Stock Market to Rise After Recent Soaking, Says First Montauk Strategist Kimmel
RANDOLPH, N.J., Aug. 8 /PRNewswire/ -- The following is being issued by First Montauk Securities Corp., a member of the National Association of Securities Dealers, CRD# 13755:
The recent rains that have drenched the Northeast may finally be running their course, but many investors still feel soaked, according to Jordan Kimmel, market strategist for Red Bank-based First Montauk Securities Corp., one of the nation's largest independent securities brokerage firms.
"After expecting steady increases in the value of their portfolios, some investors have been rattled recently as many high tech stocks have tumbled, while even some blue-chip companies have missed their earnings targets," observed Kimmel, who maintains an upbeat long-term outlook. "Despite repeated rate hikes by the Federal Reserve, widely reported stumbles among dot-coms, and a pullback in earnings at some other companies, the broader market is not heading toward a plunge. Instead, the trends point to a 'reality check' that may in fact point toward continued long-term growth."
Investors who got used to the markets setting and breaking new record highs on a regular basis may be concerned over some setbacks in their portfolios said Kimmel. "But this is not the time to bail out of the market," he added. "The economy, which was strong enough to shrug off the Asian meltdowns of the late 1990s, isn't about to shatter because of some corporate missteps or a tight-money policy by the Fed,"
Kimmel notes that many investors stumbled because they abandoned an analytical approach and instead embraced a strategy of pure momentum. "Basically, they were buying stocks because other people were buying the same stocks," he said. "I call it the 'eyes wide shut' approach. The problem is that pure momentum works both ways-it takes you up quickly, but you can slide down just as fast."
Now, says Kimmel, the broad markets are experiencing a realignment between stock prices and the underlying value of the securities. "Some investors are on a roller-coaster ride, and right now they're on a steep drop," he said. "But a disciplined approach can help them avoid the sharp downturns."
Discipline, according to Kimmel, involves resisting the urge to run after fads, and instead focusing on companies that exhibit such long-term growth attributes as high revenue growth and operating margin acceleration, but trade at a discount to their valuation levels as well as those of others in their industry. Additionally, money should be flowing into the stocks, increasing the prospect of steady price increases.
"While this strategy has elements of a momentum play, it's not a pure momentum approach," notes Kimmel. "A disciplined strategy looks for underlying growth characteristics, as well as momentum."
During the rest of this Presidential election year Kimmel expects the market to experience additional bouts of downside volatility, but he doesn't see a crash.
The markets are now settling in at comfortable levels that reflect reality," he says. "Meanwhile, I expect to see some deep dips that may make individual stocks especially attractive."
As an example, Kimmel points to three stocks appearing on the First Montauk Focus List that he believes currently offer opportunity (although he cautions that there is always the potential for downside risk):
-- Trikon Technologies (Nasdaq: TRKN), manufactures semiconductor-processing equipment. Its chemical vapor deposition systems layer silicon dioxide on chips in order to insulate and separate microscopic metal interconnections.
-- PE Biosystems Group (NYSE: PEB), a unit of PE Corporation (formerly Perkin-Elmer) produces technology that allows researchers to make advances in life sciences. One of PE Biosystems' largest customers is sister company Celera Genomics, which used the company's technology in its effort to map the human genome.
-- Quanta Services (NYSE: PWR), installs, repairs, and maintains electric transmission lines, cable TV, and telephone and data lines in North America. Quanta also works on traffic control systems (signal lights, freeway systems) and designs and installs communication towers. Major customers include PG&E, Enron, and Western Resources. Other clients include contractors, commercial establishments, and government entities. Utility holding company UtiliCorp owns 28% of Quanta Services.
"When a person is in an unfamiliar situation, the best thing he or she can do is to maintain a clear-headed, disciplined attitude," observes Kimmel. "The same holds true for investors, who should keep their focus on companies that exhibit certain performance-related characteristics, and then maintain their focus, even in turbulent markets, with discipline."
Kimmel is president of the MAGNET(R) Investment Group in Randolph, N.J., an affiliate branch of Red Bank, N.J.-based First Montauk Securities Corp., one of the nation's largest independent securities brokerage firms. Kimmel has made multiple appearances as a guest market commentator on national television and radio shows.
Investors should be aware that the future performance of any particular stock, or the stock market in general, cannot be guaranteed. Any investment in the stock market or in securities in general carries some risk of loss. |
