"Street Critique" Hilary Kramer, Chief Market Analyst at GreenTech Research
Wednesday, October 01, 2008PAUL KANGAS: Tonight "Street Critique" guest says bailout or not, these are treacherous times. She's Hilary Kramer, chief market analyst at GreenTech Research. And, Hilary, good to see you again.
HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: Nice to see you, Paul. Thank you for having me on today.
KANGAS: In early July, you told us a major capitulation was coming in the fall and that cash is king. So was Monday's massive sell-off that capitulation or is there another shoe to drop?
KRAMER: That was the major crash that we've experienced, but we may see other very bumpy days, rocky days, days where we start to pull ahead and then suddenly we pull back. So it's not yet the time to get too aggressive in the market.
KANGAS: So you're on the sidelines for the moment.
KRAMER: Absolutely. And waiting.
KANGAS: Are you seeing any good news here coming down the pike, so to speak?
KRAMER: Absolutely. We're going to see a bull market before long because so many institutional funds have raised huge amounts of cash because they've been expecting redemptions. They've been nervous and all at once, all that money is going to return into the market especially in November and December.
KANGAS: Now you recommended a handful of stocks during the third quarter and like the market's, in general, performance has been dismal. On August 6th, you liked dividend-paying stocks like FPL (FPL) and Pinnacle West (PNW). And FPL down, Pinnacle West up. Do you still like them?
KRAMER: FPL especially, what a great opportunity at $50. What has happened is the utilities have fallen off, they've done terribly because people have shied away from any kind of company that needs a lot of financing and depends on the banks. So at FPL you're getting a great opportunity and Pinnacle West, P-N-W, has always been a stock I like as a portfolio keeper.
KANGAS: Then there was Constellation Energy (CEG) and Southern Company (SO). Constellation down sharply, but it was picked up by Warren Buffett's MidAmerican Energy on September 19th at $26.50 a share, but the rest were, well, kind of a mixed bag there in Southern Company.
KRAMER: Right. Well, anything that Warren Buffett buys, we all know, we like to watch Warren, and follow what he does. And Southern Company as well, a good company to have an investment in.
KANGAS: OK. We talked commodity stocks in August 20th. And you liked metal firms like Metalico (MEA) and Sims Group (SMS), they've been hit hard. What happened there?
KRAMER: The commodity prices came down hard, but what happened is commodity funds sold off. Now talk about absolute capitulation, Metalico is still my favorite stock, it's still one of my largest positions, M-E-A, and I still believe it will go back up to $20. It's amazing what has happened and how that stock has come off. And in terms of Sims, S-M-S, Sims Metal Management, again there, the same. Everyone is worried about scrap metal pricing because of global weakness. As you know, the world is still moving forward.
KANGAS: All right. And the last 20 seconds here, you like Petrobras (PBR) and you said avoid Whole Foods (WFMI), are you sticking with those calls?
KRAMER: Absolutely.
KANGAS: OK.
KRAMER: Petrobras, the portfolio stuffer to always just have in there, I have that. It's very, very long term. And Whole Foods, I don't see where it's sustainable (ph).
KANGAS: All right. Hilary, do you own these stocks or have any disclosure to make?
KRAMER: Yes, I own FPL, I own Metalico, Sims and Petrobras.
KANGAS: OK. Thanks for sharing your insights with us once again. My guest, Hilary Kramer, chief market strategist at GreenTech Research.
