Buy this DJIA dip? Five stocks that should shine

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Chatter that stock prices are getting ahead of the approaching U.S. economy sent the Dow down about 200 points on Monday before recovering a little. But the stock market's bears are still arguing that more declines are ahead.

Conversely, the stock market's bulls say the bears are 'all growl and no bite,' arguing that the latest manufacturing and housing data suggests the longest U.S. recession since the 1930s is ending.

Amid uncertain economic conditions, it's hard to ignore the bears, but that doesn't blot-out the case for stocks. On the contrary, under the thesis that no one ever made a dime by waiting until economic conditions are 99 percent safe for stocks, here are five promising stock plays for investors who can tolerate moderate risk:

Fab Five

Freeport McMoRan (FCX). Recent Price: $60. Back up the truck for Freeport. The global recovery bodes well for copper demand, where Freeport is a star performer: It's the world's second largest producer of copper. Ignore the short-term commodity market hiccups: the secular copper demand trend (China/Asia, emerging markets) is up, and FCX's earnings and stock price will follow.

Caterpillar (CAT). Recent Price: $44. The CAT is back on the prowl, due to likely rising revenue from construction, mining, and farming equipment, but there are qualifiers: Shares could take a 20 to 30 percent hit if there's any sign that the U.S.'s pronounced recession is not about to end by the fourth quarter. If, however, you can tolerate moderate risk and seek a stock capable of doubling in 18 months, CAT is for you.

Potash (POT). Recent Price: $91. Potash was rudely treated when the leveraging bubble ended, with institutional investors somehow seeing fit to drive POT's shares to $33 from $240. Some rationality is returning to POT, given that it remains one of the preeminent fertilizer companies in the world, producing three critical, primary plant nutrients and phosphate animal feed ingredients for both developed/developing world markets. With emerging market food demand likely to rise for years, fertilizer will be in demand, so treat any near-term dip in POT's shares as a buy opportunity.

United Technologies (UTX). Price: $56. UTX knows the jet age has just begun. True, commercial airliner sales may lag the recovery, which would hurt UTX's jet engine revenue, but the company has too many, superior, in-demand businesses to ignore, including: elevators, air conditioning/heating systems. Hence, UTX remains a Buy, unless you believe the rest-of-the-world (emerging markets) can do without airplanes, elevators, and air conditioning.

CVS (CVS). Price: $34. A low-risk play for more-conservative investors. Wal-mart (WMT) gets the rap for being the toughest, meanest corporate entity, but what few investors know is that CVS is just as tough. Look for same store sales to increase about five percent in 2009 - and this gain will take place during the 'frugal consumer' era. Further, nothing has occurred within the last half-year to suggest that CVS will not be able to successfully incorporate recent acquisitions, and increase sales in key, new markets in the U.S. Finally, CVS's site selection and operational strategy versus competitors is among the most devastating in the corporate era. Hence, if you're thinking about opening a "Mom & Pop' drug store next to CVS, think again.

My Top Pick (total return on equity): Freeport.

My Safest Pick: CVS.


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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

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