Bull & Bear's Smarts

       Ronald Sadoff: "St. Jude Medical (STJ) headquartered in St. Paul, MN, develops, makes and markets cardiovascular medical devices products. They are an $18 billion company that produces a wide variety of products such as pacemakers, heart valves and implantable defibulators. The company employs over 9,000 people around the world. They sell products in over 130 countries. They recently acquired Advanced Neuromodulation Systems (ANS) for $1.3 billion. ANS is the second largest maker of spinal cord stimulation products. St. Jude has been a terrific performer during the past five years.
        We started purchasing St. Jude Medical stock for clients' accounts back in early 2001 after it broke out of a ten-year downtrend. A competitor, Guidant is in the middle of a $19 billion takeover by Johnson & Johnson. The fact that a larger competitor to St. Jude was taken over opens the door to the possibility of a larger firm acquiring St. Jude. Speculators have mentioned both Abbott Labs and McKesson as potential acquirers.
        Global growth has been an important component of their sales. International sales as a percentage of total sales have risen from 34.4% in 2002 to 44.9% in 2004. Sales outside the US have risen 88% in two years, which includes a 180% increase in Japanese sales over two years.
        We continue to have a favorable outlook on St. Jude Medical and several other companies in the medical device industry."

        Alexander Paris: "IDEX Corp. (NYSE IEX) reported strong results once again, with third quarter base sales (+8%) and orders (+10%) up compared to a very strong year ago quarter, net income and diluted earnings per share ($0.54 versus $0.44), 23% higher and in line with consensus estimates.
        Sales of $257.9 million were up 8.6%, with all of it representing organic growth and excluding foreign currency translation. Sales were up 10% domestically and 6% internationally, reflecting strong growth in Asia and Europe. However, Europe continues to show sluggish sales in dispensing equipment. Base international business in the quarter represented 42% of total sales, down from 43% a year earlier.
        Overall gross margin improved from a year ago to 40.3% from 40.0%, but was lower sequentially from the second quarter of 41.1%. The third quarter consolidated operating margin rose 130 basis points to 18.1% from the year ago quarter and was 40 basis points higher sequentially. The company continues to offset raw material price increases by aggressively implementing price increases and surcharges. It also continues to see savings from its efficiency initiatives, including Global Sourcing, Six Sigma and Lean Manufacturing. As a result, net income was up 23% to $28.5 million, or $0.54 per share from $0.44, in line with consensus and a penny below our estimate.
        New orders in the third quarter were up 10% from the third quarter of 2004 to $258.9 million, with all of the gain representing base business orders excluding foreign exchange. Free cash flow (after capital spending) also continues to look impressive at $43.4 million for the quarter, up from $37.0 million and at 1.5 times net income, indicates an even stronger balance sheet. The debt/capital ratio fell to a record low17%, leaving the company with a great deal of flexibility to continue to pursue its aggressive strategic acquisitions program in order to expand its market.
        IDEX continued to show good overall momentum during the third quarter despite the weak European economic environment's impact on one of its business segments and slower-than-expected inventory rebuilding in the U.S. manufacturing sector. We have adjusted our fourth quarter estimate to $0.53 (from $0.57), which changes our full year earnings estimate to $2.07 (from $2.11). However, except for some modest temporary impact from the Gulf Coast storms, U.S. manufacturing and capital spending activity should continue to expand through 2006 and likely 2007 as well, which should be reflected in the company's results. With its strong financial condition and acquisition philosophy, we would also expect incremental sales and earnings from strategic acquisitions over that period, though this is not reflected in estimates. While the stock has done well, it remains attractive and is still priced well below its five-year average forward P/E. We are continuing our outperform rating with a one year price target of $50."

        In the past few years, ConAgra has sold most of its fresh food businesses, including its beef, poultry and pork processing operations. That way it can focus on packaged foods, which generate higher profits. Consequently, ConAgra's sales fell from $27.2 billion in 2001 (fiscal years end May 31) to $14.5 billion in 2004. Sales crept up to $14.6 billion in 2005.
        Earnings from continuing operations rose from $1.33 a share (total $682.5 million) in 2001 to $1.58 a share ($840.1 million) in 2003. However, strong price competition and rising energy and other costs cut profits to $1.50 a share ($796.0 million) in 2004, and to $1.35 a share ($704.7 million) in 2005.
        In August 2005, ConAgra sold its remaining shares in Pilgrim's Pride Corp. for $482.4 million. The company sold its chicken processing operations to Pilgrim in 2003, and received the stock as partial payment. ConAgra will probably use the proceeds to cut its $3.9 billion in long-term debt, or 0.8 times equity. That's high, but down from 1.1 times a year earlier.
        The Pilgrim's sale generated a pre-tax gain of $329.4 million, which helped raise ConAgra's earnings from continuing operations in the first quarter of fiscal 2006 to $0.67 a share (total $347.3 million) from $0.26 a share ($132.4 million) a year earlier. However, sales dipped to $3.27 billion from $3.38 billion.

        Bob Acker recommends the following two profitable high book stocks with insider accumulation priced near the low end of their 52 week ranges.
       "Russell Corp. (NYSE RML $15.52), a leading branded athletic and sporting goods company sells athletic apparel, uniforms, footwear and equipment for a wide variety of sports, outdoor and fitness activities. Russell's major brands include such well known names as Russell Athletic(r), Spalding(r), Brooks(r), Huffy Sports(r), Bike(r), Moving Comfort(r), AAI(r), Mossy Oak(r), and JERZEES(r). Russell, which has a 52 week range of $12.31-to-$21.84, has a P/E of 15.68, yields 1.03%, and is priced more than $2 below book.
        RML experienced a loss of more than 40 containers of product, while fiber costs increased by as much as 20%, because of Hurricane Katrina. Hurricane Rita was also disruptive. These events have probably contributed to RML's seemingly depressed stock price, which is $3.21 above its 52 week low and $6.32 below its 52 week high.
        Meanwhile, shipping has returned to more normal levels, and fiber costs are expected to normalize - but at higher than pre-hurricane prices - as world supplies are increased. Also, Russell expects to recover related expenses (which are estimated to be in a range of $0.13-to-$0.16 on a per share basis) from its insurance carriers. Russell Corp. is recommended for purchase.
        Russell Corporation, 330 Cumberland Blvd., Ste. 800, Atlanta, GA 30339, 678-742,8000.
        Quaker Chemical Corp. (NYSE KWR $17.58) is a worldwide developer, producer, and marketer of custom-formulated chemical specialty products and a provider of chemical management services for manufacturers around the globe, primarily in the steel and automotive industries. KWR, which has a 52 week range of $15.80-to-$25.07, has a P?E of 19.69, yields 4.9%, and is priced at, what seems to be, a reasonable premium to its book value of $12.33.
        Quaker Chemical, which took a first quarter net pre-tax charge of $1.2 million related to a workforce reduction, expects that an $8-$10 million fourth quarter restructuring hit will result in annual savings which will approximate the one time cost of the restructuring. KWR's net debt-to-total capital ratio increased to 33% at September 2005 from 28% at the end of 2004, primarily to fund a Brazilian acquisition and to fund working capital needs associated with growth initiatives. In September, KWR repaid its senior unsecured notes due in 2007, and in October, entered into a $100 million, five-year, unsecured, syndicated, multi-currency revolving credit facility. KWR noted in its third quarter release of November 1, 2005 that, "This facility will enable consolidation of short-term debt into a long-term facility and ensure liquidity to support future growth."
        The combination of restructuring charges and increased debt may be having a containing effect on KWR's stock price. KWR, which is only $1.78 above its 52 week low, is priced $7.49 below its 52 week high. Quaker Chemical is recommended for purchase. The company's quarterly dividend of $.215 per share, (payable on 1/31/06, to shareholders of record at the close of business on 1/17/06) will lower our costs basis to $17.365.
        Quaker Chemical Corp., One Quaker Park, 901 Hector St., Conshohocken, PA 19428-0809, 610-832-4000."

        George Dagnino: "Energy stocks have stopped their slide and have been consolidating. Even the REITs have been showing some strength.
        My strategy at this stage of the business cycle is to take advantage of the current move and try to invest all the money we raised during the September-October broad decline.
        At the same time I am trying to position the portfolio away from the commodity-driven stocks and invest in other strong sectors. By doing so we are exposed to a series of attractive options.
        As usual, we will adjust the allocation to every position to reflect the market tendency in each of the sectors and the strength of each stock.
        I am recommending three stocks belonging to Internet software & services, banking, and railroads. These sectors are strong with solid momentum.
        1. CGI Group, Inc. (NYSE GIB $7.34) provides information technology (IT) services and business solutions worldwide. Its services primarily comprise management of IT and business functions; systems development and integration; and consulting.
        2. Bank of America Corp. (NYSE BAC $46.56) operates as a bank holding company that provides a diversified range of banking and non-banking financial services and products in the United States and in selected international markets.
        3. Canadian National Railway Company (NYSE CNI $79.42), directly and through its subsidiaries, is engaged in the rail and related transportation business. CNI spans Canada and mid-America."

INVESTOR'S VALUE VIEW
1212 Summit St., Columbus, OH 43201.
1 year, 6 issues, $95.

Home Depot is the epitome of what
investors should be seeking

        R. Scott Pearson: "Home Depot (HD) is the leading home improvement and building supply warehouse retailer with stores across the U.S., Canada and Mexico. The company is today the 2nd largest retailer in the U.S., and the 3rd largest in the world. Stores average over 100,000 square feet, and usually carry between 40 and 50,000 product varieties. Management has built a strategy built around growth, quality, and meeting customer demands. Historically, the company has grown rapidly since its founding in 1981, and while projections suggest that this growth may be slowing, results have continued to be strong. The company has traditionally carried low levels of debt. They also proved themselves to be a logistics giant during the days following the hurricanes, reopening most stores within 24-48 hours after the storms.
        The company, which set up 6 temporary sites after the storm to supply those needing building materials, is searching for additional locations in the New Orleans, Lake Charles, and Port Arthur areas to continue supplying the homeowners and contractors involved in rebuilding. The disaster will undoubtedly be a boon for those companies able to help meet needs in the difficult logistical environment, and HD has proven that it is a leader in disaster supply. Costs of supplying the devastated areas are obviously higher than normal, but the company anticipates that volume will be enormous, and expects to build strong customer loyalty during this period. Based upon last year's experience from storms in Florida, we can expect sales at regional Home Depot stores to show strong sales increases for up to 4 quarters, as repairs develop.
        The company continues to grow by acquisition also, buying seven Contractors Warehouse stores in California during the 2nd quarter, and rolling up West Tool, Inc. and Wire Products, Inc. into its White Cap Construction Supply professional distribution division more recently. In August, the company also closed on the acquisition of National Waterworks, the nation's leader in the provision of water supply and wastewater treatment transmission products, with 136 branches in 36 states. And in October, they bought Magnum Pipe, further expanding its Maintenance, Repair and Operations business line. The company has become successful in expanding beyond the retail format, and is becoming a national leader in building and maintenance supply for the professional world, as well. Also, the company is experimenting with urban store formats in places like Manhattan, to cater to a new market. The company has also found success in its expansions into Canada and Mexico, and is optimistic about potential in China. Finally, the company continues to open new traditional line stores in growing areas of the U.S.
        Strong consumer spending across all stores on home improvements and appliances helped build a solid foundation for Home Depot's third quarter earnings report. Reportedly, homebuyers are rushing to get into homes before interest rates rise, and this transition should help home upgrade specialists like HD. The retailer, along with its rivals, all saw revenue and net income soar as shoppers spent heavily this fall. Reports suggest that the economy is strong. This jibes with our expectations of an economic boost coming from increased government spending. Ostensibly, much of this spending should go toward recovery efforts in devastated areas, and much of that will focus on home rebuilding. All of this bodes well for home repair retailers. Further, with the holidays looming, the company's final earnings forecast looks strong. We believe HD will be an outstanding choice for the near term especially, but also for the long haul. Investor's Value View strongly recommends Home Depot as an investment for both conservative and more aggressive investors. The stock has demonstrated its potential as an earning engine, and we believe the solid results are likely to continue indefinitely into the future. This stock is the epitome of what all investors should be seeking: a high growth company with strong near-term catalysts, long-term stability and sound management, selling at a reasonable price."

        Konrad Kuhn: "The Gartner Group predicts that consumer Voice over Internet Protocol (VoIP) services spending will jump from $1.9 bil. In '05 to $9.5 bil. in '08. CORG is a communications services firm generating a majority of their revenue through their wholly owned subsidiary Cordia Communications Corp., (OTC BB: CORG) through telecommunications products and services they offer to customers. CORG currently provides Internet access, local exchange, VoIP, and domestic and international long distance telecommunications services on a bundled basis.
        The company services approx. 8,000 small businesses and approx. 52,000 residential consumers, primarily in Massachusetts, New Jersey, New York, and Pennsylvania. CORG also provides, on a contractual basis and on a month to month basis, web-based operating support systems (OSS) and related services to several competitive local exchange carriers who rely on their systems, services and experience in the industry for the management of their telecommunications operations. The company executed multi-year term commercial services agreements with Incumbent Local Exchange Carriers to have continued access to their underlying network. Pivotal agreements signed with Verizon Communications and Qwest Communications ensures survival and continued growth in the market place, thus allowing CORG to continue growing their customer base in existing territories and enter new territories. CORG is also licensed to provide local and long distance telecommunications services in Colorado, Florida, Illinois, Michigan, Ohio, and Washington.
        In May '05, Cordia International Corp (CIC) was formed for the purpose of acquiring and operating traditional and VoIP telecom assets, customers and services outside the U.S. To carryout the strategy for expanding the geographic distribution of their telecommunications services globally, CIC is in discussions with carriers in several countries, including France, Thailand, China, and Taiwan. During Q1'05, CIC expanded beta testing to include test customers in approx. 13 countries, which is expected to be launched as of Jan. 1, '06.
        Revenues for FY'04 leaped 227% to $13.2 mil. With a loss per share of (.04), with CORG continuing to invest in their VoIP platform. Revenue for the 1st 9 mos. of FY'05 vaulted 335% to $31.02 mil., with net income surging into the black, with .21 per share vs. a loss of (.03) for the same period in the prior year. CORG is well-positioned for sustained growth. Since our recommendation in July at 1.85, the stock had a major breakout (support now 2.20) and is heading towards its 1st objective of 4-5. Of the 5,215,410 shares outstanding, approx. 72% are held by insiders.
       It is estimated that growing penetration of broadband Internet access among U.S. households will increase to 42.3 mil. homes, or 36.2% will be using broadband by year-end. CORG believes global acceptance of the Internet and VoIP has created a significant opportunity to expand the geographic distribution of their telecommunications services. VoIP can deliver even greater value to internationally-based customers as compared to U.S. customers through the greatly reduced cost of international calls, and especially calls to and from the U.S. CIC recently established a Point of Presence in Hong Kong, which will be used to target the Asia Pacific region's VoIP market, which continues its explosive growth Ultimate target 7-9."

        A brand is one of the most powerful assets a firm may possess. Many companies create entire business strategies around branding by utilizing advertising, product packaging, promotions, and more. A strong brand enables a firm to sell its products simply based on a company's reputation, which consumers grow to know and trust. Branding can aid a company's entry into new markets as well as a new product offering. Coca-Cola is an example of a strong brand. Coke was rated the number one global brand in 2005 by Business Week with a value worth around about $68 billion. Brands are able to demand premium prices and maintain steady earnings from loyal customers.
        Currently, branding is one of the most important assets available to Ford and GM. Ford and GM have been around since the beginning of America's industrial era and have helped to shape the American way of life. The Ford and GM brands have created strong ties with consumers in America and abroad through a long relationship with consumers. Today these companies are experiencing some difficulties, but strong brand names like Ford and GM will likely continue to play a significant role in the U.S. and World economies in the future.
        Ford remains a strong global brand instilling the sense of well-made, rugged vehicles with the slogan "built Ford tough." The Ford brand is currently valued at $13 billion and has been rated 22nd out of Intrabrand's 2005 list of top 100 global brands. Today, Ford's brand value alone is worth almost as much as the company's market capitalization.

Currently, Ford averages around $22,000 in revenue per vehicle of which around 14 percent goes to the funding of employee retirement and healthcare plans. GM presently receives around $18,000 in revenue per vehicle out of which about 23 percent is used to fund employee retirement and healthcare plans.
GM recently reached a deal with the UAW in which the union agreed to pay part of its healthcare costs for the first time in the company's history. GM's healthcare costs are expected to be about $5.6 billion this year and the new agreement will save the company an estimated $1 billion a year or $184 per vehicle. Ford is negotiating with the UAW to gain similar concessions on employee healthcare funding. Plant under utilization also has been harming both companies. Both Ford and GM have plans to cut thousands of jobs and close several plants. In fact Ford recently announced plans to eliminate some of its plants and cut 2,800 jobs. GM has announced similar plans to close nine plants in the U.S. resulting in the loss of 30,000 jobs. These cuts coupled with the UAW deals will help GM and Ford increase profits and return to financial stability.

        Another contrarian opportunity is available via Ford's fixed income. Ford's bonds are split-rated Baa3/BB+. Baa3 is the lowest investment grade rating by Moody's, while S&P rates the issue at its highest speculative classification. The company still possesses a great deal of liquidity and is far from defaulting on its bonds. Even though Ford has nearly $100 billion of debt maturing over the next five years, the balance sheet discloses a healthy $37 billion in cash and marketable securities on hand as of September 30th.
        A Ford issue that looks particularly interesting: Ford 6.625% of 06-16-08 priced at $94.01 to Yield 9.33%.
        The bond is extremely liquid, matures in two and a half years, and is priced at a discount. Should the financial situation of Ford improve over the interim, the bond offers meaningful total return potential in addition to the attractive coupon.

        In recent years, Merrill Lynch has concentrated on controlling expenses and improving profitability more than on growth. Over the last 12 months, the company generated a 15.5% return on equity, versus 13.1% during the same period two years ago. More efficiency improvements are likely, but the company has also increased its emphasis on growth.
        The trading and investment banking segment (64% of net income, 22% income growth in the first nine months of 2005) targets Asian expansion. U.S. operations have shifted their focus to such investments as commodities and derivatives - products other than Merrill Lynch's traditional areas of strength, stock and bonds.
        To grow the private-client business (28%, 15%), Merrill Lynch is expanding its brokerage force. In September, Merrill Lynch agreed to purchase Advest Group for about $400 million, adding more than 500 financial advisers. The private-clients group manages money, provides lending and credit-card services, and sells insurance. Merrill Lynch Investment Managers (7%, 24%) is expanding in Europe. This unit manages money-market and mutual funds and other alternative investment products.
        Merrill Lynch's growth initiatives should fuel solid profit growth over the next year, augmented by share buybacks. In 2004, Merrill Lynch ended a seven-year streak of share-base expansion and began buying back stock. Over the last 18 months, Merrill Lynch has reduced its share count by more than 50 million, or about 5%. In the September quarter, Merrill Lynch bought back $856 million in shares and authorized the re-purchase of another $4 billion worth.

Over the last 10 years, sales rose at an annualized rate of 8%, with per-share profits up 18%. While the over-all growth rate is impressive, quarterly results have fluctuated greatly. No matter how much Merrill Lynch targets fee-based business, it will never deliver truly steady quarterly results. Revenue and profits depend too much on movements of the stock and bond markets. But today's business mix offers attractive growth potential over the next 12 to 18 months for investors who can tolerate some volatility.
Assuming good, but not great, stock-market returns, Merrill Lynch's international expansion and efficiency gains should generate per-share-profit growth higher than the 10% implied by 2006 consensus estimates. An annual report for Merrill Lynch & Co. can be obtained at 4 World Financial Center, New York, NY 10080; (212) 449-1000."

        Roland Carter's recent buy recommendations include General Electric, The J.M. Smucker Co., Weingarten Realty, Wal-Mart, and PPG Industries.
        "General Electric (GE) - This blue-chip, one of the world's largest manufacturing and financial services giants is a current favorite. The stock's high was 60+ in 2000 (a too-high P/E of near 50 at that time). We've bought a lot of GE the past four years, 22-36, some as a buy-and-hold forever. These types can also be traded, buying into weakness, selling into strength. GE's news is excellent, earnings estimates are being raised, and they just provided another healthy dividend increase of 13.6%, right on schedule. Very low debt aside from their GE Credit subsidiary. Continuous dividends paid since 1899.
        The J.M. Smucker Co. - This modest-sized (2005 revenues about $2.1 billion) mid-cap is best known for its tasty jams, jellies, and ice cream toppings. Acquisitions in recent years have brought them great foodstuff names such as Jif, Pillsbury, Crisco, Hungry Jacks, and others. This has also boosted their share price from a multi year low of 15 in year 2000. It appears the SJM people are establishing an excellent track record of acquisitions and divestitures and will try to continue such to further grow the company. 2005 will be the 5th straight year of record earnings @ $2.80/share. Most believe EPS will grow by at least 10% annually in the years ahead. Earnings have doubled and the dividend is up 69% in the past 4 years. This looks like a 12%-13% total return vehicle. A rated S&P.
        Weingarten Realty (WRI) - Is a Houston-based REIT, now spread over 20 southern states, specializing in shopping centers. WRI has been presented several times over the years and has been a top-notch buy and hold REIT. We look for a dividend increase in 2006's first quarter to where 37+ will surely yield 5%. Buying at a 5% should earn shareholders at least a 10%-12% return over time.
        Wal-Mart (WMT) - Is familiar, ultra-successful "low prices" retailer of general merchandise, now the world's largest with 2005 revenues set to surpass $300 billion. In recent years WMT has expanded internationally, with large operations in Canada, and toeholds in Latin America, Europe, and Asia. Their grocery operations are hurting the large, legacy U.S. grocers. If there's a negative on WMT it would be their enormous size which makes faster future growth next to impossible. Still, there appears to be 13%-14% growth here along with a nicely growing, modest yield. Presented before, and a few clients own it from 12 years ago at a cost basis of 13+ and a yield-on-cost of 4.6%. WMT shares have been in decline since peaking in late 1999 @ 70+ (a P/E of 55). The stock has reversed and broken a year-long downtrend and is settling back from a recent high near 51. 46-47 would be a perfect buy target. This could well be a P/A candidate for a trade back to 59. It could also be held. Most expect earnings to advance 13% in 2006 to $3/share. That should sure take the stock to $60. WMT and Walgreen's are the only two Fortune 500 companies having both sales and earnings increases in each of the past 30 years.
        PPG Industries (PPG) - Is a global producer of glass, fiberglass, coatings and industrial chemicals with 101 plants in 21 countries. They are the world's #1 in auto coatings (paints, polymers), #2 in fiberglass, #3 in caustic soda, and in the top 4 in float glass. This is a conservatively-run, low-debt blue-chip that made a run to 74+ in early 2005 to challenge the 1998 record high of 76+. Sales, earnings, etc. are all at record levels here in 2005 and a nice EPS gain to the $5/share area may be possible for 2006. If so, expect a minimum stock price of 75. Dividends have been paid since 1899, but their growth of closer to 5% may be a little too slow for a great buy and hold forever candidate."

        George Putnam III recommends purchasing Taiwan Semiconductor (NYSE TSM $9.29).
        "Taiwan Semiconductor is the world's largest dedicated semiconductor foundry. It manufactures (or "fabricates" in industry lingo) products for other semiconductor companies, some of which have no fabrication capacity of their own and others which outsource additional capacity. The company has grown rapidly, with sales rising from $1.3 billion in 1997 to $8 billion last year.
        The stock performed well during the technology craze of the late 1990's, peaking above 28 in early 2000. Unlike many technology companies, Taiwan Semi has had solid revenues and earnings over most of the past five years, but its stock has performed poorly nonetheless.
        Analysis: Taiwan Semi is well placed to take advantage of a couple of major trends. First, semiconductors are becoming key components of an ever larger list of products, ranging from those that are obviously high tech, such are computers and cell phones, to those that are considered low tech, such as automobiles and dish washers. But at the same time, semiconductor manufacturing has become extremely capital intensive, with new "fabs" (fabrication lines) costing upwards of $2 billion.
        As a result, many of the "chip companies" have stopped actually making semiconductors (and are known as "fables"). Today, many of the hottest names in the semiconductor industry, such as Marvell Technology and Broadcom, merely design and market their products but do not manufacture them. And those companies that do still manufacture semiconductors themselves do not want to pay for excess capacity, and so whenever demand picks up they must outsource.
        Taiwan Semi has the expertise, capital and economies of scale to handle the outsourcing needs of a wide range of semiconductor companies. As a result, it has a broadly diversified customer base that allows it to keep its fabrication lines well utilized even when some segments of the industry may be facing a slowdown.
        Taiwan Semi's financials look very solid. Margins and cash flow are improving. The company has more than $3 billion in cash and very little debt. With next year's earnings per share expected to be around $0.65, the stock is trading at a fairly cheap price-to-earnings ratio of less than 15.
        Technology stocks in general, and semiconductor stocks in particular, tend to be very cyclical. Both the tech and the chip stocks have been out of favor for some time now. When the cycle turns and investors come charging back into these stocks, Taiwan Semi will do very well. But in the meantime, the company's business should keep chugging along, making the stock a relatively low-risk technology play. The stock even pays a dividend - though it can hardly be called regular - to compensate you while you wait. We recommend buying Taiwan Semiconductor stock up to 14."

        Walter Pearson's recently recommended growth & income stocks are American Capital Strategies, Ltd., and Vineyard National Bancorp.
        "American Capital Strategies, Ltd. (Nasdaq ACAS $38.36) is a buyout and mezzanine fund that provides investment capital to middle market companies, which it generally considers to be companies with sales between $10 million and $750 million. The Company invests in senior and mezzanine (subordinated) debt and equity of companies in need of capital for buyouts, growth, acquisitions and recapitalizations. Its wholly owned operating subsidiary, American Capital Financial Services, Inc. (ACFS), provides financial advisory services to the Company's portfolio companies. ACFS arranges and secures capital for large transactions, particularly buyouts that the Company sponsors. American Capital Strategies was incorporated in 1986 and is headquartered in Bethesda, Maryland.
        Vineyard National Bancorp (Nasdaq VNBC $29.17) serves as a holding company for Vineyard Bank (the Bank) and for other banking or banking-related subsidiaries that it may establish or acquire. As a wholly owned subsidiary, the Bank is a community bank that operates nine banking centers, which are located in each of the communities of Rancho Cucamonga, Chino, Diamond Bar, La Verne, Crestline, Lake Arrowhead, Irwindale, Manhattan Beach and Corona, all of which are located in Los Angeles, Riverside and San Bernardino counties in California. The Bank is involved in attracting deposits from individuals and businesses, and using those deposits, together with borrowed funds to originate commercial business and commercial real estate loans, primarily to small businesses, churches and private schools, single-family construction loans, and Small Business Administration (SBA) loans."

        Joseph McKittrick: "In 1860, Eberhard Anheuser acquired the former Bavarian Brewery in St. Louis, Missouri. Later, Adolpus Busch would marry into the family and the two would create what was to become one of the world's most prolific brewing operations. BUD's operations have since been expanded, with current principal business segments including domestic beer, international beer, and entertainment.
        In 2004, Domestic Beer comprised 90.8% of BUD's consolidated net income. The company's major product is beer with its best selling brand Budweiser. Among its exhaustive list of beer offerings are other labels such as Michelob, Busch, King Cobra, and a select number of Bacardi drinks. Non-alcoholic brands include O'Doul's and Bush NA. The vast majority of brands, including Budweiser, Bud Light, Bud Ice, Michelob, Michelob Light, and Michelob Ultra are sold in draught and packaged form. Other products, primarily non-beer items such as Tequiza and malt liquor are sold only in packages. Distribution for most products is across 49 states, with products being created in a network of 12 breweries located throughout the country.
        Since 96% of the company's consolidated net income typically comes from domestic operations, BUD's International sales would seem somewhat insignificant. However, the sheer size of the company and its many brands insures this is not to be the case. Chief among the company's overseas assets is the ownership of Harbin Brewery Group, located in China. Anheuser also owns a subsidiary known as Anheuser-Busch Limited, which markets its products in Europe. In the U.K., the company sells Budweiser, Bud Ice, Michelob, Michelob ULTRA, and Anheuser World Select. In Canada, products are brewed and sold through license by Labatt Brewing Company. In Japan, Budweiser is made by Kirin Brewery Company. In Ireland, manufacturing is under the auspices of Guiness Ireland, Ltd.
Surprising to many is the fact that BUD is the third largest theme park operator in the United States. Through its subsidiary Bush Entertainment Corporation, BUD operates Busch Gardens parks in Tampa and Williamsburg. In Orlando, San Antonio, and San Diego the company operates Sea World locations. Water parks include locations in Tampa, Williamsburg, Orlando, and Langhorne, Pennsylvania. This segment typically experiences higher revenues during the spring and summer, primarily due to weather and holiday schedules among other factors. Major theme park competitors include such names as Walt Disney Co, Six Flags and Universal Studios Theme Parks. BUD also faces competition from public zoos, parks and other independent amusement operations.
        Interesting Qualities to Note: Recent market capitalization was $34 billion. A 52-week low of $40.15 was made on 10/27/05, and 57% of shares are held by institutions.
        At a recent price of $44, Anheuser Busch is in a Rising Trend with a 39% downside risk to a low price of $27, high yield of 4.0%. From current levels the company has a 145% upside potential to an Overvalue price of $108, low yield of 1.0%. Over the past few months, shifts in BUD's share price has led to numerous questions from subscribers as to its continued suitability as an investment. Based on our analysis, the company continues to have an enormous upside potential, coupled with a stable business in a reliable industry. Shares will not have exhausted their upside potential until they come within 10% of the low yield pattern established at 1.0%. Based on the current annual dividend of $1.08 this corresponds to a price of approximately $98/share. Investors not already invested in the stock should keep in mind the remaining 39% downside potential and the possibility that the stock could return to Undervalue before continuing its rise to Overvalue."

        Sy Harding added a 5% position in Anheuser Busch (NYSE BUD) in the market-timing strategy portfolio.
       "Anheuser Busch is the world's largest brewer of beers, a large manufacturer of aluminum cans, and operates major theme parks (SeaWorld and Busch Gardens).
       Like its competitors, BUD has experienced disappointing sales and earnings this year, resulting in a significant decline in its stock price.
       Competition from wines and hurricane Katrina cut into sales, while higher energy, aluminum, and transportation costs cut into profit margins, with 2005 earnings expected to be 10% below those of last year.
       We believe that shortfall has been factored into the stock price, which is down 20% from its 2004 peak, and the company is taking steps to rectify its problems. It has introduced new products and packaging, and plans price increases for many of its products early in 2006.
       Catching our eye also is the company's emphasis on international markets, where its beverage volumes increased 70% in the first three quarters of the year. In particular, BUD is increasing its exposure in China, the world's largest (by volume) and fastest-growing beer market.

       If one of your New Year's resolutions is to make smarter investment decisions in 2006, resolve to put your money in the stock market, say Harry S. Dent, founder and president of the H.S. Dent Foundation.
       One of the world's foremost economic forecasters, Dent says in 2006 "the smart money will turn more bullish - leading to a strong rally as new money comes back into stocks and out of housing, bonds and REITS."
       Dent is known for developing the Dent Forecasting Method, an economic forecasting approach that incorporates demographic trend data into traditional forecasting models.
       In the December edition of his monthly newsletter, the H.S. Dent Forecast, he says because the bond, REIT, energy and homebuilding sectors are beginning to slow, investors will become increasingly bullish toward the stock market in upcoming months.
       So much, in fact, that if economic reports are strong, "it is likely the markets could resume their rally" as early as this December.
       The rally will be led by institutions, he explained. "New institutional investors will come back into the markets well ahead of the more bearish everyday investor."
       And with his projected targets between 14,000 and 15,000 for the Dow as well as 3,500 for the Nasdaq, "we could even be underestimating the market's potential for 2006," Dent contends.
       Other highlights of Dent's forecasts for 2006 include:

The Fed will stop raising rates by January of 2006 to avoid an inverted yield curve;
Oil prices will continue to trend down throughout 2006;
The housing bubble, which is already showing signs of slowing, will manifest as flattening and then lower housing prices;
The Dow's ascent to Dent's targeted range between 14,000 and 15,000 will take place by August 2006;
The market can continue to rally because stocks are currently undervalued by 40 percent compared to bonds.

"All indications show that stocks are heading up from here. So, investors that waited for proof of the recovery from the lows in October 2002 have already missed a doubling of the Nasdaq and a 50 percent gain in the Dow," Dent says. "I'm giving a strong buy signal NOW for the 2006 bull market. If investors procrastinate, they again will miss major gains in the coming year."
Editor's Note: H.S. Dent Publishing (www.hsdent.com) of Tampa, FL. helps people understand change and prepare for its arrival through a variety of Dent publications, including the monthly H.S. Dent Forecast. The Dent methodology, which is based on the study of demographics, or the study of whole populations and their spending habits, takes financial forecasting out of the world of theory and into the realm of real-world consumer behavior, allowing investors to make intelligent and informed economic decisions about their future.