"Street Critique"-Hilary Kramer, Chief Market Strategist at Greentech Research
Wednesday, August 06, 2008PAUL KANGAS: Tonight's "Street Critique" guest says cash is still king, especially in a market like this. She's Hilary Kramer, chief market strategist at Greentech Research and author of "Ahead of the Curve" and Hilary, good to see you again.
HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: Thank you, Paul, it's nice to be here tonight.
KANGAS: Back in early July, you said the markets were gearing up for a major capitulation this fall but that we might see some strong rallies over the short term. Do you still believe that?
KRAMER: I absolutely do and it's come to be. The proof is in the pudding, because we've had that this week but Paul, we're still in for some rough patches. The individual investors especially need to know that in many ways this is a head fake and there's still bad news coming just like there was some bad news from AIG tonight.
KANGAS: What about the recent easing in oil prices? Isn't that enough to support the market?
KRAMER: The easing in oil prices is because we have a recession and now there isn't as much demand. So it's really a result of a poor global economy, not a stronger one.
KANGAS: Since you still think cash is king, tonight, you brought our viewers stocks that pay cash, namely dividends paying utility stocks. What's the first on your list?
KRAMER: FPL, Florida Power and Light. I talked about this one before. I own Florida Power and Light. It's a core holding I've held for years. I bought more today at $57. It's really a bargain. It's been as high as $73. FPL is a utility that has a large business in both nuclear, solar now, was an announcement and one of the largest wind operators and wind businesses in the country. You can't go wrong and you have a 3 percent dividend yield.
KANGAS: You liked it last fall when it was $59. It's held up pretty well, a little over $57. How about another selection?
KRAMER: Well, Pinnacle West Capital, the ticker symbol is PNW. Pinnacle West is $33. It's been as high as $44.50 in the last 52 weeks and this is Arizona's utility and it's pretty hot in Arizona. A lot of customers will be paying a lot of money to PNW and the stock is very depressed right now. There's overhang because they have this very small real estate division and many people think of it as a real estate play. So it came down with the home builders and the housing drop.
KANGAS: And a big dividend, over 6 percent.
KRAMER: 6.4 percent. You can't go wrong.
KANGAS: Next pick, please.
KRAMER: Constellation Energy. The ticker symbol there is CEG. This is a Baltimore, Maryland-based merchant energy company. They're in the regulated businesses. They provide wholesale energy and I love Constellation Energy, especially here at $74.
KANGAS: CEG on the big board. We have time for one more.
KRAMER: OK, Southern Company, SO, an Atlanta-based utility. Again, here, you have a dividend 4.8 percent. The stock's at $35 and everybody has sold off these utilities, Paul, because everyone is out there especially big institutional investors. They're going for more risky stocks and also because they think rates are going to go up, not down. They tend to gear away from the utilities in this kind of environment.
KANGAS: Hilary, do you own the stocks you've mentioned or have other disclosures to make?
KRAMER: Yes, FPL Group and Pinnacle West, both stocks I own now and I have owned for a long period of time. I'm watching the other utilities and will be buying some.
KANGAS: All right, thanks for joining us, once again.
KRAMER: Thank you so much, Paul.
KANGAS: My guest, Hilary Kramer of Greentech Research.
