Top 5-year investment picks for 2009
Posted
Dec 22 2008, 12:59 PM
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This post is by MSN Money columnist Michael Brush.
In a recent column, I rounded up a 2009 outlook from market experts at the top investment newsletters ranked by their 10-20 year records -- enough time to have been through more than one bear market.
But top-ranked investment writers in the next Hulbert Financial Digest category -- five-year returns -- are worth checking in with, too. After all, these investment letters earned their strips for excellent stock picking coming out of the last recession. Since we may be coming out of this one soon, their strategies are worth considering now, for advice on how to play a rebound.
Here’s a look at what analysts at the top three newsletters for five-year returns are saying about what’s in store for 2009 and how best to play the trends:
Outstanding Investments
Rank: #1 for five-year performance
Annualized returns: 12.5%
Big picture call: Outstanding Investments picks stocks in the energy and natural resources sectors, which includes alternative energy. Editor Byron King expects alternative energy plays to get a big boost from favorable policies under the Barack Obama administration.
Favorite picks: A major theme in alternative energy is the need to upgrade and integrate U.S. electricity grids so they can distribute power where it’s needed, from alternative sources like wind farms. Two promising plays on this theme are Allegheny Technologies (ATI), which makes expensive specialty steel used in transformers and electrical equipment, and Koppers Holdings (KOP), which sells treated wood products used to make utility poles and railroad ties.
Cabot China & Emerging Markets Report
Rank: #2 for five-year performance
Annualized returns: 11.6%
Big picture call: Cabot China & Emerging Markets Report editor Paul Goodwin typically invests in momentum stocks. So it’s no surprise to find him 100% in cash in this lousy market. However, he’s close to getting back into Chinese stocks. All it would take will be some continued positive momentum in the group -- or another several days of gains in the Halter USX China Index.
Favorite picks: If he gets the momentum green light, he’d be buying the iShares FTSE/Xinhua China 25 Index (FXI) exchange traded fund, which is made up of larger, less risky Chinese companies. He also likes China Sky One Medical (CSKI) which sells traditional Chinese herbs, supplements and medicines, and has solid revenue and earnings momentum.
Insiders PLUS
Rank: #3 for five-year performance
Annualized returns: 9.1%
Big picture call: Insiders PLUS editor Jack Adamo expects a choppy market rally through the middle of April, followed by weakness which will take stocks into negative territory for 2009.
Favorite picks: Though the thinks the markets may end down for the year, Adamo thinks the following stocks, which he owns, will do well. One is Annaly Capital Management (NLY), a real estate investment trust that invests in mortgage-related securities backed by the U.S. government. It has a 14.7% dividend yield. He’s also betting on NuStar (NS), whose asphalt production should get a boost from infrastructure spending under the Obama administration. Adamo also likes US Bancorp (USB), whose strong balance sheet should help it gain market share from weaker competitors during this downturn in the financial sector
