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Get Ready for GDP Growth !

Last week capped the good news which was coming over last few weeks with GDP contraction at 1% which was better than expected. Here are some of the snippets of good news:
  • GDP contraction slowing considerably and coming at 1%
  • Housing showing some life at last with prices in some areas increasing in 3 years
  • Inventories down significantly
  • More than half the companies which have reported beating profit expectations
  • Durable sales increasing
  • Consumer confidence holding steady
  • Car sales increasing (thanks to Cash-for-clunkers)
  • China/India still showing enviable growth
  • Stock markets across the world showing significant increases with S&P having its best 5 month run since 1938
All these factors are indications that we are on our way to slow and gradual recovery. I won't be surprised if economy/GDP shows a growth of about 0 to 0.5% in Q3CY09 and 1-2% or more in Q4CY09

Last week was pretty good for many of my earlier recommendations especially FIG, ACAS, PCX, CENX, HIG and LNC. I expect this positive momentum to continue for another one to two weeks before people become cautious for Sept/Oct.

Here is my this week's recommendations:

Company: Conseco
Symbol: CNO
Buy price: $2.80 to $ 3
Target price in 12 months: $4.50
Company Information:
Conseco, Inc. (CNO) is the holding company for a group of insurance companies operating throughout the United States that develops, markets and administers supplemental health insurance, annuity, individual life insurance and other insurance products. The Company focuses on serving the senior and middle-income markets. CNO sells its products through three distribution channels: career agents, professional independent producers (some of whom sell one or more of its product lines) and direct marketing. The Company manages its business through three primary business segments: Bankers Life, Colonial Penn and Conseco Insurance Group.

Reasons for Recommendation:
Company has pre-announaced that it would be making profit when it reports earnings next week.
This is second consecutive quarter it would be making profits thus significantly reducing survival fears. The stock has jumped more than 50% due to this profit announcement. However on it is still down by more than 60% and has significant potential. With revenues of over $4B (annual), its market cap is still around $500 M. Just check out the trajectory of GNW over last 6 months. My prediction is CNO would have similar trajectory over next 6-12 months and hence this is my weekly stock recommendation.

Kids are very excited that finally they got their own pet - bunny names Stella. They are busy playing with her leaving me alone to do some blogging.

Have a great weekend !

/Shyam


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