Don Coxe's Investment Recommendations
1. After four years of focusing on oils and base metals, it is
time to add new commodity-producing sectors to a long-term
portfolio.
2. Within the oil group, our favorites are, in order, oil sands,
reÞ ners, natural gas producers, and offshore drillers.
3. Within the base metals group, our favorites are copper, nickel
and zinc. Each time we get enthusiastic about the aluminums,
they announce major new expansions.
4. Uranium should be a core holding for those who can live with
the problem of political incorrectness.
5. Precious metals stocks have corrected from their highs and
some are now attractive. We continue to believe that gold is the
clearest value in the group, although platinum?s attractions are
becoming more obvious as the automobile industry?s catalytic
converter decisions become more platinum-friendly. Silver is
a tweener?it isn?t a truly precious metal, because it tarnishes,
but it still has attractions for Indian brides, and there will be
more of them who can afford baubles and bangles. Its industrial
demand has shifted from Þ lm production to electronics, but has
remained strong.
6. Financial stocks have performed well, despite the inversion of
the yield curves. We recommend that investors concentrate on
those with the best dividend records. We share the concerns
of those who question the asset quality of some aggressive
American regional banks, particularly in real estate lending.
7. The forest products stocks are a subset of the earth group. Our
esteemed colleague Stephen Atkinson has been telling us that
investors are wisest to focus on the Brazilian producers, and
should eschew the Eastern Canadian loggers.
8. As for agribusiness, there are numerous opportunities. Although
the ethanol boom is at risk if oil prices fall below $50, we are
conÞ dent that Congress will continue to cosset ADM and other
alternative energy players. Always have, always will. We believe
that the opposition to genetically-modiÞ ed seeds will continue
to crumble, which means that Monsanto, DuPont and their
competitors are worthy of consideration as core investments.
9. Our case for long zeros is as hedges against economic problems
that hit the commodity stocks. The US economy continues to
give mixed signals, while economies abroad look stronger.
Winter should tell the tale. If, because of continued strong
economic growth, you don?t make money on long zeros, you
will proÞ t hugely on your basic materials stocks. |
