1. McKesson (MCK) - This drug distributor's two largest customers are Rite Aid and CVS Caremark. There is concern that Rite Aid may default on its debt, and the CVS contract is up for renewal this summer. The stock is recommended because the analyst thinks that its price already reflects the worst-case scenario of McKesson losing both customers. Instead, McKesson could take business from its competitor Cardinal Health.
Also, MCK could pay off their $1.8 billion in debt with one year of cash flow from operations.
2. Intel (INTC) - They own 80% of the PC microprocessor market, and they are moving into notebook computers, mobile internet devices, etc.
3. American Express (AXP) - This stock was down with all the other financial stocks. Forbes thinks it will come back because of the virtuous circle that earned them a ten-year average return on equity of 10%: American Express attracts high spending card holders, which allows them to charge higher merchant fees. AmEx then invests some of this money into cardholder rewards/perks. This, in turn, attracts more high spenders.
Thursday, 28 May 2009
Three Stock Picking Ideas From Forbes Magazine
Posted on 21:57 by Unknown
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