"Street Critique"-Patrick O'Hare, Editor in Chief of the Financial Information, Briefing.com
Wednesday, August 15, 2007PAUL KANGAS: Tonight's street critique guest is normally a bargain hunter, but he says when searching for stocks in a crazy market like this one, it's more about finding a safe place to wait out the storm. He's Patrick O'Hare, editor in chief of the financial information website briefing.com and author of briefing's bargain hunting column. And Pat welcome back to NIGHTLY BUSINESS REPORT.
PATRICK O'HARE, EDITOR-IN-CHIEF, BRIEFING.COM: Hi, Paul, thank you.
KANGAS: Give is your current view on what's going on Wall Street these days.
O'HARE: Well to state the obvious, it's not a very good market right now. Trying to call a bottom is a little bit more of a guessing game really. The market will eventually throw off some (INAUDIBLE) but we're not seeing any yet as the selling remains pretty indiscriminate surrounding the headlines related to credit market risk.
KANGAS: What should value-oriented investors be looking for?
O'HARE: A market like this, we think value-oriented investors should be favoring quality blue chip companies and specifically those blue chip companies that have exhibited relative strength during the sell off and also have a very good fundamental story behind them.
KANGAS: And not in the mortgage business.
O'HARE: No definitely not.
KANGAS: Now I know you brought our viewers three picks tonight which you consider to be safe places to wait out the volatility and you believe they've got some upside potential as well. What is your first pick?
O'HARE: Well, Walgreen, the symbol is WAG, which is the nation's largest drug store in terms of sales is nicely positioned for a risk adverse market given its position in that consumer staples industry. The stock trades at about 22-times trailing 12-month earnings which is roughly a 25 percent discount to its five-year historical average in good financial shape with no debt, over $1 in free cash per share.
KANGAS: You know your fact and figures on that one. How about another one?
O'HARE: Proctor & Gamble is a name everyone knows. The symbol there is PG. It's a leading consumer staples company. The thing that we like about Proctor & Gamble it's coming off a year in which it delivered 5 percent EPS growth. It's got good visibility into the next fiscal year for looking for 13 to 14 percent growth and very strong from a financial standpoint. It's over (ph) $3 per share in free cash and just announced a plan to buy back up to $30 billion worth of stock over the next three years.
KANGAS: And the chart indicated it's not exactly at a high either, is it?
O'HARE: No that's right. At 21 times trailing 12-month earnings, it's at about a 10 discount to its five-year historical average.
KANGAS: And finally, I understand that you like a tech stock. Which one is it?
O'HARE: Yeah, it's Cisco. The symbol is CSCO, the leading networker, just coming off a great quarter and strikingly had nothing but good things to say about the global economy including its business in the United States. John Chambers has done a great job managing this company. It too trades at roughly about a 20 percent discount to its five-year historical average, has - is also in good financial shape and is in an ideal position to capitalize on the competition between telecom companies and cable providers as they work to expand their communication networks.
KANGAS: Some very interesting selections there Pat. Do you own any of the stocks mentioned or have other disclosure to make?
O'HARE: No, I do not Paul.
KANGAS: All right, most interesting, we'll follow them with care. My guest tonight, Patrick O'Hare, editor in chief at briefing.com.
