With the release of Alcoa's (
) results last night, investors should be getting primed for the
deluge of earnings reports due out for the first quarter.
The response to Alcoa's numbers were muted, but homebuilder
Lennar Corp (
) saw some some buyers following the company's report this morning.
There is a lot of chatter going on regarding the housing market
potentially building a bottom, and we saw a similar positive
reaction from the markets when KB Home (
) reported last week. My gut was that the financials would be the
better candidate for a decent rebound in 2011, but it may make
sense to watch the homebuilders for anecdotes as well.
I still stick with my thesis on investing in real estate, which
is to focus on multi-family/commercial units that throw off numbers
that work each month. Buyers simply bought on the hope of price
appreciation potential in the recent mania, and you see how that
worked out in the end. Any price appreciation you get would be
gravy if the rent-roll carries the properties and puts money in
your pocket every month. Speculation in flipping condos burned many
buyers the last few years and is something I would be guarded
against trying. All this said, I still prefer dividend stocks for
the liquidity and the fact that there are still great names that
can be bought in today's market at current valuations.
Speaking of great names, we just added eight new names to our
Best Dividend Stocks
list today. Check out the link below if you did not read the e-mail
alert we sent out earlier. We prefer investors not hurry into any
names we first recommend, but instead look for entry points on
pullbacks. Also, the two names that were downgraded today are not
sell calls. Those downgrades simply mean that we do not advocate
putting any further money into those stocks, if owned.
I'd also like to remind investors that developing a sell
discipline is a must. Our general rule is anything that drops 25%
from its 52-week high must be examined closely for possible
trimming of shares. Too often, investors let underperforming shares
pull down their portfolio results for much longer than they
Elsewhere in the market today, Wall Street upgrades helped lift
stocks like Walter Energy (
), Fluor Corp (
), and Franklin Resources (
) higher. We are continuing to monitor the markets and economic
data closely as we position our "Recommended" list to outperform as
we move ahead.
If you have been fighting the rally from the March 2009 lows and
are sitting on the sidelines still, I would recommend one considers
scaling in slowly just to test the water. When you try and time the
markets, you can sometimes put yourself in a situation where you
forget how stock prices move. Remember, the focus is always on
earnings looking forward and not behind. We are still finding
attractive valuations as we continue to dig, but that doesn't mean
there aren't areas of the markets that are way overvalued from a
valuation standpoint, as I see several spots where investors could
be vulnerable. Remember that fighting the tape, up or down, is a
long-term losing battle.
Thanks for reading and I'll see you tomorrow!
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here
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