The stockmarket continues to grind higher. And you can give the
U.S.economy the tip of the cap for the recent gains. Recent data
points imply that the incipient economic strength we saw last fall
has continued into 2012. If this trend remains in place, then the
economically-sensitive stocks in my $100,000 real-money portfolio
will surely benefit.
is a great example. Though I recently
took stock of a subpar fourth quarter
, I also think many investors underestimate the rising demand for
cars and trucks. Ford saw its sales rise 7% in January (compared
with a year ago), in line with the industry's growth rate. And if
the full year's sales grow at this pace, then Ford is
well-positioned to meet or exceed 2012 estimates -- assuming Europe
doesn't fall off a cliff. The fact that Europe is inching closer to
a resolution of its various crises could also boost results as
European consumers feel comfortable enough to purchase new cars and
Perhaps one of the best data points around to gauge theeconomy 's
health is thespot price of aluminum, which appears to have bottomed
out at around $0.91 a pound in early January, but recently moved
back up above $1.
and other aluminum stocks have responded in kind, though they
remain far below levels seen last spring. The Dow Jones U.S.
AluminumIndex has moved above its 100-daymoving average , abullish
To push aluminum prices higher, the industry's key players are
showing great discipline. Alcoa announced a series of production
cuts in January, and just this week (Jan. 30), Russia-based United
Co. Rusal announced plans to trim its output by roughly 5% in the
next 18 months. These cuts are in tandem with moves by China to
further curtail its aluminum output this year. This could help push
aluminum prices back to $1.10 or even $1.15 a pound, which explains
why I think Alcoa's stock
will likely post solid gains this year
The stock is already up 20% this year, but at a recent $10.40, it's
well below the52-week high of $18. Frankly, investors should brace
for a slow climb, so a return to the $18 mark might still be a year
or two away.
Yet investors also need to brace themselves for a bumpy ride when
it comes to some stocks. For example, LED lighting (light-emitting
diodes) prices continue to drop, which sets the stage for a
possibleearnings shortfall for
. The fact this stock is already up 23% in 2011 makes me anxious.
All of these gains could be disgorged if Cree indeed delivers a
subpar quarter. Still, I love this company's long-term positioning
and don't intend to trade in and out of this stock based on
As for my other portfolio holdings, here are some other key events
to watch in the coming month:
will deliver a more detailedquarterly report this coming Monday,
Feb. 6. A week after that, I will be meeting with the company at
the annual New York Toy Fair, which the company uses as a platform
to discuss its goals for the coming year.
• On Friday, Feb. 10, battery maker
Exide Technologies (Nasdaq:
will release quarterly results. This will be a nail-biter. If Exide
delivers yet another bad quarter, thenshares could quickly fall
back to the52-week low of $2.34 (from a recent $3.60). Yet if
results are at least decent, then the stage could be set for a
sharp rebound in the stock in the coming quarters.
• The following Tuesday, Feb. 14, we'll hear from
, which appears to have posted a solid quarter. It's not a
seasonally-important period -- Zipcar does the bulk of its business
in the spring, summer and fall -- but investors want to see that
all of the operating metrics are still moving in the right
Action to Take -->
More than half of my $100,000 allotted to this portfolio is now in
play. As I get closer to being "fully-invested," it may be time to
cull certain names from the portfolio to raise fresh cash. (So make
don't miss a single update
.) It's crucial to always have cash in reserve, as great
opportunities arise unexpectedly, and it's no fun to lack the funds
tocapitalize on them.
-- David Sterman
P.S. -- We're making David Sterman's $100,000 Portfolio
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David Sterman does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC owns
shares of AA, F, CREE, HAS, ZIP, XIDE in one or more if its "real
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