US Companies That Won't Be Hurt By a Recession

There's a lot of talk about a recession. I think we are probably in one, and to be honest, it doesn't really matter if we technically are, because our economy is suffering for sure. This spells trouble for most American businesses, because US consumers will spend less in general as they attempt to weather the economic troubles we face. The media won't help this either, because all the reports about how dismal our economic outlook is only keeps people's money closer to them, and US businesses will feel the hurt.

However, there are some US corporations which won't be hurt by a poor economic situation at home. These companies are insulated from domestic troubles by a variety of reasons. Some face huge demand from overseas Some see increase demand from citizens during rough economic times. Whatever the reason, finding a company like this and investing in it as a hedge against further economic downturns is a good way to grow your money in a time when most stocks are losing ground. Here are a few stocks I feel will not feel the recession, or may actually profit from it:

Wal-Mart (NYSE:WMT)

Wal-Mart (WMT), as we all know, is a huge chain of retail stores that sells everything from groceries to clothing. Known for cheap prices that run competitors out of business, WMT is all about price and not about quality. During rosy economic conditions, Wal-Mart sees large demand for their goods. In a recession, Wal-Mart sees HUGE demand. When consumer confidence is low and people are scared about spending money, they will search out the cheapest prices they can, and they will be willing to sacrifice name brands to do it. For necessities like clothing and food, WMT meets the demands of consumers concerned about cost. This is why Wal-Mart saw same store sales rise 3% in February, and why Analysts project WMT will grow by 12.5% next quarter. WMT will see continued growth throughout 2008, but it will probably peak in about 3-4 months, as the economic slowdown will probably begin to lessen at that point. WMT is up 8.79% from a year ago, and up 9.66% so far this year.



Caterpillar (NYSE:CAT)

Caterpillar (CAT), is the number one company when it comes to industrial, commercial and agricultural machinery and engines. CAT has the largest market share of this sector, with a $48.1 Billion market share. Last year they took in 47% of revenue from overseas, and with urbanization in China and India overseas foreign should see steady growth. This is a huge strength of CAT, it seems to be able to maneuver difficult situations here in the US because it has such a strong presence in other places.

Also, CAT provides products that few, if anyone, else can produce. Take for example the 777F, an enormous truck used in mining that can carry over 100 tons at a speed of 40 mph. No one else in the world can provide these kinds of equipment, and that's why you'd have to wait till 2012 for these bad boys if you bought today, and pay millions of dollars for it.

CAT provides little downside for investors, as it can benefit from basically any situation. Disasters provide the need for earth moving vehicles, economic growth of third world countries requires heavy machinery, and more growth here in the US also spells more demand for CAT's product. While the downside pay be low, CAT is a mature company and has less room for rapid growth than other companies. I see CAT as a low-risk play to balance a portfolio looking for a long term and slow growth winner. CAT is up 15.27% from a year ago, and up 6.24% in 2008.

McDonald's Corp. (NYSE:MCD)

The true king of fast food, McDonald's Corp. (MCD) represents today's society. Get something that's quick, pleasing, and most importantly fast. Do that, and then sell the rights to do that to other people who will do most of the dirty work themselves. Love them or hate them, MCD has it figured out. They run more than 31,000 restaurants, employ over 1.5 million people, and operate in over 100 countries. Not only that, but they do it for less than anyone. These last two reasons are why they survive a recession in the US. Because they have such a huge global market, the slowing the US doesn't kill them. Unlike an energy company that only sells the US citizens, MCD sells in most countries, and they are experiencing rapid global expansion. Secondly, the "dollar menu" looks pretty good during a period of economic decline. The inexpensive food they offer sees large demand when people have less money to spend. MCD is expected by analysts to grow 9.56% annually the next 5 years, and 10.7% this year. They are trading at a forward P/E of 17.34, with a forward PEG of 1.62. While it isn't the best value, MCD offers a steady investment when economic times are bad. This February they reported a 12% gain in same store sales. They are up 23.15% from a year ago, however they are down 5.82% Year To Date.

Salil Sessions

First of all I’d like to say hello to visitors of this blog. My name is Salil, and I’ll be writing posts from time to time. By the way if “Salil Sessions” seems somewhat familiar it’s because it’s an acknowledgement towards Alan Sloan’s “Sloan Sessions”. I’m a fan of “Sloan Sessions” because he explains complicated situations simply and with what he feels are the best courses of action. Although I do not claim to have his expertise, I hope to emulate his style and add a light hearted feel towards the stock market. That being said, my posts are not going to be comedy pieces and I will always address the situation thoroughly.

Breakfast at Tiffany’s

Well, for those who haven’t seen it, Breakfast at Tiffany’s is an 1961 film (originally a novel by Truman Capote) about a call girl named Holly Golightly (Audrey Hepburn) who meets a failing writer/ gigolo Paul Varjak (George Pappard). Holly has dreams about one day becoming an aristocrat, going to the best parties, and well achieving any girls’ dreams. As any predictable romantic comedy unfolds the girl exchanges her diamonds at Tiffany’s and goes for her true love, and, what do you know? The diamond fell into the laps of Tiffany & Co investors after the company produced better than expected results for their 07 4th Quarter.

So what does this mean for non-investors? Analysts we’re eager to see how Tiffany & Co (TIF) would fare because it would show how the luxury market is doing. After several bad months on Wall Street, a heavily loss in the luxury market would be another huge concern. Although it is certain that average consumers have cut back on spending, if upper income consumers have done the same then there would be a very grim outlook on consumption – which is the majority of the economy.

After Tiffany & Co reports were released the stock went up 10% and there was a silver lining in the clouds. Perhaps the most interesting parts of the report are the specifics. Even though sales fell 4% in the U.S, they increased a staggering 21% internationally. Booming economies in the emerging markets has caused increase in sales in places like Brazil and China, and even though America’s decline in the past few months has certainly had a detrimental affect globally, it hasn’t stopped the emerging upper middle class internationally from buying some diamond rings.
Although there is a possibility that the eventual decline of the euro could affect demand of US companies like TIF, one has to understand that these countries have been rising at huge bounds for the past 10 yrs and they have reached a position they are not going to give back in a 6 month period. According to Mr. Belloni from Pictet (a Swiss investment bank), “They [luxury companies] are very cheap” and some are only 12 to 13 times forward earnings with high yields with huge cash deposits and very little debt. So how would someone in America play the luxury game? Actually it’s kind of hard. With the 3 biggest luxury conglomerates –LVMH, PPR, and Richemont – all traded only on international markets shy of Tiffany & Co. and Diageo (DEO) there aren’t very many big players on the streets of the NYSE. Instead, some feel the best move is to bet on the sector. Claymore Advisers and the magazine,the Rob Report recently launched an ETF called Claymore/ Rob Report Global Luxury (ROB) . Their holdings include BMW, Porshe LVMH, Christian Dior and various others). You can also look at the Bloomberg European Luxury Index and the Merrill Lynch Lifestyle Index.

Looking at the history of the luxury market in the past 6 months, there has definitely been a decline; however, with heavy amounts of cash and a growing international market this industry might just be a diamond in the rough.

References: Bloomberg; WSJ; About.com; Marketplace – References are linked with article used.

If you have any comments or questions, I would love to hear them. Please let me know what you think of my articles so I can tweak them in the future. You can contact me at salilka@gmail.com . I’d like to thank you for checking out the Salil Session.

ECRO Drops

So I wrote about daytrading a while back, and mentioned ECC Capital Corp (ECRO.) I also mentioned them when I talked about dividends, because they paid such a high one last week. I mentioned how easily it was to trade this stock effectively because of its clear and stable supports and resistance values. However, this all changed today as ECRO closed at .11, and traded as low as .095. This is huge drop, -31.25%, probably represents the beginning of a new trend. I would guess that today's close price (around .10 or .11) will become either the new resistance or new support (probably the support) and a new pattern will be determined in the coming weeks. I would stay away from the stock until a pattern emerges, because if you guess and guess wrong, you could stand to loose a TON. I'm guessing that the sell off is due to the dividend being paid out Friday, and today was the first day of trading afterwards. However, the actual reason may be just arbitrary selling by investors, or knowledge of something that happened that I don't have. After the new pattern is set, I think the stock will still be a good one to day trade, because it seems to settle into predictable patterns of established supports and resistance.

Finding a Brokerage

I'm a high school kid too who's just starting to invest, but I don't know what internet stock broker to use, any advice?

This is a question that was emailed to me yesterday. And honestly, I'm probably not the best person to be giving advice, but I have had my fair share of experience with different brokerages, so I'll give it a shot.
Personally, the biggest thing I look for in a brokerage is the commission fee. For small time investors (like me, and probably you) commissions can make the difference between a gain and a loss. When your buying thousands of dollars worth of stock, a $10 commission is noise. However, when your trading $100 dollars worth of stocks, $10 represents a 10% hit right off the bat, and then it will also take a chunk out of the money you end up selling a stock for. I got in a position with E*Trade where I bought $100 worth of a stock but couldn't sell after a 20% jump because i would actually loose money due to the commissions. Taking into account how much the commission is can not only help you choose a broker, but help you choose the amount your going to invest.
Watch for hidden fees as well. Some brokers offer low fees, but only under certain conditions. One place fees arise that has hurt me is when trading penny stocks. Make sure there are not penalties for investing in low price stocks, or buying a large number of shares.
Secondly, I look for is how easy the site is to use, primarily how easy it is to transfer funds into the account. Most accounts offer transfers straight from your bank account, but it may take days, or weeks, to get these external accounts verified. Also, watch out for holding periods on transfers, as it may interfere with your trading.
Lastly, I look for services of the site. Most small time traders are pretty much put on the back burner when it comes to services of the site, and that's probably okay. By doing your own research and coming up with your own thesis on stocks, not only are you actively involved in your investments, but your probably having fun and learning. You also are probably doing better than many of the financial ad visors who you would be paying to do the work for you. Sites that boast lots of services probably are going to slam you with huge commissions, which is waaaay worse than having to do your own research.
Personally, I have accounts with E*TRADE and Tradeking. I primarily use the E*TRADE account, simply because it has turned out to be the better deal for day trading and penny stocks. Below I've summarized some popular Internet brokerages, I've tried to focus on ones with cheap commissions. The information is based on use of a basic account with the minimum amount invested (usually under $25,000) if you have an account with more than that in it, talk to me about taking over this blog. Of course, you should do your own research and make the decision that is best for you.

Commissions By Site

• E*TRADE -$12.99 per trade, unlimited OTC shares, for listed shares (NYSE, NASDAQ etc...) $.015/share cost for orders greater than2000 shares.



• Tradeking $4.95 per trade, add $.01 per share for stocks under $2.
  
  
• Scottrade $7.00 per trade, add $.01 per share for stocks under $1.



• TD Ameritrade $9.99 per trade. No restrictions on OTC stocks, no fees for large orders. Free month of trading with opening of account $2,000 or greater.



• Think or Swim $9.99 per trade OR $.015 per share ($5.00 min fee) for orders less than 5,000. For OTC stocks, $20 for 20,000 shares, $30 for 50,000 shares and $50 for unlimted shares.
  
  
• Zecco $4.50 per trade. If account balance is $2,500 or greater, first 10 trades of the month are free.

Why I'm Betting Against Gold

Gold has been a savvy investor's dream since the markets’ tumble a few months ago. Not only has its priced soared, but it's a great hedge against inflation and the dive-bombing dollar. In fact, these last two reasons are probably the cause for the price increases. Many investors were (and still are) really concerned about inflation and the US dollar as the Fed furiously slashed interest rates. The increase in demand for hedges against these two risks, Gold being a classic and popular one, has driven prices through the roof. Gold Futures broke $1000 per troy oz about a week ago, from levels six months ago around $730. Futures a year ago were trading between $650 and $700. This is around a 50% increase this year.
So great, right? You see everywhere 'buy gold.' Gold has momentum. Gold still has huge upside. Gold will not only save you from inflation but you'll make a huge wad of cash on it too. Well, maybe. If the economy continues to collapse at the current rate, then yes. Gold should continue to rise, and would be a wise investment. However, I'm betting that the economy isn't going to do that. I'm betting that the market is bottoming out, and that soon the stock market will begin to recover. I'm not saying were not in a recession (I think we are) or that were out of the storm (were not) but I am saying that I think the price depressions in stocks are coming to a close. The Fed's opening of lending to Investment Banks does not only help, but shows they are willing to act in new ways to help Wall Street. I'm betting investor confidence will begin to recover, stocks will flourish, and Gold will TANK.
Tank? Yes. Tank. Look what happened last week. The market surged on the Fed's actions and Investment Bank's better than expected earnings reports, (The Dow Jones was up 410.23 or 3.43% to 12361.32) and Gold fell to $919.60, a drop of $78.60 or 7.87%. Yeahh. Gold’s volatility due to investor sentiment is unmatched right now, and this is because the increases in Gold's price is largely due to fears about the economy. This makes Gold scary. Gold's price is a bubble, and like all bubble's, it has got to burst. When it does, Gold will fall big, and fast. Last time Gold went crazy, in the early 1980's, Gold peaked around $1000. (This is like $2250 in real terms.) It fell in a matter of weeks to a fraction of that. I don't want to be long on Gold when that happens.
Really, unless your chasing a short term gain, which is definitely there, I see little upside in going long on Gold. Price bubbles ALWAYS correct themselves, and there is nothing different about Gold. The forces pushing demand right now are warranted, because the fears about the economy are real. However, the legitimacy of these forces will dissipate sooner or later, and Gold will be a big, juicy bubble waiting to pop just like tech stocks in 1999 and just like home prices last year. Only go long on Gold if you think the US stock market is going to continue its slide long term, because this is the only situation in which the current forces pushing Gold will remain. Otherwise, you'll be bummed in a year when your stuck with a bunch of Gold you bought for $900-$1000/oz which is now only worth $600-$700. That’s a 33% loss. Ouch.

Exposure to Gold other than Your Grandmothers Earrings:

• streetTRACKS Gold Trust (NYSE:GLD) 3/21 Close-89.80 (-3.36%)


• iShares Comex Gold Trust (NYSE:IAU) 3/21 Close-90.17 (-3.58%)


• Deutche Bank Gold Dbl Long (NYSE:DGP) 3/21 Close-22.44 (-7.46%)


• Deutche Bank Gold Dbl Short (NYSE:DZZ) 3/21 Close-27.66 (6.59%)


• PowerShares Gold (NYSE:DGL) Fri Close- $33.92 (-3.28%)

These are Exchange Traded Funds (ETFs.) They are a great way to gain exposure to commodities without having to actually purchase futures. Also, while futures may be hundreds of dollars, ETFs are usually similarly prices to stocks, making them affordable for everyone. Their behavior, while not exactly the same as the commodity futures they follow, are very similar, as you can see from the prices these Gold ETFs closed at last week.

Sexy Dividend Stocks

Since the market was closed today due to Good Friday, I decided to take some time to talk about dividends. While most of my time generating gains is spend trading, finding stocks that yield really nice dividends and buying them can be a great way to generate some serious money.
Dividends are basically cash that a company pays you to own their stock. Usually these payments are reaaaally small, and just a slight bonus, not the reason to buy the stock. However, there are a few stocks out there where the dividends are so high its worth owning them just for the payouts. First, some useful dividend lingo that can save you headaches:

• Declaration Date- The day the company announces it will distribute dividends.
• Ex-dividend Date- After this day shares bought will not be paid the dividend and owners as of this date can sell their shares and still recieve the dividend.
• Record Date- Those who were 'on record' on or before this date recieve the dividend. Those who were not do not. (registration for being 'on record' is almost always automatic.)
• Payment Date- The day on which dividends are distributed to those who are eligable.

Here are some stocks that I've found which pay great dividends, or atleast have payed great ones in the past. To find great dividend yielding stocks, you usually have to look past mainstream stocks like Google or Apple. You'll see what I mean in a second.

Alesco Financial Inc. (NYSE: AFN)

2007-2008 Dividends Cash Distributions (Payment Dates):

• 3/15/2007-------------------$.30
• 6/25/2007-------------------$.31
• 10/1/2007-------------------$.31
• 1/10/2008-------------------$.31
• 4/10/2008-------------------$.25

Current Price (3/21/2008 Close Price): $2.85

The current quarterly yield of owning AFN is 8.78%. AFN is also a Real Estate Investment Trust (REIT.) This is a special kind of stock that among other rules is obligated to give back atleast 90% of its income to its shareholders. It's good for them because they don't pay tax on this money, and its good for us because we get sick dividend pay outs, like those of AFN.

ECC Capital Corp. (OTC:ECRO)

2007-2008 Dividends Cash Distributions (Payment Dates):

• 1/29/2007-------------------$.24
• 3/30/2007-------------------$.07
• 3/21/2008-------------------$.10

Current Price (3/21/2008 Close Price): $.16

The current quarterly yield of owning ECRO is 62.5%. I know I constantly seem to be discussing ECRO. I'm lame, and I swear I don't work for them. I just think their a really interesting trading option. And the check I got today for owning them is the reason I decided to write this post. They, like AFN, are a REIT. They aren't as regular or predictable with their dividends, when they decide to pay out, make sure your their to get it, because it's an easy way to make a killing.

Realty Income Corp. (NYSE:O)

2007-2008 Dividends Cash Distributions (Ex-Dividend Dates):

• 1/30/2007-------------------$.13
• 2/27/2007-------------------$.13
• 3/29/2007-------------------$.13
• 4/27/2007-------------------$.13
• 5/30/2007-------------------$.13
• 6/28/2007-------------------$.13
• 7/30/2007-------------------$.13
• 8/30/2007-------------------$.14
• 9/27/2007-------------------$.14
• 10/30/2007-------------------$.14
• 11/29/2007-------------------$.14
• 12/28/2007-------------------$.14
• 1/30/2008-------------------$.14
• 2/28/2008-------------------$.14

Current Price (3/21/2008 Close Price): $26.91

The current quarterly yeild (using four monthly yields) of owning O is %2.1. While this is no where close to the huge yields of the first two, O prides its self of the consistency of its dividend payments and increases. Known as the Monthly Dividend Company, O has increased dividends 48 times since 1994 and paid monthly dividends for 457 months straight. An investment in O, regardless of action of the stock price, will create great returns. And best, its in CA$H.

Dividends offer a great opportunity to get a little cashflow from your investments. Sometimes, they present a unique investment opportunity that can give huge returns. (Like ECRO did for me this month.) Keep an eye out for high yielding stocks, visiting the websites below could be helpful, and happy investing.

• http://www.dividenddetective.com/
• http://www.ex-dividend.com/
• http://www.thedividendguyblog.com/
• http://www.investinreits.com/

Visa

So Visa went public Tuesday. The stock was offered to an elite few who could find a way to get it. (So not a few, there were hundreds of millions of shares sold.) Anyway, Visa (NYSE:V) was available to everyone yesterday. It opened at $59.50, hit a intraday high of $69 and a low of $55 and closed at $56.50. It amassed a volume of a staggering 177,121,500 shares and made over $19 billion for Visa. Today V's price flew even higher, opening at $58.40 and closed at $64.24. In after-hours trading it ended at $64.89. The stock price is up 7.96% from where the public could buy it and up 47.48% from the IPO pricing of $44 a share. (The price those lucky few could get it at on Tuesday.)
V is attracting so much attention for many reasons. Not only is it the largest revenue generating IPO in US History and second worldwide, but it follows the wildly successful IPO of Mastercard (MA) last year. MA debuted at $39 a share (IPO price) and closed today at $220.38, a cool 465% increase. Also Visa's business outlook looks pristine. Visa has a larger share of the market than Mastercard, and unlike competitors Discover (DFS) and American Express (AXP), Visa has no exposure to defaulting credit borrowers.
I think Visa is an incredible investment opportunity. Like GOOG and MA, V offers a huge opportunity to buy a company cheap that will probably never trade at current price again. However, there may be a better entry point for buying V. I'm waiting to jump all in until prices drop a little. My hope is that many who priced with the IPO or at lows on Wednesday will choose to sell soon, and take their 20%-40% gain. This will hopefully cause the price to depress a little, and I can jump in. I'm hoping for a price under $58. However, be wary. The demand could continue, and prices could continue to skyrocket. In this case, jumping in at a higher price might be necessary.

Day Trades

While Day Trading seems risky, (Pussy) its way more fun than long term investing and can make money a hell of a lot faster than waiting months or years for investments to pan out. Shit, I lost an average of 4.5% today on my long term picks. Day trading can be a way to suplement the income. The things I look for in a day trade are 1) Small price, 2)Volitility 3)Enough Volume 4)Patterns. The basis of day trading is just buy low sell high, but having a stock that you can be pretty sure of what is about to happen, based on what usually happens, makes trading it waaaay easier. Two stocks that I day trade are ECC Capital Corp and Zix Corp.


ECC Capital Corp (ECRO) is a OTC stock. They have declared bankruptcy or something idk, its a shitty company, but it pretty much meets all my requirements. It trades around .15 CHEAP. It moves one or two cents a day (thats like 6.67%-13.33% a day) It has okay volume. Usually around 100,000 a day. It can be a problem however, and not being able to get a sell through is a huge red flag with day trading, and has been a problem for me. The reason I choose to trade it is that it has a very predictable pattern. Buy at .15, Sell at .17 or .18. The support at .15 is almost perfect, and this leads to an easy entry point. (See graph)



Zix Corp (ZIXI) actually is a company I think long term is a pretty damn good investment. They're a leader in email encryption, and I think they will suceed. However, currently they're not doing much, except being a sweet candiate for some day trade action. They meet all the epectations of a good day trade stock. They are cheap, trading in the $4 range. They are volitile, usually .1 to .3, or 2.5%-7.5%, a day. It has sufficient volume, with an Avg Vol of 641,000 on NASDAQ. Perhaps most importantly, it is an easy stock to trade because of its predictability. There is a definet support around $3.8 and a resistance in the $4.1-$4.2 range. (See graph)

The Credit Crunch

So the market is tanking. Bear Sterns got sold for a fraction of its value, the economy seems destined for recession and the Fed is cutting rates left and right. The problems which at once seemed only to affect home builders and those heavily involved in sub prime lending has stretched into the main stream financial institutions which provide the liquidity our market desperately needs to survive. SHIT.
Couple this with the dropping yield in Treasury's (10 yr T-Bill at 3.48% as of 3/18), diving US Dollar (.639 EURO as of 3/18) and most money market funds yielding less than 2%, it seems to be a terrible time to invest. However, the economic trouble we are now facing present unique opportunities for those who have some money to invest and some balls to go with it. Here are some opportunities I see for investment:

Financial Services

-This may seem strange, but as long as you have faith in the US government, that rational investors will eventually take hold of the market and that the banks are being fair with their reports to us, the large financial institutions are quite undervalued. A few I like:

• Goldman Sacs (GS)- GS is the largest firm within the Investment Services industry with a 69.38 B marketcap. It traded mostly above $200 in 2007. Earnings released today of 3.32 per share destroyed expectations of 2.58 per share showing that GS is doing better than the gloomy wallstreeters thought. GS has a forward P/E ratio of 10.35 and a forward PEG of .89. While the upside of GS may not be as high as others, the risk is defiantly lower. I look for GS to settle at $200 by the end of the year
• Citigroup (C)- C is one of the largest firms within the Money Center Banks sector. It has a marketcap of 108.21 B and has fluctated around $45-$50 for the past 5 years. As of 3/18 it was trading at $20.71, down 38.64% from 5 years ago to date. Citi may have more exposure to sub prime losses, but it has enough reserves to weather the sub prime storm and emerge with lessons learned. Currently forward P/E is 10.68 and foward PEG is 1.12. There is a 169.4% Growth Estimate for this year, and 79.4% Growth Estimate for next year. This bodes well for C. Potentially the best part about Citigroup is how cheap it is currently, and how far off its pre-crumble price it is. At just over 20 dollars, C is affordable for anyone. If it returns to $30, it will be a $10 increase, a 50% gain. If it returns to 40$, its a $20 gain and a 100% return. I look for C to hit $30 by the end of the year.

Mining

-Mining presents a solid opportunity for stocks that have potential for growth and no exposure to the current troubles within the credit market, other than investor sentiment. Mining companies are constantly merging, so being up on these stocks can make you some bankkk.

• BHP Billiton ADR (BHP)- BHP is a diversified resource company. It is a South American company that operates mines in Austrailia, southern Africa and Latin America. It mines resources used for energy as well as steel, iron ore and magnesium. It has a market cap of 192.07 B which ranks it first in the Metal Mining sector. It currently has a forward P/E ratio of 12.94 and a foward PEG of 1.5. While it may seem like BHP is a little overpriced based on these numbers, I expect earnings estimates to be topped for two reasons. One, BHP has a huge potential buyer in China. China's energy demand is huge and growing, and BHP is set to cash in on this. Secondly, South Africa's demand for coal has exploded. South African government has dedicated itself to increasing energy production, and it has chosen to increase coal imports 50% just this year. BHP has homefield advantage and will see much of this increase as increase in demand for their coal. I look for BHP to hit $80 in a year.
• Vale ADR (RIO)- RIO is also a resource company. It's located in Brazil and operates mining interests in aluminum, precious metals, copper, nickel and iron ore as well as others. It also operates some hydroelectric power plants. RIO offers a huge potential for growth. Its a small and quickly growing company that is seeing explosive growth and huge potential. It has a forward P/E of 10.9, forward PEG of .43, as it is expected to grow at a rate of 25.4% for the next 5 years. With increasing energy costs, expanding emerging market demand and many new investments, the long term prosepect of RIO is glowing. I look for RIO to hit $40 by June, and once the market recovers and investor confidence returns, for RIO to push $60.