Schering-Plough (SGP) - Bought

The news media is the main decline for this stock, which equals buy. The Vitorin press did not say the drug was bad, it said it may not do all the things advertised. So, listening to the conference calls, the execs are firm in their belief the drug will be redeemed. Until then, look at all the different businesses SGP is in: Claratin, Dr. Sholls,... More importantly than any of it, look at their pipeline of drugs submitted for approval. No other drug company is that loaded, and isn't that what Pharma company stocks trade on anyway? Like my buddies in REO Speedwagon, I'm "riding the storm out" and going long with Schering-Plough.

--Brad

Oh, they're pretty good on cash too. So they have that going for them.

WB - Sold

Dumped Wachovia today for a break-even. After cutting the dividend and releasing more shares, thus reducing EPS for my shares, I decided to keep the homebuilder and lose the bank. Time to find more buys.

--Brad

Energy

It's time to get an energy stock. Here's a problem I haven't encountered yet, too many good companies. So I'm going to start the energy play in Natural Gas. Why? Because I don't think these will get annihilated if the Democrats control both the Executive and Legislative branches of government this winter. I have no hard evidence that either will occur, I'm simply taking one of Descartes reasons to believe in God (If He does not exist, then death is like a long nights sleep, no big deal. If He does exist, then you don't want to be on the opposite side. But I digress.) So here goes...

Apache (APA): Stock Price = $139; P/E = 16.6; Dividend = $0.15/share; Sales Growth = 20%; Insider Activity = massive selling in the past 6 months.
Verdict: pass on it

Anadarko (APC): SP = $67; P/E = 8.4; Div = $0.09; SG = 55%; IA = very little activity in either direction. Random note: Saw an interview with the CEO and he seems like a straight shooter who gets things done.
Verdict: in the running

Atlas (ATN): SP = $41; P/E = 18; Div = $0.57; SG = 80%; IA = none
Verdict: pass on it. Is the dividend too good?

Chesapeake (CHK): SP = $50; P/E = 19; Div = $0.0675; SG = %6.5; IA = massive buying
Verdict: in the running

Marathon Oil (MRO): SP = $49; P/E = 8.6; Div = $0.24; SG = -0.4%; IA = lots of "awards" very little buy and sell
Verdict: pass on it

XTO Energy (XTO): SP = $67; P/E = 19; Div = $0.12; SG = 20%; IA = some selling, mostly exercise options.
Verdict: in the running

Finalists: APC, CHK, XTO

The winner(s) will be announced when (1) money is transfered (2) on a pull back.

--Brad

KB Homes (KBH) - bought

I purchased this one about the same time as WB. KBH is my speculative pick. The homebuilding sector has been taken down for over a year and probably has even further to fall. I'm guessing this will be at least a year long buying opportunity. I choose KBH over other homebuilders (Toll Brothers was #2, not bought) because it appears upper management is positioning themselves to take a short term hit to better position themselves when the market returns. Such as, getting out of some areas and moving inventory.

There is one issue, I am now overexposed to the Federal Reserve with both KBH and WB. KBH just announced they are reinstating their dividend while rumors run amok that WB is going to cut theirs. On the other side, WB is actually making money, while KB sits in the red. I need to dump one of these, I'm just not sure which.

I'll bail when: not sure?
I'll cash out when: 25%, I'm willing to bet I'll be able to get back in.
I'll buy more when: 5$ - $10 down

--Brad