If you've been looking at a sea of red on your stock screens lately, then you have plenty of company. A hefty 495 stocks in the S&P 500 have moved lower since the market sell-off began July 22. Yet a quick look at the five lonely stocks that have been able to post gains in the last few weeks gives insight into the few winning investment angles right now. If the market hits more rough spots head, these stocks may continue to point to one of the few rays of light.
Motorola Mobility (NYSE: MMI ) and National Semiconductor (NYSE: NSM ) are on track to be acquired by Google (Nasdaq: GOOG ) and Texas Instruments (NYSE: TXN ) , respectively. The fact that each is being acquired for roughly $6 billion to $12 billion should tell you something. Major tech firms don't want to waste their time anymore with small tuck-in acquisitions that barely move the needle. Cisco Systems (Nasdaq: CSCO ) made more than 100 acquisitions in the past decade -- most of them for less than $500 million -- and has little to show for it. Sales growth, which had peaked at 11% in fiscal (July) 2010, likely decelerated to just 5% in the fiscal year that ended last month.
Deal-making is a fact of life in the tech sector, especially in a sloweconomy where organic growth is hard to find. And as I've commented many times before, major tech companies are sitting on so much cash that the temptation to do deals is simply irresistible.
Who might be in play? Well, really large deals may be hard to justify in times of economic uncertainty. But here's a short list of tech stocks that are big enough to make a difference for potential buyers...
Gold keeps soaring
It should be no surprise that Newmont Mining (NYSE: NEM ) recently touched an all-time high. The company's estimated 93 million ounces of un-mined gold are worth more every day as gold rises in price.
Gold began the year selling for just under $1,400 an ounce, and moved up to $1,600 by mid-July. Since then, it has "gone vertical," pushing up another 20% past $1,900 in just five weeks (before a small pullback on Tuesday). Suffice it to say gold miners like Newmont will keep rallying if the yellow metal pushes past the $2,000 an ounce mark (and toward the inflation-adjusted record of $2,300). Will that happen? This is a question best left for speculators and momentum traders, and not investors.
Widows and orphans
Why is a utility like Con Edison (NYSE: ED ) moving higher in these challenging times? Because these stocks, which typically appeal to "widows and orphans" for their predictabledividend streams, are seen as a safe haven in these times. The stock hit an intra-day all-time high last week, though any further gains may prove challenging. This is because a rising stock price has pushed down the dividend yield to 4.4%. This is better than many fixed-income investments, but not quite as appealing as a range of blue chips in other industries that offer up higher -- yet still safe -- yields. Here's a short list of blue chips yielding more than 5%...
A dividend shocker
Speaking of nice payouts, investors have surely cheered the moves by fertilizer manufacturer CF Industries (NYSE: CF ) . CF has increased its dividend from $0.40 to $1.60. Still, that represents a dividend yield of just 1%. Investors are bidding up the stock on the heels of a robust profit upturn for all fertilizer makers.
For my money, Mosaic (NYSE: MOS ) still looks like the best way to play the sector, even thoughshares have slipped 7% since I profiled it on July 20 . Investment funds run by David Tepper (Appaloosa Management), Morgan Stanley and Goldman Sachs also boosted their holdings in Mosaic in the second quarter, according to 13-F filings. Their ardor may be fueled by the fact Mosaic looks set to generate roughly $2 billion in free cash flow this year, matching a company record set in fiscal (May) 2008.
Risks to consider: Of these gainers, both Con Edison and Newmont Mining appear ripe for a pullback if the " flight to quality " trade starts to recede and the market finally regains its footing. Can gold prices shoot yet higher? Surely, but the recent boom feels like musical chairs, and in cases like this, the music could stop at any moment.
Action to Take --> Two of these themes look quite sustainable. The tech industry is in the midst of another wave ofconsolidation , and many potential targets now look quite undervalued. And the boom in agriculture is here to stay, even if the U.S. planting seasons benefit from better weather in 2012. Global demand is on the rise, with U.S. exports leading the charge -- and this is a trend that simply can't be reversed.
-- David Sterman
P.S. -- If you devote a portion of your portfolio to "swing for the fences" plays, you should watch this video. It shows how six shocking events could lead to hundreds of percent gains for prepared investors.
Disclosure: Neither David Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.
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