4 Stocks to Buy in 2009

January 3rd, 2009 | Filed under: Editor's Pick, Stock Recommendations, , , ,

New Year! New Stocks! See my 4 stocks to buy in 2012.

12/31/09 – See updated follow-up Final Results for 2009 Stock Picks.
09/30/09 – See updated follow-up 4 Stocks to Buy in 2009 Q3 Results.
06/30/09 – See updated follow-up 4 Stocks to Buy in 2009 Q2 Results.
03/31/09 – See updated follow-up of 4 Stocks to Buy in 2009 Q1 Results.

With 2008 in the books, we now have to leave that all behind us and focus on 2009. On the top of my head, there are a couple facts to remember:

  • Barack Obama will officially take office.
  • According to history, the average global recession is 1.5 years, so we should be out somewhere near July.
  • Many companies have practiced the forget till new year policy, so the beginning of 2009 could be shaky to say the least. Expect direction of market to be unclear for the first 3-6 months of the year.

Now that we got that out of the way lets look somethings that should benefit or at least help us conclude some specific sectors:

  • The price of oil has dropped so much. How much lower can it really go?
  • The Dow was down roughly 35% for the year.  While it could still go lower, predicting another 35% loss would be hard to imagine.

Lastly, before we look at my 4 recommendations remember these things:

  • As we are predicting the best stock for 2009, keep a 1 year time frame in mind. We are not necessarily looking for the stock to have made huge returns by end of January, although that would be nice.

The Wild Investor is proud to announce 4 stocks that should pop in 2009:

AK Steel – AKS

Once Obama takes office he plans to role out his new plan that would aim to create new jobs, with much of them having to do with infrastructure look for AKS to react fairly to this. Also throw in the fact that the stock is down 60 points from its 52 week high and AKS is always a takeover target. If they can get their business rolling once again, then we might see some vultures come in and eat it up.

Using technical analysis, if AKS can make it above $15, then there is no resistance until $32. If we are fortunate to pass that, then we need to get by $40, $45, and then on to $70.

Similar stocks include: NUE and STLD

Schlumberger Limited – SLB

 

I would be crazy not to mention a stock in the energy sector. While price of oil may not head all the way back up to $150 by year end. We can almost rest assure that the price will be higher than what it is today, so why wouldn’t we expect any of these hard hitting energy stocks to make a move higher.

The safe bet would tell you to pick up shares of Exxon Mobile (XOM), but I like the return capacity of SLB. The company is down more than 60% from their 52 week high, and, once the price of commodities turn around, its only a matter of when should we take profits?

Using technical analysis, we must stay cautious. Often times when stocks just get absolutely slaughtered, there are many chances for misleading signals. After doing the retracement, we are at a point of deciding whether we hit bottom or not. If SLB bounces off the support (bottom red line), then look for resistance of $54 and then $65. If we pass both those, then just continue following the same trend.

If SLB breaks the bottom support, then turn that line into your new buy target. Remember, for this move to happen we are depending on the price of oil heading higher.

Similar stocks include: XOM and HAL

Bank of America – BAC

Hey, with the horrendous year that the financial sector experienced, I had to add one of them. We all know when one sector is taking a beating all the stock there are going to take a hit; however, you can always tell the good ones from the bad ones because the good companies have constant bull surges every now and then. That is exactly what BAC had experienced for the last half of 2008.

As much as the stock wanted to move higher, its peers would not let it. If we can manage to solve anything in 2009 look for BAC to make a huge surge to the plus side. Think 20+ point swing.

Using technical analysis, a buy +$16. Key resistance at $28 and then $37.

Netflix – NFLX

About 2 months back I discussed why I was really digging Netflix, and the change in price justified my analysis. That being said there is still much upside to this company, as online video distribution is the way we are heading. Look for Netflix to lead the way. Take a look at my previous analysis to learn more about what Netflix has to offer.

Using technical analysis, we see that Netflix has already crossed the 50 day moving average (yellow circle) and 100 day (not shown). This crossing signifies a good chance of a change in trend. Look for first resistance at $32.50 and the next one at $39.

Similar stocks include: AAPL, AMZN

Closing Prices as Market Closing 12/31/08:

  • AKS – 9.32
  • SLB – 42.33
  • BAC – 14.08
  • NFLX – 29.89

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