rofgile (35.17)

Stocks are oversold. Yields are toooo high!!

September 13, 2011 – Comments (1) | RELATED TICKERS: NMM , STD , INTC

This is a very simple blog post.  I strongly feel now that many stocks are oversold, particularly those with positive earnings and hefty dividends.  On my list right now: NMM, STD.  Both of these have way too high yields (~10%).   INTC has a nice 4% dividend.  All these have PE below 10.

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Simply put, I don't know if we have ever gotten to this point on the S&P with earnings as high as we currently have.  Perhaps the market is seeing into the future and all these earnings are about to disappear, but I don't see it.  

Let's look at trade, stats from (bloomberg news).

* Barclays Capital Research raised its tracking estimate for third-quarter growth to 2.5.

* Exports increased 3.6 percent to $178 billion in July, boosted by sales of telecommunications equipment, civilian aircraft, autos and industrial engines. U.S. shipments of capital goods and autos and parts to overseas customers were the highest on record.

* Imports fell 0.2 percent to $222.8 billion from $223.4 billion in the prior month.

* Crude demand is falling.  

* Imports showed the most shipments of auto parts since Feb 2008.  That's a good sign for both consumer demand and also recovery occurring in Japan. 

* Separately, I've been watching the Baltic Dry Index.  Its at a year high, coming out of the deep lows of 2011.  Has risen near 50% in the fall.  What is driving this?  Perhaps manufacturing in Asia is picking up again (recovery of Japan or growing activity in China)?

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 I think stocks earnings mostly reflect global trends rather than unemployment, media and consumer pessimism.  As such, while the global situation looks healthy (subtracting the solvency crisis in Europe), I like stocks still right now.

 To retire in a healthy situation, getting better than 8% return on your investments each year greatly helps your compounding.  Given that we are moving quite sideways, I would recommend picking up some of these cheaply priced, high yielding stocks.

 -Rof