Daily Stock Pick of the Day - Wed, Sept 8 2010

The markets gave it up a bit today after last week's surge.  The Dow fell 107 pts to (1%) to close at 10,340.  The S&P 500 gave up 1.1% or 12 pts to close at 1091.  The Nasdaq dropped 24 points, 1.1% to close at 2208.  The Wall Street Journal revealed today that European banks may be carrying more risky debt than the stress tests showed.  Investors sought safe havens and as a result, gold rose to new highs and closed at 1257.  Oracle (ORCL) was a big leader today.  The announcement that Mark Hurd, former Hewlett-Packard CEO, will take the helm drove ORCL up almost 6% today and closed at $24.26. 

The charts on many stocks look discouraging these days. Many stocks are below their 50-day moving averages and even below their 200-day averages.  It seems like there are so many good stocks that have just been beaten down with the rest of the market.  It can probably be said that there are good quality stocks out there at bargain prices.  I'm looking at few with good growth rates that I think are trading below their true value.  For instance, let's look again at a stock in the mining sector, Cleveland-Clff (CLF).  They operate six iron-ore mines in Michigan, Minnesota and Eastern Canada and two coking coal mines in Alabama and West Virginia.  Earnings growth is projected to be in the neighborhood of 33%.  It's P/E ratio of 7.6 is a little low compared to others in the S&P (running at about 11 times earnings).  It closed down today at $66.78 (-.45%) per share right now, but this stock is valued at a minimum of $80.  There seems to be some good upside here, for sure.  It looks a tad overheated here, I'd wait to see if it pulls back to $61 and trade it from there.

Stay cautious, and remember:  Trade to trade well.

Obligatory disclaimer: This blog is for information only. Past results do not guarantee future performance. All financial decisions involve risk and there are no guarantees. The suggestions above are for informational purposes only and the blogger is not liable for any losses incurred as a result of actual investment activity on the part of the reader.