Thursday, December 20, 2007

Agriculture & Infrastructure Continue to Work

Despite the bearish economic sentiment in the overall market, there are several sectors that continue to outperform. Every individual investor should have some exposure to agriculture and infrastructure. Both sectors are in the middle innings of their individual "bull markets" and are under-owned by many investors. I have mentioned several of my favorite names before and will mention them again.

CF Industries (CF)
Monsanto (MON)
Mosaic (MOS)
Potash (POT)
Terra Industries (TRA)
Terra Nitrogen (TNH)

Fluor (FLR)
Foster Wheeler (FWLT)
Jacobs Engineering (JEC)
McDermott (MDR)

Note: I am long MOS & MDR

Thursday, December 06, 2007

Retail Sales

Today's higher than expected retail sales numbers should be interpreted cautiously. Overall, the numbers were mixed and many companies reporting positive November sales lowered their December forecast.The percent increases in sales were impressive at many department stores driven by successful "Black Friday" promotions. High sales are a good sign. The question is at what price? How compressed did the margins get to generate those sales? The higher end stores will come out ahead of mid-tier retailers like Macy's (M) and J.C. Penny (JCP).

Retail stocks have seen some serious multiple contraction this year. This is in anticipation of higher discounting and a thriftier consumer. I agree with what the market is saying and I would continue to avoid the sector.

Note: I have no position in JCP or M