November 20, 2004
This is Louis Navellier. It is Saturday, November 20, 2004.
Well, it was a good week for us but not the best week for the market. The
market sold off late this week on fears of a weak dollar. Ironically, that
helps us a lot because our buy list has a lot of international and U.S.
based stocks multi-national stocks that benefit from the weak dollar. So
the market might be scared of a weak dollar, but it certainly helps our
stocks.
Additionally, the market ended the week on a negative note largely due to
resurging oil prices. This also helps us because 40% of our buy list is
energy related. So we’re very well positioned for this market.
This week saw fascinating economic news. The Producer Price Index, which is
wholesale inflation, saw the biggest jump in 14 years, up 1.7%. The core
rate of inflation excluding food and energy was up 0.6%. It was obviously
caused by rising energy prices and rising food prices as a result of the
Florida hurricanes’ crop destruction that affected tomatoes, grapefruits,
strawberries and oranges. Wholesale produce prices rose over 34%. That is
non-recurring inflation that is now dissipating as hurricane season is now
over. The Producer Price Index did scare people because it had its biggest
jump in 14 years.
The next day, the Consumer Price Index was released at up 0.6%. The core
rate excluding food and energy was only up 0.2% versus the previous month’s
0.3%. That was reassuring to Wall Street and they now think inflation might
be cooling off. Again, most inflation in the economy is energy related.
Some of it is food related as food costs have risen with the strong dollar.
Also playing in are fertilizer costs. We’re positioned to capitalize on the
inflation due to food and energy.
We have some changes for the December Blue Chip buy list. I’d like you to
sell Countrywide Financial (CFC) and Stryker (SYK), the orthopedics
company. Both of these stocks have been downgraded to "hold" for a while.
Countrywide bounced back a bit so it’s a good time to sell it. Stryker
rebounded a few weeks ago and you can sell it now.
I have only one new stock to purchase this month: Apple Computer (AAPL). It
has had incredible earnings, much of which relates to iPod sales. They
process digital media (pictures, movies, etc.) better than anyone else. If
you wonder what the fuss about the iPod is, just go find a teenager as they
basically all have one. Apple is on a roll right now and that’s my new buy.
If you have any money leftover from selling Countrywide and Stryker and
buying Apple, you might want to look at our Top 5 stocks. This month, they
are Brascan (BNN), ChevronTexaco (CVX), Syngenta (SYT), Valero Energy
(VLO), all conservative stocks, and TXU Energy (TXU), a moderately
aggressive stock. TXU just boosted its dividend yield to 3.5%, which is
very encouraging.
I feel pretty good because we are in the right industries that prosper when
the dollar is weak. Alan Greenspan finally acknowledged that the U.S. might
have to do something about the weak U.S. dollar. In the past, he said we
should let the dollar float because that is how to eliminate trade
deficits. This is the big fuss in international circles. It helps the U.S.
economy and it hurts other economies with strong currencies. So the U.S.
should be growing faster than Canada now, largely due to the weak dollar,
although Canada has a lot of natural resources and will do very well in
this environment.
Let me walk you through the stocks on the December buy list. Starting with
the conservative stocks, American Standard (ASD) is a good buy.
Avon Products (AVP) has pulled back and is a good buy. Many people have
told me that Avon is weak. Starbucks was weak a couple of months ago and it
resurged. Avon is moving in its normal trading range and it will be fine.
I’m not worried about this stock. The company’s sales and earnings come
predominantly from outside the United States. It will benefit from the weak
dollar. It has very strong sales outside of the United States. It will be
fine. It’s a great buy.
BG Group (BRG) is very strong. You can buy it up to $37 per share. This is
a U.K. company which is obviously resurging because of surging energy and
the weak dollar. When the dollar weakens, these international stocks take
off.
Brascan (BNN), one of our Top 5 stocks, is improving and is a good buy. You
can buy it up to $40 per share. ChevronTexaco (CVX), one of our Top 5
stocks, is improving and is a good buy. You can buy it up to $57 per share.
ConocoPhillips (COP), is improving and is a good buy. The energy stocks do
really well late in the week. eBay (EBAY) is a good buy. It pulled back on
Friday and is now back in range. You can buy it up to $117 per share. eBay
usually does really well in the fourth quarter because that is when it
makes a lot of sales.
Golden West Financial (GDW) has pulled back and is a good buy. You can buy
it up to $129 per share. It pulled back sharply on Friday but I’m not
worried about it. It’s an outstanding buy. It is the best financial stock
out there.
Hershey Foods (HSY) is steady and a good buy. You can buy it up to $56 per
share. It should profit from the weak dollar. Imperial Oil (IMO), in
Canada, is improving and is a good buy.
National Grid Transco (NGG) is improving and is an outstanding buy.
Occidental Petroleum (OXY) was kind of quiet but is now steadily making
some ground. It’s still a good buy.
Procter & Gamble (PG) is a good buy and will profit from the weak dollar.
Qualcomm (QCOM) is improving and is a good buy and will also profit from
the weak dollar.
Starbucks (SBUX) is a phenomenal buy. You can buy it up to $59 per share.
Suncor Energy (SU) is improving and is a good buy.
Syngenta (SYT) is improving and is a good buy. Valero Energy (VLO) is
improving and is a good buy. You can buy it up to $47 per share. These are
both Top 5 stocks.
Zimmer Holdings (ZMH) has pulled back and is a good buy. I wouldn’t worry
too much about it though I sold Stryker. Zimmer looks a lot better than
Stryker does. Stryker bought a company called SpineCore, which knocked its
earnings a tad. Zimmer did a merger a long time ago with a company called
Centerpulse. Zimmer is looking good.
Moving on to the moderately aggressive stocks, Alcon (ACL), the Swiss maker
of medicine for degenerative eye diseases, is steady and just started to
pull back. It’s a good buy. You can buy it up to $81 per share.
Amerada Hess (AHC) is finally resurging. It’s improving nicely and is a
good buy. America Movil (AMX), the Mexican cell phone company, did pull
back on Friday but it’s a very good buy. You can buy it up to $49 per
share.
Apple Computer (AAPL) is very steady and is a good buy. Burlington
Resources (BR), our natural gas stock, is improving and is a good buy. You
can buy it up to $45 per share.
Canadian Natural Resources (CNQ) is improving and is a good buy. CNOOC
(CEO), the Chinese oil company, is improving and is a good buy.
Georgia-Pacific (GP) is a good buy. Nextel (NXTL) is a very good buy.
TXU Energy (TXU), one of our Top 5 stocks and one of our stars last month,
pulled back just a tad and is a good buy. You can buy it up to $71 per
share.
Moving on to the aggressive and more powerful stocks, Aluminum Corporation
of China (ACH) is a good buy. Motorola (MOT) is a good buy.
Research in Motion (RIMM) is improving and is a good buy. Yahoo! (YHOO) is
still a "hold" in my system but it’s doing all right.
We’re pretty happy because we are properly positioned with a lot of energy
stocks which rally when the overall market is soft. We have foreign stocks
that profit from the weak dollar, too, so we’re positioned to profit from
all the things that are bothering Wall Street. So I wouldn’t worry about it.
I’ll update the hotline next Thursday morning on Thanksgiving Day. I hope
everybody has a wonderful Thanksgiving holiday. I do want to mention that
volume will dry up a bit next week, but usually right after Thanksgiving we
see a lot of pension funding and the market should firm up with that.
Please don’t worry about surging oil prices or the weak dollar because
we’re positioned for it. I think our stocks are going to be oases when the
market is soft.
I’ll talk to you Thursday morning or before then if the Dow swings more
than 200 points per day or the NASDAQ swings more than 100 points per day.
We’re well positioned, so hang on and enjoy the ride. Take care, everybody.
