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EScroogeJr (< 20)

what to buy now?



March 04, 2007 – Comments (0)

OK, the correction has taken us down a few percent, so I'm now a bit less bearish than a weak ago. While most of the market is still way overpriced, some more reasonable valuations are beginning to appear.

My current favorite is USG, which I already own, and will be looking forward to increase my position tomorrow. Construction materials is a steady and relaible industry to own, the timing is right, and the price looks cheap. Gypsum has emerged as the material of choice for the construction industry, and is unlikely to be replaced by something else in the foreseable future. And, for the adherents of TA, the number of shares for sale has just been reduced by 19% - this is how much Buffett has bought (yes, I am ready to bet he won't be selling anytime soon).

MRH is still falling, despite having reported exellent results. P/B of 1.12 is very cheap. Unfortunately, I'm already overweight in MRH, and can't really buy more.

My third favorite is JNJ. $62 is a good price for the most boring blue chip in the world. It newer touched $57 during the last correction, and I don't think it will do this time either. If I'm right, I'll be buying this stock very close to the absolute minimum.

I'm beginning to like SCSS and PRAA at their current prices. SBUX is on my watchlist, I'll be buying it agressively below $30. And ISRG, trading in the mid-range, still looks reasonably attractive.

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