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December 28, 2008
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However I end up owning almost nothing of what is rated buy and recommended. The reason is that it is recommended for a while and it has not fallen in price. So at best, you get exactly what you pay for. In the current context of meltdown, fear and exagerration, one should focus on the premium he deserves for going in what nobody wants to go.
After torough analysis of many stocks whose price seems distressed, one may find compelling value and growth potential at one fifth to one tenth of the price it was this summer, when it was rated buy!
My picks are among beaten down financials who still show signs of good management and resilience in the current mess. AIB, ING, DB, LYG, MFC are among these. Some other companies are debtless, have a very big moat and really contribute to move the world and the way things are done forward. This is the like of EXFO, INTC, NVDA.
And another one is beaten down and is competent at planifying beating down show: it is World Wrestling Entertainment - WWE. This one is also debtless, it still does a profit and pays a hefty dividend. Its moat is undiscutable, Hulk Hogan and others created a legacy of legends which everyone knows and many want to see in person or with Pay Per View. That cash flow is incredible and the management is sound and imaginative.
I think there is value in other sectors as well but did not investigate sufficiently to confidently buy something, as the value is there but the contrarian feeling of going there is less intense than it is with financials. SSL, COP, BHP are my targets on weakness, if they return to they 52 weeks low or very near to them. I do not like healthcare much but it seems to be good fat dividends there.
