Industry (FMCG). Products included in this category are: cleaners, toothpastes, toilet paper, paper towels, detergents, and soaps. The leading companies who engage in the production and sale of these products are Clorox (CLX), Colgate-Palmolive (CL), Proctor & Gamble (PG), Unilever (UN), and Chattem (CHTT).

Bankruptcies, bailouts and bad loans have rocked the financial industry. For investors, this bad news may provide good opportunities to buy low. Let’s take a look at some companies that look to be in the best shape to survive the current crisis and profit once it’s passed. CITIGROUP INC. (C) A discussion of the current financial crisis must include Citigroup. With over 200 million customer accounts in more than 100 countries, Citigroup provides consumers, corporations, governments, and institutions with a broad range of financial services.

With the recent strength of the U.S. dollar and the fear of a global recession, commodity prices have plunged over 50% in some cases, over the last few months. While this is hurting the majority of industrial and commodity based companies, there are some consumer staples and consumer goods companies whose raw costs are declining because of the decrease in commodity prices, which should lead to increased profit margins. Companies which may benefit the most from these lower commodity prices are: Kimberly-Clark Corp. (KMB), General Mills (GIS), Tyson Foods (TSN), and Goodyear Tire & Rubber Co. (GT).

The headlines scream it loud and clear: “Greatest Financial Crisis Since the Great Depression,” “Severe Recession Looming,” “Retirement Savings Wiped Out.” Government bailouts and partial nationalizing of our banking system have resulted, thus impinging on the great American laissez-faire capitalistic experiment. Clearly, something in our financial system went very wrong or we wouldn’t be in this precarious predicament. That something is the result of two historic economic bubbles within one decade; unprecedented in American history.

The recent decline in the stock market has provided investors with several opportunities in commodity-related stocks. The recent decline was mainly due to heavy selling by hedge funds and the decline in consumption of these commodities from China. The fundamental long-term outlook for these companies remains solid and this should turn out to be a major buying opportunity for many of these companies. Through most of the 2007 and the first half of 2008, commodity stocks were on fire. However, over the last two months, many of these stocks have lost 50% or more of their gains. Some of the best commodity-related stocks that are now cheap according to their Price Earnings Multiple are Freeport McMoran Copper and Gold (FCX), Nucor Corporation (NUE), Bucyrus International (BUCY), and Arch Coal (ACI).

With high gasoline prices, consumers are looking for ways to save money on fuel. There are many ways to accomplish this goal: drive less, take public transportation, telecommute, or buy a more fuel-efficient vehicle. Considering our driving habits, driving substantially less doesn’t seem likely, and for people who aren’t in a densely populated area, public transportation isn’t a possibility. This leaves the average consumer with one possibility: buy a more fuel efficient and less expensive vehicle. For many, their transportation of choice is a motorcycle.

For-profit schools serve 2.8 million students and are challenging community colleges for students who want to develop specific workforce skills. These schools, in addition to their computer technology programs and entry-level business certifications, now provide programs in growth industries such as health care and education.