Thursday, January 17, 2008

4 Stock Recommendations for a BRUTAL market

When you find yourself in an absolutely brutal market like the one we are experiencing now you can either pack-it-in and find a mattress to stuff what is left of your money under, or find a strategy that uses the down tape to your advantage.

2 strategies (and 4 stock recommendations) that that may turn this down market to your advantage:

Strategy #1 - Get defensive:
Coke (KO) is defensive in a down market AND it a carries a nice 2.1% dividend. Additionally KO 's international exposure set it up to benefit from the weak US dollar... Besides who could argue with owning a Warren Buffett pick.

Speaking of Warren Buffett, Berkshire Hathaway (BRK-A / BRK-B) is a great defensive stock... In fact Berkshire Hathaway has a whole portfolio of defensive stocks run by a financial genius. Additionally, as Jeff Macke said on CNBC's Fast Money "Buy the vulture, not the meat" and Berkshire Hathaway is the ultimate vulture in that Warren Buffett will pick through the down stocks to buy some of the best companies deep discounts.

Strategy #2 - Buy the fire sale:
Wells Fargo (WFC) is cheap down here at 26 and change with a PE of 9.89 and a 4.7% dividend. They are one of the few good banks left in this "sub prime slime" environment, and long-term stand to benefit from the mis-fortune of the other banks. Oh, and did I mention this is also a Warren Buffett pick?

And finally Intel (INTC) is WAY too cheap down here at 19 and change. Intel is another stock with great international exposure that can benefit from the weak dollar and the recent stock price drop has pushed the dividend up to 2.3%... And lets face it, an industry leader like Intel shouldn't fall this hard when their competition has fallen down like AMD has.

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