Wednesday, July 27, 2011

Debt limit? Schmebt Limit. I'm Investing

That was some market plunge Wednesday. It was ugly. My own portfolio was crushed by a single-day 2.6 % loss.
And there may be more to come.
The debt ceiling debate is reason for concern. The fact that our government representatives look like a bunch of bumbling idiots with so much at stake is an even bigger concern.
But as an investor, I have to look at this embarrassing gaffe as a potentially great opportunity.
Not only is this stalemate driving down stock prices at a time when companies like Apple and Amazon are posting monster growth and profits, but its resolution has the potential to be a catalyst to drive stocks even higher than they were before.
Those who take a chance when prices are low and things are still uncertain could be rewarded.
Sure, investing before things are resolved is a risk. But investing is all about risk.
I can't offer any insight on the ramifications of the debt limit not getting raised, or what happens if the U.S. gets downgraded as a debt risk. There's plenty out there to read on that.
But I do know that I've read a number of pieces about using this as an opportunity to buy low and they have me leaning in that direction. Even Jim Cramer is instructing his audience to do so.

With that in mind, I've reloaded my brokerage account with a few rounds and look to set my sights on a bargain or two.
I'm putting my focus on two areas:
  • Fast growers whose shares slap back sharply or fail to get the post-earnings boost they should have.
  • Dividend payers whose yields were driven up by the dip.
Growth first 
In the first group, the fast growers, I'm considering at least these four stocks:
  • Apple (AAPL) - Killer quarter and still has a low valuation. This is a stock that shouldn't be pulling back at all, yet it lost 2.6 % Wednesday. I may add to my holdings.
  • (AMZN) - I'd written off this stock much the same as I did Apple after it had a great run in 2009-10. It's continuied to show me that was a mistake, and its results reported this week show there's plenty of growth to come.
  • Boston Beer (SAM) -  This great beer maker looks poised for better growth in coming quarters as it gets better prices on ingredients. To see what I like about SAM, read this.
  • National-Oilwell Varco - The oil and gas drilling supplier has been on my radar since it was below $70. Now $6 down from its $86 high, NOV may be giving me the entry point I was looking for.
The dividend payers
  • Vodaphone (VOD) - The European mobile communications company could see its yield pushed back up over 6 % despite a strong quarter.
  • Annaly Capital (NLY) - Yes, it's a risk to invest in this mortgage-backed securities play. But if it dips any lower, it's yielding some 17 percent. To me, that's a risk worth taking, at least with a small position.

Which of these stocks I choose to pull the trigger on will depend a lot on what happens and how the stocks behave over the next few days. Of course, this could all be for naught if we wake up Thursday to news of an imminent deal.
Would it be selfish to ask our boys and girls on Capitol Hill for a couple more days of suspense?

My portfolio down 3.29% year to date. See it here.

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