The Motley Fool's Weekly Editors' Picks
Fools were out and about this past week in an investing world jam-packed with actions and ideas. Here are three articles you might find useful as you decide how to invest your money.
3 Cheap Stocks for Aggressive Investors
In a world where investor demand helps drive share price, investors' desire for security has driven up the prices of some low-volatility stocks and correspondingly created bargains among stocks that are more sensitive to economic cycles. "You can therefore find what look like sweet deals on some stocks of cyclical companies that appear to be priced for a big economic contraction," Fool analyst Dan Caplinger wrote.
He uses mining company Freeport-McMoRan Copper & Gold (NYS: FCX) as one example of a company investors have shied away from thanks to its involvement in copper, the demand for which gets tugged around as economic activity waxes and wanes. "Investors have bid down Freeport-McMoRan shares because of slowdowns in construction activity and industrial growth," Dan wrote. "Yet with the stock trading at just seven times forward earnings estimates, and just over 10 times trailing earnings, investors have a huge margin of safety against any slowdown that may come."
Chesapeake Energy (NYS: CHK) is another company investors are wary of, partly because it deals in energy, the demand for which decreases during economic slowdown. But the stock has a "fairly attractive" valuation, Dan noted. "Combine that with the prospect that natural gas prices may have bottomed and that activist investors may unlock more of the natural gas giant's value, and you have a reasonable bull argument for Chesapeake," he wrote.
Price isn't the only thing to look at when considering a stock. Read the article to learn more about what really makes a bargain.
Can General Motors Be Saved?
Fool analyst John Rosevear delves into questions surrounding General Motors' (NYS: GM) strength. John deems the company strong but says it suffers in the court of public opinion, partly because it gets compared with Ford (NYS: F) .
"Ford ... has an advantage in perception that GM hasn't yet earned," John wrote. "While Ford's renaissance came about as a result of gutsy moves and careful management, GM's was boosted by a gift from American taxpayers. In the eyes of many, GM has yet to prove that it can make it on its own."
GM's also been taking it on the chin recently with the "abrupt" removals of Karl-Friedrich Stracke, head of GM's Europe operations, and Joel Ewanick, global marketing chief. These removals suggest impatience on the part of GM CEO Dan Akerson, John wrote, when "patience might have been the better course." And GM investors will also need patience. "Despite GM's solid financial footing, it has -- best case -- several years of hard work to go before its turnaround will match Ford's, before it will reach its potential in markets around the world," John wrote.
Read the article to get John's full analysis of what's going on with GM.
Early Layaway Gives Away Something About Wal-Mart
Wal-Mart (NYS: WMT) will be launching its holiday layaway program in the next few weeks, a month earlier than last year. That might be good news for cash-strapped shoppers, but Fool analyst Alyce Lomax helps investors figure out what it might mean for them. "This move illustrates just what kind of plight Wal-Mart's core customers are in -- and why recessionary times aren't necessarily a positive for the Bentonville behemoth," Alyce wrote.
Low-price Wal-Mart has lost customers to discounters such as Dollar Tree and Family Dollar, Alyce wrote, and the people who shop at Wal-Mart aren't in a position to buy, buy, buy.
The news about Wal-Mart's layaway program, and what it says about the store's customers, gives Wal-Mart investors incentive to think about getting out of the stock, which has surged nearly 40% in the past year, Alyce wrote.
Read the article for her full analysis.
Ford may be better than GM, but it has its own challenges as well. Get the latest scoop on Ford's prospects and pitfalls in the Fool's premium report on the automaker.
The article The Motley Fool's Weekly Editors' Picks originally appeared on Fool.com.Fool online editor Kris Eddy owns no shares of any stocks mentioned in this article. The Motley Fool owns shares of Chesapeake Energy, Freeport-McMoRan Copper & Gold, and Ford.Motley Fool newsletter serviceshave recommended buying shares of General Motors and Ford, as well as creating a synthetic long position in Ford. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.
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