Finally last week, DOW was above the level when Obama became president (Dow at 7949 on Jan 20). In last 70 odd days, it was mostly trading below that level and made a dangerous trip to levels not seen for last three presidential terms (12 year lows). Now that it has recovered all its losses, can we say that "Let Obama Rally begin".
Considering President Obama's performance at world stage (G-20), we can definitely give credit to him for new-found confidence among investors and speculators alike ! We need little bit of that if world economy has to climb up the hole it has dug itself. With looming Q1 results and stress test results on 19 major banks, April month would be quite volatile. I won't be surprised if index goes close to 7000. As long as it holds above 7500 by end of Apr, it would set a nice base for Obama "bull" run and could take markets above 9000 by year end.
Now let's come to stock of week pick:
Last couple of weeks, my picks have been doing quite well. However I would give most of credit to rising markets than timing of my pick. In general, I have been getting more and more convinced that there is tremendous value in real estate and financials. So this week's pick is also in REIT sector
Stock: DDR or DDR-G (8% preferred)
Company: Developers Diversified Realty
Buy price: DDR ($2.5 to 2.7) DDR-G ($5 to $5.3)
Target price in 12 months: DDR ($4.5) and DDR-G ($7-8)
Context:
Developers Diversified Realty Corporation currently owns and manages approximately 710 retail operating and development properties in 45 states, plus Puerto Rico, Brazil, and Canada, totaling approximately 157 million square feet. Walmart is its biggest tenant with nearly 11% of leased assets. Other tenants are house-hold names like Target, Home Depot, Kohl's and bankrupt companies like Circuit City. Since it has very high exposure to retail sector, it's fortunes are tied to general economy. If one or more of its big tenants go belly-up, that would a big problem for DDR. Other risk for company is its debts are coming due in 2010-2012. So till credits markets loosen up, DDR would trade below $5. With aggressive Fed steps, credit markets have started showing some life. It would help DDR and hence it is stock of week pick.
Good luck and have a good weekend !
/Shyam
Considering President Obama's performance at world stage (G-20), we can definitely give credit to him for new-found confidence among investors and speculators alike ! We need little bit of that if world economy has to climb up the hole it has dug itself. With looming Q1 results and stress test results on 19 major banks, April month would be quite volatile. I won't be surprised if index goes close to 7000. As long as it holds above 7500 by end of Apr, it would set a nice base for Obama "bull" run and could take markets above 9000 by year end.
Now let's come to stock of week pick:
Last couple of weeks, my picks have been doing quite well. However I would give most of credit to rising markets than timing of my pick. In general, I have been getting more and more convinced that there is tremendous value in real estate and financials. So this week's pick is also in REIT sector
Stock: DDR or DDR-G (8% preferred)
Company: Developers Diversified Realty
Buy price: DDR ($2.5 to 2.7) DDR-G ($5 to $5.3)
Target price in 12 months: DDR ($4.5) and DDR-G ($7-8)
Context:
Developers Diversified Realty Corporation currently owns and manages approximately 710 retail operating and development properties in 45 states, plus Puerto Rico, Brazil, and Canada, totaling approximately 157 million square feet. Walmart is its biggest tenant with nearly 11% of leased assets. Other tenants are house-hold names like Target, Home Depot, Kohl's and bankrupt companies like Circuit City. Since it has very high exposure to retail sector, it's fortunes are tied to general economy. If one or more of its big tenants go belly-up, that would a big problem for DDR. Other risk for company is its debts are coming due in 2010-2012. So till credits markets loosen up, DDR would trade below $5. With aggressive Fed steps, credit markets have started showing some life. It would help DDR and hence it is stock of week pick.
Good luck and have a good weekend !
/Shyam
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