Basic Materials are the Place to Be?
Mar
9
Written by:
3/9/2008 5:55 PM
Basic Materials are the Place to Be?
In a week where all the three major
averages dropped 2.5% and many good picks all of a sudden became bad, the Basic
Materials sector was the strongest. After some analysis of the top industries
over the past ten days, the Basic Materials sector stood out with industries
like Cooper, Silver, Steel & Iron, Aluminum, Nonmetallic Mineral Mining and
Gold being in the top 15 for the period.
My best recommendations for the
week where two put options, one in March Freddie Mac (FRE) puts and one in
March Washington Mutual (WM) puts. And these could still hold up if the market
continues to go down.
But if the trend in Basic Materials
stays stable or improves slightly, there are a few names that could appreciate.
I like Silver Wheaton (SLW) which held up all week and looks good on the
earnings front at this time. Also staying in the Silver area, I like the
exchange traded fund the iShares Silver Trust (SLV). This ETF tracks the price
of silver which is in a nice rally at the moment.
In the Nonmetallic Mineral Mining
industry, the top in market cap and performance is Potash Corp (POT), which
sold off a little bit on Friday but for the week was only down 2.5 points. The
earnings forecast for the stock is great but the chart has begun to turn down.
Finally there is gold. I recommend
the streetTracks Gold Shares (GLD) recently and still like using the ETF to
stay in gold but not be exposed to a single stock. Goldcorp Inc (GG) held up
this past week and their earnings going forward look ok, if you really want to
be in a stock but that’s not a recommendation.