best 25 stocks 2008

On last month's 12th FORBES cruise for investors--aboard the majestic Crystal Serenity, which sailed from the Pacific to the Caribbean through the Panama Canal--guests got these 2008 stock picks from our expert panel.
Ken Fisher is the founder and CEO of Fisher Investments, which manages $46 billion across 20,000-plus private accounts. Fisher said: "Most see a global recession or slowdown in 2008. I don't, not with strong earnings yields relative to low Treasury yields around the world today. Before others figure out the good news, you'll want to be in on these economic turnaround stocks:--Flextronics International (nasdaq: FLEX - news - people ) (FLEX, $11.53) --Manpower (nyse: MAN - news - people ) (MAN, $57.18) --Allianz (nyse: AZ - news - people ) (AZ, $20.16) --Cascade (nyse: CAE - news - people ) (CAE, $46.80) --Union Pacific (nyse: UNP - news - people ) (UNP, $128.96).
Brian Wesbury is the chief economist for First Trust Advisors, which manages $36 billion for private and institutional accounts. Wesbury said: "Our model shows U.S. stocks to be 25% undervalued even when we use a higher 6% yield for the ten-year Treasury bond." (As this column went to press, the yield was 4.1%.) Wesbury thinks the U.S. and the global economy are in a long boom, fueled by tech-led productivity, easy money and tax competition. He likes chip manufacturers and aerospace parts suppliers:--Sigma Designs (nasdaq: SIGM - news - people ) (SIGM, $62.71) --Nvidia (NVDA, $33.28) --Precision Castparts (nyse: PCP - news - people ) (PCP, $138.39) --Parker Hannifin (nyse: PH - news - people ) (PH, $75.06) --Hasbro (nyse: HAS - news - people ) (HAS, $25.84).
Stephen Biggar is the global director of equity research for Standard & Poor's. He recommended any of the 149 five-star stocks within the 1,550 companies covered by Standard & Poor's. Pressed to name just five stocks, Biggar offered us this broad midcap mix:--Carlisle Companies (nyse: CSL - news - people ) (CSL (other-otc: CMXHF.PK - news - people ), $37.62) --CVS Caremark (CVS, $39.13) --Hologic (nasdaq: HOLX - news - people ) (HOLX, $65.08) --Manitowoc Company (nyse: MTW - news - people ) (MTW, $45.90) --Triumph Group (nyse: TGI - news - people ) (TGI, $75.55).
Charles Payne is CEO of Wall Street Strategies, a firm that develops stock selection services for professional traders and institutional investors. Payne is a frequent guest market analyst on Fox News and Fox Business News. He shared these picks:--Diana Shipping (DSX, $29.29) --MEMC Electronic Materials (nyse: WFR - news - people ) (WFR, $83.42) --Evergreen Solar (nasdaq: ESLR - news - people ) (ESLR, $15.02) --VimpelCom (VIP, $35.74) --Guess (GES, $40.10).
Vahan Janjigian is Vice President and Executive Director of the Forbes Investors Advisory Institute. He is the editor of the Forbes Growth Investor and the Special Situation Survey, investment newsletters that have produced five-year annualized returns of 15.3% and 26.6%, respectively, according to the independent Hulbert Financial Digest. Janjigian is also the host of MoneyMasters with Vahan Janjigian, an Internet video program available on Forbes.com and iTunes, and is the coauthor and editor of the Forbes Stock Market Course, as well. Although Janjigian is an economic and market bear, he likes these stocks:--Johnson & Johnson (nyse: JNJ - news - people ) (JNJ, $67.55) --DRS Technologies (nyse: DRS - news - people ) (DRS, $55.31) --Rock-Tenn Company, Class A shares (RKT, $24.50) --Trinity Industries (nyse: TRN - news - people ) (TRN, $26.07) --Avnet (nyse: AVT - news - people ) (AVT, $34.75).
And for You Bears
Disagree with the bullish forecasts given above? Think bad mortgages will torpedo the economy and stocks? Here are some down-market defensive strategies shared during our investor cruise by longtime FORBES columnist Gary Shilling:
--Short home builders. Whoa! Haven’t the home-builder stocks already fallen hard? Not far enough, says Shilling. Home builders trade at book value today but sold for half of book in 1991.
--Don’t just short home builders; short (or sell) mortgage lenders and mortgage insurers, too.
--Sell any residential real estate or land you don’t intend to keep for the long haul. Take small losses, sure to grow larger soon.
--Short or sell companies that make big-ticket consumer items— like cars.
--Short sub-AA-rated CDOs backed by subprime mortgages.
--Get rid of junk bonds.
--Sell or avoid most commercial real estate.
--Sell or short commodities, including oil. Why? The U.S. recession will damage the global economy and suppress demand for commodities. Shilling’s favorite short: copper.
--Short (or sell) emerging-market stocks.
--Short (or sell) emerging-market bonds.
--Sell U.S. stocks in general.
--Buy the U.S. dollar.

Best stock 2008

I'll make this simple. Apple (Nasdaq: AAPL) is 2008's best stock because it wallops rival electronics retailers in generating sales per square foot:
Company
Retail Revenue (mil)
Square Feet, Retail (mil)
Sales Per Square Foot
Apple
$4,115
1.5
$2,743.33
Best Buy
$32,222
33.3
$967.63
Circuit City
$11,860
17.6
$675.01 Sources: SEC filings, The Motley Fool estimates.
Impressive, yes? I'll say.
I should point out that these numbers are anything but perfect. Apple's retail revenue includes its small but growing international operation. Not so for Best Buy (NYSE: BBY) and Circuit City (NYSE: CC). Apple also operates on a different fiscal calendar than its electronics-retailing peers.
Still, look at that footprint. With just 1.5 million square feet, spread out across roughly 200 stores around the globe, Apple -- the 30-year-old Mac daddy -- is but a baby when it comes to retailing.
Not for long, though. That 4-T black turtleneck you bought little Stevie for Christmas is already ripping at the seams. Apple plans 40 new stores in 2008, many of which will be planted overseas. Mexico, too, if the rumors are true.
Apple: Netflix killer?Apple can still make billions from retailing. But there's also big money waiting in other areas of its business -- video rentals, for example.
Last week, major media outlets reported that Apple had inked a deal with News Corp. to make video rentals available via iTunes. If true, it would put instant pressure on Netflix (Nasdaq: NFLX) to do more with its fledging "Watch Now" free service.
But the news may be bigger than any single deal. Thanks to Hulu, Watch Now, the SlingBox, and TiVo, we've become accustomed to getting programming any time, anywhere, in whatever form we want. You can be sure that Apple CEO Steve Jobs is keenly aware of this, and that iTunes video rentals are on the way. If News Corp. doesn't provide the content, someone else will.
Apple: Palm killer?Then there's the iPhone. The numbers are staggering. Roughly 1.4 million have already sold, which, by my math, will bring in at least $700 million in new revenue for Apple.
But that's a conservative estimate. I'm assuming just $399 per phone, plus $100 for Apple's referral deal with AT&T. We know that many iPhones sold for $600. We also have press reports stating that Apple reaps $18 a month from Ma Bell for each iPhone activated, or $432 over a two-year period.
Do the math with me: 1.4 million multiplied by $831 per iPhone is ... (key-punching sounds) ... $1.16 billion. Apple may have created a billion-dollar business ... in six freakin' months.
It makes me wonder: How can Palm (Nasdaq: PALM) be so slow when the market is moving so fast?
Apple: Windows killer?Finally, let's talk Leopard. No, not the cat; the operating system. The new Mac OS is already a winner, having sold more than 2 million copies in its first weekend of release.
Reviews in my copy of Macworld don't offer breathless praise for the OS, but there's plenty to like, including a very useful new feature called "Time Machine." You select the hard drive you'd like to back up, and the destination for your archived data, and Leopard takes care of the rest.
Elegant system software engineering like this is commonplace for Apple. Before there were retail stores, the iEmpire and its devotees -- yours truly included -- thought superior design would ultimately draw customers away from Microsoft (Nasdaq: MSFT) and Windows. Never happened.
But here's the thing: It still could. Retail stores are as much a showroom for the Mac OS, the iPod, and the iPhone as they are a sales depot. Researcher IDC says that Apple's share of the domestic PC market is climbing as a result.
What's more, with chips from Intel (Nasdaq: INTC), Macs now handle PC programs pretty well. For example, a software application called Crossover allows you to run PC software in the Mac OS without a copy of Windows present. Talk about a rebellion in the making.
Fly the pirate flagNotice the pattern here, Fool. Apple is disrupting every business it enters, and in most cases, doing so successfully. Think about how extraordinary that is. All Microsoft had to do was disrupt the PC business once to unleash billions in market value.
How much more will Apple unleash when it disrupts two? Three? Four? You get the picture. Apple, like so many rebel stocks before it, is a misunderstood multibagger in the making. $200 a share is just the beginning.
But that's my take. If you agree, head over to CAPS to rate Apple "outperform." If not, rate it "underperform." Our editors will tally your votes and, next week, reveal your choice for the best stock of the New Year.

What do Value Investors Look for in Stocks?

What factors should you consider when evaluating a value stock? Before we answer that question, maybe we should briefly define value investing.
Value investing is finding a stock that is selling at a discount to its intrinsic value or companies that the market has undervalued for some reason unrelated to its economic fundamentals.
Benjamin Graham pioneered the value-investing concept and recognized the biggest flaw in the strategy: deciding what a company’s intrinsic value is.
Margin of Safety For this reason he always counseled for a margin of safety that provided room should your calculation of the intrinsic value be off.
This is important because the key to successful value investing is buying at the correct price. Graham’s strategy called for a strict discipline on price, which included his margin of safety.
If he could not buy the stock at that price, he would pass.
Many modern stock pickers scoff at the rigidity of his system, yet Graham and his pupils, such as Warren Buffett, have made fortunes sticking to the strategy.
Financial Statistics Here are some of the financial statistics value investors study, historical and forward:
price to book ratios
price to sales ratios
price to earnings ratios
price to cash flow ratios For an explanation of these ratios, see Tools of Financial Analysis.
The value investor will look for these ratios to be below the S&P 500 benchmarks for a company’s industry group.
However, let’s be clear. Value investors are not looking for companies on the way to bankruptcy. They are looking for companies that have been beaten up by the market for no real fault of their own.
One of the ways you can make sure the company is on solid footing is to look at its financials.
Debt Ratios Look in particular at its debt ratios (debt levels should be low) and look for good cash flow. A company with manageable debt and good cash flow is worth getting to know better, regardless of how the market is treating the stock.
How does a good company become a value stock? Several things can happen.
The company may not have a glamorous product. Some products just don’t get much attention, but still must be produced, for example, those orange barrels you see on highway construction sites.
The growth prospects for the stock may not be high relative to other opportunities in the market. During the dot.com stock frenzy of the late 1990s, almost any stock that wasn’t high tech became a value stock in comparison.
If a stock is selling at below $15 - $20, some investors think there must be something wrong with the company. This is an irrational response, but it happens.
Conclusion Successful value investing depends on identifying a stock that is trading under the intrinsic value of the company and buying with a margin of safety in case you have misjudged the intrinsic value.

Supply and Demand Drive Stock Prices

What can stock investors learn from the credit crisis and the declining values in the housing market?
Aside from the damage caused to stock prices thanks to billions in write downs by major financial services companies, the falling values in the housing market is a good reminder of how supply and demand work.
When you read that home prices are tumbling (after years of rising) in major metropolitan markets, you have to ask why.
Has something changed that makes those houses worth less than a year before?
Markets Change The houses haven’t changed, but the market has. In many major cities, the supply of real estate has been behind the demand.
This created and sustained a sellers’ market, which means if there are more buyers than desirable properties prices will rise.
Those properties are no less desirable than they were a year ago, however the credit crisis has reduced the number of potential buyers.
Tougher lending standards may prevent some from qualifying, while others are just nervous about buying property that may continue to decline in value.
Sellers and Buyers The result is there are now more sellers than buyers, which reverses the relationship. With fewer potential buyers in the market, prices will drop as homeowners compete for the sale.
A note about the buyer-seller relationship: In free markets, you must have a willing buyer and a willing seller. When I say there are more sellers than buyers, I mean that sellers are forced to provide incentives to convert reluctant prospects into buyers.
They do this primarily by lowering the price. A prospect is then converted to a buyer.
This seems simple and obvious, but it is how markets work.
In the stock market, the basic principles of supply and demand are the same.
Attractive Stocks When a stock is attractive for whatever reason (great fundamentals, lock on its market, new patent, and so on), there tend to be more buyers than sellers.
Sellers may be coaxed into parting with their stock by a higher price.
For a stock that is out of favor, prospects must be wooed with lower prices to convert them into buyers.
Supply and demand make sense, but what doesn’t always make sense is what causes investors to favor one stock over another.
However, it ultimately comes down to matching willing sellers and willing buyers at a price both agree on for the sale.

What is Best Investment you can Make Today?

What is the best investment you can make?
Here’s a hint: It will earn you a guaranteed return that will beat just about any stock on Wall Street.
This investment doesn’t require more than two minutes of research and you have everything you need to begin right now.
I’m not talking about a stock, bond or mutual fund, but an investment in lowering your personal debt.
High Interest DebtToo much high-interest credit card debt is never a good idea and considering the economy remains unstable, now is a good time to reduce those balances.
Start with your highest interest debt (probably a credit card). If you have been a good customer and your interest rate is more than 12 percent, ask the issuer to lower it.
If the issuer won’t give you a break, consider switching the balance to an existing card with a lower interest rate (don’t get a new card just to get a new rate).
Make up your mind to pay off all the high interest debt as soon as possible. This may mean giving up some luxury or skipping expensive presents until the job is done.
Try to avoid adding to any balances and pay as much as you can (at least three times the minimum payment).
Investment ProgramIf you have to slow your investment program (not your retirement account, such as a 401(k)), do so as long as the money goes to pay down your debt.
What about the guaranteed return? How is paying off debt going to earn you a return?
Consider it interest avoidance.
If you are paying 12 percent (or more) on your credit cards or other debt, you are unlikely to earn that level of return on a consistent basis.
So, for every dollar you don’t pay in interest on personal debt, you are effectively paying yourself.
Those unspent interest dollars can go to reduce your debt even more and, best of all, when you pay off your personal debt, the cash flow that you were paying to debtors is now yours to keep.
In any economy, but especially when things a slowing, cash is king and you will have more cash to do with as you please when you aren’t paying off your personal debt.
Once you get out of debt, put away all of your credit cards except one and pay of the balance each month.

Expectations of High Returns May Lead to Disappointment

Did you buy a stock to turn $10,000 into the $30,000 you need for Junior’s next year in college?
If so, you’re not investing, you’re gambling, and, unless you are incredibly lucky, you will not meet your goal.

The expectation of a high return in a short time frame is not realistic. Do stocks every shoot up like rockets?

Risk
Yes, some do. However, you must understand that the market works on a rigid risk-reward basis. If there is little risk to the investor, there will be a lower potential reward.
Investments that offer an extremely high potential reward invariably come with a high level of risk.

For the investor, this means if you are after the big returns, you must be prepared to suffer more losses than rewards.

As an investment choice, stocks have historically returned 10 to 12 percent. Does that mean that every stock should return in that range?

Average
Not at all – that is simply an average. You need to assess the risk of investing in a particular stock before deciding what an acceptable return is.
An investment in a young high tech company should have a higher potential payout than putting your money in a “blue chip” company that posts modest growth and pays a regular dividend.

What would be the risk factor for a stock that could potentially triple in price over a short period? The answer is very high – in fact, so high that the odds of it succeeding would be very slim.

There is no safe (or legal) way to earn a very high return on your money over a short period.

Conclusion
Investing in stocks is best done as a long-term effort, which allows your money to grow and permits time for course corrections and adjustments.

Benefits of ownning commonstock

What Are the Benefits of Owning Common Stock?

News channels, the internet and even newspapers are always bombarding us with common stock prices, telling the world if a determined share went up or down. But, what is common stock? Is the only kind of stock that exists in the market? Or are there other ones? And which one is the best for investing? Let's find out more the true common stock definition and how they can improve your future.

What Is Common Stock?

Common stock is the most basic kind of stock that a company can emit. Owning common stock from a company means that the stockowner owns a piece of the company. This ownership can be executed through his voting rights: one share, one vote. Proprietors of common stock can choose the members of the board and even decide determined policies.

Besides the voting rights, there are occasions in which common stock owners have pre-emptive rights. These rights permit common stock owners the possibility of owning the same percentage of the company in case the organizations emits new stock. So, any common stock owner can buy, if he chooses to do so, an additional percentage of stock in order to maintain his level of ownership of the corporation.

Finally, common stock owners can receive dividends for their shares. If the board of directors approves common stock dividends, a determined amount of money is distributed among the thousands of people who have bought common stock. For example, let's say that the board of directors decided to pay $0.01 per share and that a determined individual owns 10,000 shares. That means that he will receive dividends for $100.

What Is The Difference Between Common Stock And Preferred Stock?

Besides common stock, there is another type of shares that is called preferred stock. The difference between common and preferred stock is that preferred stock has additional benefits. Maybe the most important one is that the dividends obtained by a company are distributed, first, among owners of preferred stock.

But, there is an additional plus. In case the company goes through a process of insolvency or bankruptcy, the first stockowners who are going to receive a payment for their shares are the ones who own preferred stock. Meanwhile, common stock owners have to wait until the end and hope that there is some money left for them (which, in the majority of cases, doesn't happen). In this case, common stock prices won't be enough to save the capital that has been invested by the shareholder.

The second big difference is that the dividends paid by preferred stock are much bigger than the ones paid by common stock. Preferred stock owners receive pre-defined payments, while common stock owners depend on the decision of the board of directors. As a consequence, preferred stock owners can use their shares as a fixed-income security.

There are many kinds of preferred stock. For example, there is the Convertible Preferred Stock. In this kind of stock, the stock owner has the option of converting his preferred stock into common stock at a determined price. Another type of preferred stock is the Perpetual Preferred Stock, where the owner of the stock hasn't a set date for receiving their invested capital. The dividends on this type of preferred stock simply accumulate over each other until the board of directors makes a decision.