MoneyMiser Picks

Well, it looks like the big bad bear has a majority of traders in its grasp.

So what should you do now?

It's time to start buying quality on the cheap.

Now the average investor can't do what Warren Buffett did, getting 10% for life essentially and an option to buy more for potentially less than face value, but there are a lot of companies out there who are quality on the cheap for INVESTORS WITH A LONG TERM MINDSET (10+ years)

My first buy today: CHK when it dipped below $13.

Chesapeake has become the #1 or #2 (depending on how you view it) natural gas producer in the U.S. In the good days, it went north of $60 per share. In the low teens, that'a more than a 75% discount from the highs.

But Chesapeake won't recover quickly. It's a long term share price growth story.

Essentially a greenier energy source than oil, will make you green (cash) in the next decade + .

--Look at how many plants have converted to nat. gas for electricity.
--How do you make all of that steel for infrastructure growth? Nat. gas needed to heat to hot temperatures.
--T. Boone Pickens isn't blowing hot-air about using nat. gas as a bridge.
--Democrats in Congress seriously considering off-shore drilling for nat. gas

All of this adds up to a decade long (or longer) fundamental story for nat. gas.

Again, CHK won't recover by end of 2008, but probably by Spring 2010, we'll start to see momentum recover. From a $13 price floor, we could easily see $40 by 2018, and that's about 15% compounded return on investment.

Others I like for 5+ years recoveries: Both MGM & LVS. Both are in the low teens, and the world is not going to stop gambling anytime soon. Of the two, I prefer MGM because of its brand name properties, performance at those properties, and expansion plan.

Comments: View Comments |  Friday October 10, 2008