Bull & Bear's STOCKS

        Genia Turanova: "Recently, we talked about the changing landscape of the Chinese telecom markets, where important licenses were about to be issued. The Chinese government has been preparing to issue the 3G (third generation) licenses for years, and this time most observers believed it was finally ready to do so.
        Guess what? They were all wrong. China's Ministry of Information Industry's is delaying the issuance of the 3G licenses yet again. And this time, according to some reports, until the first quarter of 2008 at the earliest. The delay this go round is likely because they want to wait until a new series of tests involving the homegrown TD-SCDMA 3G technology is completed next year.
        This situation alters the investment thesis on our Chinese telecom plays. We think China Mobile (CHL) benefits the most from the new (or rather old) situation, while China Unicom (CHU) is more likely to languish. We're therefore selling the later.
        China Unicom is the second-largest of China's cell phone providers, operating two separate networks using two technologies, GSM and CDMA. Without a new 3G license, it will continue to operate both networks, which is a less efficient structure than that of China Mobile's. And with the new 3G license not being awarded, we don't see big upside potential at this point. Sell.
        We are staying, however, with China Mobile and rate it a buy. Majority owned by the Chinese government, this company reportedly plans to invest roughly $1.9 billion to build TD-SCMA networks in 2007, and it will finish the construction of 8,602 TD-SCMA base stations in eight cities including Beijing, Shanghai and Shenzhen before October of this year. It will also complete the procurement of core equipment based on this standard before the end of May. In short, China Mobile is preparing to begin rolling out 3G services later this year.
        Just to remind you what's at stake: China needs to have 3G in place in time for the 2008 Beijing Olympics in order to accommodate foreign tourists and the media. If China Mobile has networks in place, it will benefit from the current situation. And by building early, it will have a head start in expanding the 3G coverage throughout the country.
        China Mobile is expanding within China and beyond. It continues to capture lower-income rural customers in China by reducing prices, enabling it to effectively compete with rivals like China Unicom. Recently, it announced the purchase of 89 percent of Paktel Ltd., Pakistan's fifth-largest cellular carrier.
        As a telecommunication equipment provider, China GrenTech (GRRF), clearly loses out while Chinese large telecoms wait on the government decision. We were early in our recommendation of GrenTech ahead of the 3G license decision. However, for now we're staying with the stock.
        With the large-scale roll out of the 3G networks likely to begin in 2008, reduced capital spending by the major operators doesn't bode well for the company. On the other hand, the stock isn't expensive by most measures; with a PEG of about 0.6, we think the downside from here is limited. The company has positioned itself as an industry leader, and its strong research and development capabilities, established reputation and existing network of coverage products across China makes it a good candidate to be a major recipient of 3G network coverage contract awards. China GrenTech remains a buy."

        Douglas Gerlach: "There is a lot of information out there on buying stocks, but precious little on selling. One of the best reasons to sell is when there has been a change in the competitive environment such that assumptions about a company's growth prospects could be much lower.
        Garmin Ltd. (Nasdaq: GRMN) is the leading manufacturer of global positioning system (GPS) devices. The stock debuted as part of the IAS in March 2002 after being a public company since only December 2000. It was recommended at $18.86, an inexpensive price due to the severe impact September 11 had on its main market at the time, aviation. We recommended sale of the stock in June 2004 (at a price of $30.89, a 64% return in a little over two years) because we saw product margin slipping in the face of competition, largely from cellular phone manufacturers who were incorporating GPS into their handsets. This could have caused Garmin severe problems as its premium pricing structure could have eroded rapidly in the face of "cheap" cell phones.
        However, Garmin responded successfully to this challenge. Instead of maintaining its focus on solely providing a GPS-only device, the company took a page out of the cell phone manufacturer's book and incorporated such features as language translators, MP3 players, audio book players, and digital photo organizers. While reducing prices to stay competitive, Garmin found that it could protect product margins by buying in much higher volumes and riding the wave of price contraction for key components such as flash memory and LCD displays.
        With the availability of full featured GPS devices that sell for as little as $399, the market for GPS has exploded. The company shipped over 5 million GPS devices in 2006. Of the firm's $1.8 billion in 2006 sales, about 62% was derived from the automobile/mobile markets, a segment that has grown at a stunning 131% annual rate for the past two years. Garmin helped fuel that growth last year by agreeing to supply GPS to Enterprise, Avis, and Budget rental car companies. In January, it signed similar arrangements with National and Alamo.
        While the automotive/mobile segments are key to Garmin's future growth, the firm enjoys leading positions in the Outdoor/Fitness (16% of sales), Aviation (13%), and Marine (10%) segments. These segments maintain product margins of between 55%-65% and are less competitive. The firm works much more as a contractor in the Aviation and Marine segments, jointly developing complicated navigation systems with its customers. This diversification helps to limit some of the downside risk of owning a high-tech manufacturer.
       Garmin estimates its market share in North America is over 50% and is targeting 20% of Europe as a goal. The firm's chief competitor is Europe-based TomTom. It appears Garmin is having success there as shown by the firm's 88% sales growth in Europe during 2006. There continues to be concern that companies such as Palm, Apple, Nokia, Sony, and others will take share away from Garmin as they incorporate features into their "smart phones", but Garmin has already shown it is quite adept at handling these competitors.
       Management has a history of conservative projections, and 2007 is no exception. The firm expects operating margin to decline by over 4% due to anticipated rapid price reduction of GPS devices, coupled with a shifting mix to a higher concentration of automotive/mobile sales dollars (product margin of 44% in this segment is lower than the rest of Garmin's business). Even so, the company is expected to grow EPS 20%. The CEO has been heavily selling stock, but insiders still own over 41% of the firm, and this is likely a diversification move.
        We believe the market for GPS, particularly automotive applications, can grow for quite some time and are projecting annual EPS growth of 18%. Five years of this growth could lead to EPS of $5.38. Using a high P/E ratio of 24 (excluding the 2003-2004 period when the market was expecting very high growth), the potential high price is 129. The downside risk appears to be 40% to 31, the product of the average low P/E of 13.3 and 2006's EPS of $2.35. If these results come to pass, the annual appreciation could be as high as 20%. The firm pays an annual divided of roughly 1%, yielding a total possible yearly return of 21%.
        The stock pays an annual dividend of $0.50, has $800 million in cash and little debt."
        Editor's Note: Investor Relations Manager, Garmin Ltd. 1200 E. 151st St., Olathe, KS 66062, Phone: 913-397-8200, E-mail: investor.relations@garmin.com.

        Popular Inc. (NYSE: BPOP; $16.68), a full service financial institution with $48.6 billion in assets, is based in Puerto Rico with operations in Puerto Rico, the Caribbean, Latin America and the United States. While BPOP is the leading financial institution in Puerto Rico, it is probably best known by readers in the states through its subsidiary, Banco Popular North America. BPOP, which is trading at the low end of its 52 week range of $15.51-to-$22, has a price/earnings ratio of 13.45 and yields 3.84%. Buy.
        Bristol Myers Squibb's (NYSE: BMY; $27.60, Rec. 4/04 - adjusted price $20.94) February dividend of $0.28 per share lowered our cost basis to $20.94, and BMY's 5/1/07 dividend of $0.28 per share (payable to shareholders of record 4/6/07) will further lower our cost basis to $20.66. Unless reducing extended positions - buy on weakness.
        Dow Chemical's (NYSE: DOW; $45.70, Rec. 4/06 - adjusted price $39.985) January dividend of $0.375 per share lowered our cost basis to $39.985 and Dow's 4/30/07 dividend of $0.375 per share (payable to shareholders of record 3/30/07) will further lower our cost basis to $39.61. Unless reducing extended positions - buy on weakness.
        Eli Lilly & Co's (NYSE: LLY; $53.81, Rec. 2/05 - adjusted price $51.835) March dividend of $0.425 per share lowered our cost basis to $51.835. Unless reducing extended positions - buy.
        Pfizer's (NYSE: PFE; $25.66, Rec. 10/03 - adjusted price $24.08) December and March dividends of $0.24 and $0.29, respectively, lowered our cost basis to $24.08. Unless reducing extended positions - buy.
        Verizon Communication's (NYSE: VZ; $38.12, Rec. 5.04 - adjusted price $30.584) November spin off of Idearc, Inc. (NYSE: IAR; $34.66) and February dividend of $0.405 lowered our VZ cost basis to $30.584 (our cost basis for IAR following its February dividend of $0.3425 per share is $23.243). VZ's 5/1/07 dividend of $0.405 per share (payable to shareholders of record 4/10/07) will further lower our cost basis to $30.179. Unless reducing extended positions - buy."

Nate Pile: "Apple's (AAPL) stock did a great job "merely treading water" while the rest of the market was tanking. The stock is once again in an uptrend and appears to be gearing up for a re-test of the highs set back in early January. Though the launch was delayed by several weeks, the company began shipping its much anticipated AppleTV product. As stated many times before, I continue to believe there is a very good chance that sales of Apple's Mac line of computers are going to blow away estimates for the next several quarters and help push the stock to new highs for us. AAPL is now a strong buy under $87 and a buy under $100.
I am pleased to report that LSI Logic's (LSI) proposed acquisition of Agere Systems (AGR; $22.14) received government approval in China and Germany earlier this week. Though the stock is technically still stuck in a trading range between $9 and $11, I am pleased with the way it has acted during the crazy four weeks of market action we have seen since last month's issue went to press - if/when the stock can finally clear $11 on good volume, I believe the stage is set for a run that may take it all the way back to the high-teens/low twenties. For those of you with a more conservative investment style, I believe this stock represents one of the more conservative plays in the newsletter. LSI is a strong buy under $10 and a buy under $12."

        Ronald Sadoff: "Over the past few years, Saks Incorporated (SKS) has undergone a change to focus more on its luxury flagship department store brand, Saks Fifth Avenue. Since 2005, Saks has sold Proffitt's and McRae's, its Northern Department Store Group (Carson Pirie Scott, Boston Store) and recently its Parisian business. With the proceeds from these sales, Saks has issued a total of $10 per share in dividends since early 2004, including $8 per share in 2006.
        After the recent sales, Saks now operates 54 Saks Fifth Avenue stores, 49 Off 5th discount stores and 62 Club Libby Lu specialty stores, which sell makeup, accessories and clothes for pre-teenage girls. Saks is expected to sell the Club Libby LU unit.
        We initially purchased Saks in early 2004, when they, along with several other department stores, broke out of a long-term downtrend. Just looking at a chart of Saks does not tell the entire story. Remember when looking at a chart of Saks, the $10 in special dividends are not included. Adjust for the dividends; Saks would be trading around $30 per share.
        Stephen Sadove took over as CEO in 2006 and has led the turnaround. He plans on improving operating margins, which are at 2% to 8% by 2009. Saks' goal of 8% is still shy of competitors Federated, Nordstrom and Neiman Marcus.
        While we are keeping a close eye on the slowing economy, we are still bullish on Saks."

        To say the Internet has become ubiquitous is to belabor the obvious, yet it bears repeating. For businesses, the Internet has created a significant communications and sales channel, enabling organizations to reach and engage with geographically dispersed consumers, suppliers and business customers in real-time. In terms of consumers, according to a Yankee Group survey, European broad-band users spend more time on the Internet than watching TV.
        An increasing number of companies provide information and conduct e-Commerce over the Internet, and as a result, Internet operations are critical to the commercial and communications operations of most businesses. Most businesses seek outsourcing arrangements to assure their Web presence because they lack the resources and expertise to develop, maintain and improve the facilities and systems necessary for successful Internet operations.
        Thus, there is increasing demand for ISPs such as Internet Gold to offer turnkey Internet services, including Web hosting, server co-location, remote account management, e-Commerce and other value-added services. This, in turn expands an ISP's potential revenue streams from basic monthly access fees to other fees, including set-up and maintenance charges.

        As in the United States, the Internet media industry in Israel is very competitive and still developing. Companies compete for frequent users who have a broad range of interests. Internet Gold competes with Bezeq International NetVision, Barak, Bezeq International, Netvision, Yediot Ahronoth, Yahoo!, MSN.com, MSN Israel, Netex, Start, Google and OLSALE.
        The primary factors determining success as an Internet service provider are competitive pricing, reliability, high-quality service, customer support, access speed, customer acquisitions, and ease of use. To date, Internet Gold has competed favorably based on its strong brand recognition, innovative marketing programs, and by providing fast and reliable, high quality services and superior customer service and support.
        In addition, the company expects to face competition from telecommunications providers, direct broadcasting satellite and cable companies. It's likely that these providers will offer bundling packages and will increase competition in the future.
        Internet Gold - Golden Lines is well positioned with a variety of offerings to go head-to-head in these markets. The firm's demonstrated ability to deliver profits year in and year out is due to outstanding management, and suggests an ability to thrive in highly competitive environments.
        With the acquisition of Golden Lines, the sole analyst firm covering Internet Gold, Dutton Associates, is projecting extraordinary growth in 2007. Dutton is projecting 2007 combined revenues of $299.5 million, a 213.5% increase over Internet Gold's 2006 results. Dutton is calling for earnings of $1.04 per share in 2007. We are initiating coverage of Internet Gold - Golden Lines with a Buy rating and price target of $16.00, which translates into a pricing multiple of approximately 15X the 2007 earnings estimate. A price of $16.00 represents price appreciation potential of 37% from the current price of $11.68."

In 1913, five California entrepreneurs invested $100 apiece to set up America's first commercial-scale liquid bleach factory. From the words "chlorine" and "sodium hydroxide," which in combination form the bleach's active ingredients, the company's name was derived - Clorox. Today, Clorox continues to manufacture its namesake bleach and cleaning products, but is also the home to many other well-known brands. Thanks to innovation, acquisitions and strong brand building efforts, Clorox's great consumer brands include Armor All and STP auto-care products, Fresh Step and Scoop Away cat litter , Kingsford charcoal, Hidden Valley dressings, K C Masterpiece sauces, Brita water-filtration systems, Pine Sol, Tilex and 409 home care products, and Glad bags, wraps and containers.
Clorox announced solid sales growth of 3.5% during the second fiscal quarter as strong sales from Fresh Step scoopable cat liter, Kingsford grilling products and international markets helped offset weakness in Clorox disinfecting wipes, Clorox 2 color-safe bleach and Glad trash bags, which were all negatively impacted by increased competitive activity. Cost savings and price increases during the quarter enabled gross margin to expand 100 basis points, which led to 10% net income growth from continuing operations during the quarter.

R. Scott Pearson: "We need to invest as though we're headed for recession. This means avoiding most of the economically sensitive industries, and focusing our attention on basic staples. Food and healthcare are generally safe places in a weak economy, as, sadly, are the "sin" stocks such as tobacco, alcohol, and casinos. Another area we like is debt collection. Our top stock pick this month, is a leading collector.
Asta Funding (ASFI) is a purchaser of non-performing consumer debt. The company buys charged-off receivables from creditors for pennies on the dollar and attempts to achieve partial collection of these portfolios. Receivables are primarily credit card, installment contract, and telecom charge-offs, and delinquent secured loans, such as car loans, which may have already gone into default. ASFI has been a stellar performer for years, in both good times and bad, because of willingness to wait for the best deals, rather than buying assets at less favorable prices. The company continues to reap higher profits and earnings while expanding its business. Just recently, Asta completed a $300 million purchase of a portfolio worth $6.9 billion. With continued acquisitions, investors should expect very favorable returns. While the stock ran up on news of the large recent purchase, we believe the price is still affordable in relation to its past growth trend. We also anticipate that the current sub-prime mortgage woes may provide additional opportunities for debt collection organizations like this one. While it is difficult to anticipate specific availability of assets, it seems clear that more bad debt will be available somewhere, and Asta is in a strong position to acquire some of these non-performing loans that are beginning to litter the landscape. In times like these, a debt liquidator seems to be the ideal investment. We recommend Asta Funding for long-term growth and appreciation."

        Dick Davis Digest offers investment ideas from the best minds on Wall Street. Below Louis Navellier and Frank Curzio "Talk Tech."
        Louis Navellier: "Qwest Communications International, Inc. (NYSE: Q; 8.80) spans the globe with its high-capacity broadband fiber-optic network. The company is the fourth-largest phone company in the U.S. (behind AT&T, Verizon, and BellSouth), and its access lines stretch from Arizona north to Wyoming and east to Minnesota. The company uses its network to provide long-distance, as well as broadband data, voice and video services outside its local area and around the world. Qwest also resells wireless services through an agreement with Sprint Nextel. As more people favor high-speed telephone services over traditional land lines, Qwest stands to benefit. In the fourth quarter, the company reported that net income rose to $194 million, or $0.10 per share, compared with a net loss of $528 million, or $0.28 per share, last year. Revenue in the most recent quarter was $3.49 billion, up from $3.48 billion in the year-ago period, which was in-line with expectations. Looking at its strong performance through the February 27 market correction, clearly. Qwest is an 'oasis' stock that is very resilient to the stock market's movement. The stock is a great buy for the moderate section of your portfolio under $9."
        Editor's Note: Louis Navellier is editor of Louis Navellier Blue Chip Growth Letter(tm), 9420 Key West Ave., Rockville, MD 20850, www.bluechipgrowth.com, (800) 718-8289, 12 issues, $299.
       Frank Curzio: "Online Resources Corporation (Nasdaq: ORCC; 10.83) is a payment-services firm that enables small and midsized financial institutions to offer online banking services to their clients. Online Resources is in an advantageous position, having direct relationships with both banking customers and bill-payment networks. On Thursday, research firm ThinkEquity issued a bullish note on Online Resources, upgrading its rating to buy from accumulate. Key drivers for the upgrade included the near-completion of the Princeton eCom integration and the possibility for EBITDA (earnings before interest, taxes, depreciation and amortization) margins above 30% by year-end versus recent levels of 25%. Also, ThinkEquity believes that Online Resources can achieve 15% to 20% annual organic revenue growth over the next few years because of expanded bill-pay adoption by current customers and the addition of new customers. Shares traded about 6% higher following the upgrade. We believe ThinkEquity's projections for EBITDA margins of above 30% is a bit aggressive, but we remain fans of Online Resources because of the company's attractive network and potential for ongoing 20% long-term annualized revenue growth. We rate Online Resources as a One."
        Editor's Note: Frank Curzio & the Stock Under $10 Investment Team, TheStreet.com Stock Under $10, 1 year, $239.95, Email: stocksunderten@thestreet.com.

        George Putnam, III: "Allied Waste Industries (NYSE: AW) is a full-service, vertically-integrated waste processing company, including collection, recycling and disposal services, serving about 10 million residential and commercial customers in 37 states and Puerto Rico. Founded in 1992, Allied grew rapidly through the 1990's, culminating in the acquisition of Browning Ferris in 1999 which was financed with more than $11 billion of debt. The stock peaked above 31 in 1998, after rising nearly 900% during the preceding four years.
        The economic downturn of 2000 - the first since the company's founding - and the fallout from 9/11 led to broad-based weakness that began to affect the company's profit margins. As results softened, Allied found it increasingly difficult to manage its heavy debt load. With management forced to focus on the financial side of the business, operations suffered as the company's fleet of trucks (the oldest in the industry) deteriorated, maintenance costs rose and employee morale declined.
        Analysis: After several years of lackluster performance, a new CEO, John Zillmer, took the helm in 2005. Mr. Zillmer brought extensive operational experience in the service sector, having previously been head of domestic and international operations for ARAMARK, a food service giant with revenues of $11 billion and 240,000 employees. Upon his arrival, Mr. Zillmer instituted a strategic plan that called for either selling or turning around noncore assets, cutting costs and reducing debt.
        After reorganizing the company into five broad regions in 2005, management focused on identifying and fixing underperforming units. By early 2007, 65% of the weaker markets were showing improvement, and operations in other troubled areas had been sold off or shut down. Efficiency was improved by utilizing asset swap with competitors and closing duplicate landfills. Moreover, the company began to reininvest in its equipment, purchasing more than 1,000 new trucks in each of 2005 and 2006. This reduced costs and boosted employee morale.
        Allied has also been able to keep revenues growing with modest volume gains augmented by price increases. With revenues growing and operations becoming more efficient, cash flow has improved, allowing the company to pay down some of its debt. During 2006, debt was reduced by more than $200 million. In addition, Allied has also been able to refinance much of its debt to reduce interest costs and extend maturities. Thus, while total debt is still considerable at $6.9 billion, the company has much more financial flexibility than it did a few years ago.
        Allied has some savvy large shareholders who will keep up pressure for better results. Two large and very successful private equity groups, Apollo and Blackstone, control a total of 22% of Allied's stock.
        The waste disposal industry has historically offered stability and predictable cash flow. Allied managed to abuse these industry strengths for a while, but with new leadership the company is once again capitalizing on these strengths to produce growing earnings and cash flow. In addition to improving earnings, we foresee a time when the company will reduce its debt burden to a level where it will be able to utilize its cash flow for dividends and stock buybacks. We recommend buying Allied Waste up to $19."

        MetLife's three largest businesses delivered record profits in 2006. Earnings from institutional products grew 18% to $1.70 billion; individual-products earnings rose 23% to $1.54 billion; and the auto and homeowners segment saw profits expand 78% to $414 million.
        Institutional: MetLife holds the industry-leading market share in group life insurance and annuities. MetLife expects to land about $1 billion in pension assets in 2007.
Individual: The company also holds a leading position in life and annuity products. Growth is coming from an aging population, increased interest in retirement planning, and investors' realization that Social Security will not cover retirement costs.
        Auto and homeowners: Strong 2006 results reflect fewer natural disasters and favorable claims development from prior years.
        International: The small international segment reported lower earnings due to U.K. start-up expenses and economic problems in Taiwan. MetLife remains well-positioned to grow this business, based on strong market shares in Mexico, Japan, and Korea, and growing operations in China, India, and Brazil.
        MetLife, which generated about $3 billion in after-tax profits through the November sales of a New York City apartment complex, is putting money to work in other real estate projects and aggressive stock buybacks. In February, MetLife unveiled a joint venture with Trammell Crow to develop shopping centers across the U.S. Also in February, MetLife authorized the repurchase of $1 billion of its own shares. In the December quarter, MetLife repurchased $500 million in shares.

        Jeffrey Hirsch: There are four sectors that begin their bullish run in April. Healthcare Products seasonality goes until July and has a average 10-year return of 9.6%. We are already exposed to this sector via last months ETF recommendation of Healthcare VIPERS (VHT). If you haven't added a position yet, the VHT is down marginally and a good buy at this level.
        We are going to combine Computer Tech and High-Tech with one recommendation this time around as we are a bit leery of overexposure to a tenuous equities market at this time. Both seasonalities have the same bullish timeframe, April to July. Computer Tech has a 10-year average return of 15.0% and High-Tech has a 15.8% average return over the same period.
        We are recommending streetTRACKS Morgan Stanley Technology (MTK), formally "High Tech 35". It is a best-of-breed fund that incorporates computer tech and high tech issues well. Buy Limit: 55.50 Stop Loss: 50.00 Expected Return: 63.83 Auto Sell: 70.21.
       The second sector that we are recommending is Internet. Internet has a bullish period that goes from April to July and has a historic ten-year average return of 14.8%. We are picking up two Internet concerns, both of which are HOLDRs and have special rules that apply. For specifics, ask your investment advisor or go to www.HOLDRS.com.
        The first recommendation is Internet Architecture HOLDRs (IAH). Buy Limit: 41.50 Stop Loss: 37.25 Expected Return: 47.64 Auto Sell: 52.40.
        The second recommendation is Internet Infrastructure HOLDRs (IIH). Buy Limit: 5.25 Stop Loss: 4.50 Expected Return: 6.03 Auto Sell: 6.63."
        Seasonal: Slightly Bullish. Best six months have only one month left and pre-election forces still hold sway. However, recent weakness has tempered our upside expectations for the near term and reinforced our cautionary stance. This is not the time to do any aggressive buying. We have likely seen the highs for now and expect further downside action. Implement downside protection and hold cash reserves."

       Warren Buffett's just-announced investments in railroads has caused many to consider this sector. But one advisor who was already welll-entrenched in the rail sector is Elliott Gue.
       Here, in Personal Finance, www.pfnewsletter.com, he looks at the rail sector - but not at the railroad operators. Rather, he has been finding opportunities among companies that provide products and services to the sector. Here's a look at four favorites.
       "Coal is far and away the industry's most-important cargo, while grains are the second major cargo for the rails. Prime beneficiaries of growth in rail traffic are companies that provide freight cars to haul all that coal, grain and ethanol.
       "American Railcar Industries (NSDQ: ARII) derives the majority of its revenue from building and selling tank railcars and hopper cars. Driven primarily by sales of ethanol tankers, deliveries of tanker cars soared 32% in the final quarter of 2006.
       "In addition to ethanol demand, there's a strong replacement cycle underway in the tanker car business. Specifically, new government safety requirements are forcing shippers to upgrade and replace their older carriers with safer models.
       "And ethanol demand doesn't just benefit the tanker car market. Hopper cars are used to transport corn to ethanol plants. And dried distiller's grain, a by-product of ethanol production, is also typically transported in hopper cars for use as a base for animal feed. ARII is a buy under 33.
       "FreightCar America (Nasdaq: RAIL) is the leading make of coal cars in the US. The coal car business has been booming amid strong demand for coal and the need to replace an aging fleet of older railcars.
       "Newer aluminum railcars weigh a third less than traditional steel cars - translating to major fuel savings. Not surprising, FreightCar's total car sales grew from less than 8,000 cars in 2004 to close to 19,000 last year. RAIL rates a buy under 55.
       "Unlike the other railcar builders, Trinity Industries (NYSE: TRN) also has a major leasing operation. Most railcars are actually owned by third-party leasing companies. With a fleet of more than 85,000 railcars, Trinity is one of the largest railcar leasing firms in the US.
"And the business doesn't stop at the rails. Trinity also builds hopper and tanker barges designed to transport liquids and grains via US inland waterways. With revenues up 19% in 2006 and the backlog of unfilled orders at an all-time record of 36,000 cars, Trinity's business remains on solid footing. Buy under 46.
       Despite the slowing economy, container shipping ports on both coasts are running at close to full capacity. And all those containers shipped into US ports must ultimately be moved to retailers all across the US.
       "Greenbrier Companies (NYSE: GBX) is the largest mak of intermodal railcars in the US. These carriers are designed to facilitate the transfer of container goods from truck to rail. It also makes railcars and manages 9,000 cars as part of its leasing operation.
       "Greenbrier has had some difficulties with production costs and management shake-ups; the CFO recently departed unexpectedly. Nonetheless, the backlog of unfilled orders remained solid at 14,700 at the end of 2006 and the company trades at just over 40% of sales, a big discount to larger rival Trinity. Buy under 32."

       Bill Martin - well-known for his role as founder of the Raging Bull website - now shares his trading and investment advice in his always-intriguing FindProfit.
       And while noting that his latest buy "strays from our usual small-to mid-cap focus," he is nevertheless willing to "step up and buy web giant eBay (Nasdaq: EBAY). Here's his rationale.
       "After watching EBAY for years, we believe that the stock now represents an attractive purchase for long-term investors. EBAY started to underperform in 2005 as growth in its core marketplace business slowed and Google gained operating steam.
       "The stock today is more than 20% below its 52-week high and equal to the levels it traded at in early 2004. In our eyes, EBAY has now become an attractive 'growth at a reasonable price' stock. EBAY should generate nearly $2 billion in free cash flow in 2007, despite ongoing growth investments and high levels of capital expenditures.
       "To us, EBAY increasingly looks like the kind of high-class company that Warren Buffett loves: it has a strong brand and franchise, it generates substantial returns on equity, it is positioned to grow for as far as the eye can see, and it is in a position to reinvest its cash flows at high rates of return.
       "At the core, EBAY's marketplace business, albeit certainly maturing, is a wonderful cash flow generator with powerful network effects that create defensibility. Further, even though the marketplace business is no longer the high growth machine that it once was, it should continue to grow at low double-digit rates for a long time to come.
       "Where EBAY management has impressed us - and this is where we think the overall story gains 'legs' - is in their continued ability to make smart and timely acquisitions while leveraging its massive marketplace user base.
       "The first example of this was the company's acquisition of PayPal which, like its marketplace business, has become a cash cow. Adding to this, in 2006 EBAY purchased Skype, a deal that at first generated tremendous investor skepticism. Looking back on that deal one year later, the acquisition of Skype now looks genius to us.
       "Beyond these 'anchor' deals, EBAY has made a number of smaller acquisitions, such as Rent.com, Shopping.com, and StubHub, that fit into the company's marketplace focus, while leveraging EBAY's mammoth user base and other strengths.
       "In 2006, EBAY also acquired VRSN's payment processing business, thus bolstering PayPal's service offerings. Looking forward, we believe that EBAY is positioned to continue creating value via additional bolt-on acquisitions like these.
       "Further underpinning the story, EBAY is sitting on $3.5 billion of cash, and is continuing to aggressively buy-in stock. After purchasing $1.7 billion worth of shares in 2006, EBAY announced an additional $2 billion buyback on its last earnings call.
       "We believe that this is a wise use of EBAY's prolific cash flows, and a reflection of the stock's attractive valuation. With a little luck, we believe that EBAY can deliver low to mid double-digit annual returns over the next 3-5 years, with fairly limited downside risk."

       "According to some experts, diabetes has reached epidemic proportions, and the demand for diabetes treatments is likely to grow over the next several years," notes Chuck Carlson.
       The editor of The DRIP Investor, www.dripinvestor.com, says, "That makes Novo Nordisk (NYSE: NVO) an attractive play in the health-care sector." Here's his review of NVO, a leading player in insulin.
       "Let me start this article by providing some rather sobering statistics:
        By 2010, more than 28 million Americans are expected to have diabetes and it is estimated that one in three American children born in 2000 and beyond will develop type 2 diabetes.
        Approximately $1 of every $10 spent on health care in the U.S. is related to diabetes care.
        Worldwide, it is estimated that some 246 million people have diabetes, and that number is expected to increase more than 50% over the next20 years.
        Diabetes accounts for 3.8 million deaths per year globally, similar numbers to HIV/AIDS.
       "Novo Nordisk, based in Denmark, controls more than 50% of the world market share of insulin. Europe and the U.S. account for more than two-thirds of total revenues. Products include NovoLog, Levemir, and InnoLet.
       "The company also has strong market shares in treatments for bleeding disorders and growth hormone deficiency. Its NovoSeven treatment for bleeding episodes in people with hemophilia has shown excellent growth. The company's Norditropin growth hormone has also been a winner for the company.
       "Per-share earnings have risen in every year but one since 1994. Per share profits in the fourth quarter rose 44% on an 11% increase in revenue. For 2007, the firm expects revenue to rise by at least 10%, with operating profit measured in local currencies rising around 15%.
       "The strong earnings growth has fueled nice stock gains for these shares over the last decade. The stock recently posted an all-time high before pulling back in recent trading. Thus, it is hard to classify these shares as cheap.
       "Still, the stock trades at a p/e ratio of 22 times 2007 earnings estimate of $4.03 per share. That multiple doesn't seem too rich given the company's leading market position in a high-growth area of the health-care sector.
       "Novo Nordisk hasn't split its ADR shares in six years, so it would not be surprising to see this stock split should its upward performance continue. Admittedly, I would be much more bullish on the stock in the low $80s or the $70s, and it's possible a market correction could drop the stock to those levels.
       "However, I also realize that in a market in which it is difficult to find attractive health-care stocks - most of the major drug manufacturers, for example, face tough competition and skimpy product pipelines - Novo Nordisk offers an excellent choice to gain exposure to health care.
       "Thus, it may be too much to expect a 15% or 20% pullback in the stock. Therefore, I would feel comfortable nibbling at current prices. If a correction occurs, step up purchases. Novo Nordisk offers a direct-purchase plan whereby a U.S. investor may buy stock directly, the first share and every share."

       Investors may not be familiar with the name of France's Publicis Groupe (NYSE: PUB) - but they are likely very familiar with the ads created by its agencies, including Chicago-based Leo Burnett and London's Saatchi & Saatchi
       Global expert John Christy, editor of The Forbes International Investment Report, www.newsletters.forbes.com, notes, "Publicis, the smallest of the big four advertising groups, still packs a powerful punch."
       "The Publicis empire includes firms that offer media buying, consulting, public relations, and event sponsorship services. On Feb. 28, Publicis announced its annual results for 2006, which were strong across the board.
       "The company's revenue grew 6.3% in 2006 to $5.8 billion. Net income grew 15% to $586 million and free cash flow rose 14% to $718 million. Publicis also boosted operating margins from 15.7% to 16.3% - the best in the advertising industry - and slashed its debt load by more than 30%.
       "Publicis booked net new business of $3.3 billion in 2006. New accounts came from a diverse batch of companies from across the globe including Renault, JC Penney and Sony Ericsson.
       "Thanks in part to the great financial performance, Publicis was able to announce a 39% proposed dividend hike. Even after the increase, PUB's payout ratio - the annual dividend divided by earnings per share - will be a modest 24%. This, coupled with strong free cash flow, suggests potential for future dividend increases and/or share buybacks.
       "More importantly, Publicis has two promising growth initiatives in place that should continue to bear fruit. One is an emphasis on opportunities in online and digital advertising and the second is an aggressive push into emerging markets. The potential for digital advertising is enormous.
       "In emerging markets, Publicis has a presence in a number of large and rapidly growing countries and regions including China, Russia, Turkey and Latin America. Publicis expects that another 25% of its revenue will come from emerging markets in just three years' time.
       "When you consider PUB's leadership in the industry, its current financial strength and its future growth opportunities, it starts to look like a very cheap stock. At a recent price of $46, the company is trading at just 15 times estimated 2008 profits. Publicis is targeting a 16.7% operating margin for next year, but even if they fall short of that mark, it still won't be remotely expensive."

        Ian Wyatt recently added Wonder Auto Technology (OTC BB: WATG) to the Rising Star Stocks portfolio. "Why we like Wonder Auto Technology:
        • 12.4% share of the starter and alternator markets in China, the second largest automobile market in the world
        • Low-cost, high-technology manufacturer
        • Entering Korean and EU markets
        Wonder Auto Technology is the second-largest manufacturer of starters and alternators in China. Wonder's share of the Chinese automotive market was 12.4% in 2005. Wonder has already began to migrate to other key markets including Korea and the European Union. Wonder became a U.S. publicly traded company in June 2006, through a reverse merger transaction.
        The company operates a 450,000 sq. ft. state-of-the-art manufacturing facility in Jinzhou City plus two R&D centers located in Jinzhou, Liaoning and Beijing. Wonder owns 14 starter- and alternator-related patents in China and can produce as many as 135 different alternators (SKUs) and 70 types of starters.
        In later 2006 and early 2007, Wonder posted some impressive new business wins. Its newest customers include Beijing Benz-Daimler Chrysler Automation and Nanjing MG Rover Motor Company. Both of these contracts are for higher output engines and thus will broaden the company's product manufacturing experience.
        In addition, Wonder has also recently entered the Korean market and EU markets with contracts from Doosan Infracore and SW-Tech Corporation in Korea. In the U.K., the company has received orders for sample productions runs from the LDV Group Limited, the second-largest commercial vehicle manufacturer in the U.K.
        These solid deals add to an already impressive roster of more than 40 world-class manufacturing customers, including eight of the top 20 auto manufacturers in China. Wonder's clients include Beijing Hyundai Motor Company, Dongfeng Yueda Kia Motor Company, Shenyang Mitsubishi Aviation Engine Company and Haerbin Dongan Engine Company.
        Wonder also has a strategic manufacturing alliance with Korea Hivron automobile electric company, focused on the research and development of advanced automobile electric technologies, products and processes.
        The firm is completing work on a new line of starters and alternators, which will go into production by June 2007. And in the third quarter of 2006, Wonder acquired a 50% interest in Dong Woo, a key supplier. The company began consolidating the results of Dong Woo's operations and its financial position as of December 1, 2006.
        Wonder's goal is to be the number one alternator and starter manufacturer in China by 2008. The company positions itself as a low-cost manufacturer, but also one that adds value through a consultative selling approach: working closely with customers in the development of new starters and alternators.
        Wonder is currently working on 20 new starter/alternator development programs for existing customers. These new models are slated for delivery between six and 24 months down the line. Thus, the new product pipeline is healthy.
        The firm is looking well beyond China, however. It is planning an aggressive export sales initiative. Wonder plans to derive as much as 30% from export sales over the next five years. The company believes, quite rationally, that its low-cost, high-quality approach coupled with world-class manufacturing experience will serve it well internationally.
        The company believes future growth will come from a burgeoning aftermarket in China. Though most aftermarket sales are currently handled through the existing dealer channel, it's likely that, as the Chinese market matures, a superstore market will develop similar to that in the United States. In the meantime, Wonder is well ensconced in the existing dollar network through its OEM relationships.
        Though the company does very little business in the United States, it is engaging in ongoing discussions with certain entities about participating in the U.S. aftermarket. Those talks are extremely preliminary at this time, largely because of the very large commitment of capital that would be involved in maintaining inventories and distribution centers to serve the needs of large aftermarket franchises in the United States.
        The company also plans to stay alert to potential acquisitions that serve its strategic plans, such as in the development of additional manufacturing capacity or cost reduction. With its additional stock offering in 2006, enviable balance sheet position and availability of credit, Wonder has taken steps to be able to react quickly to acquisition opportunities.
        As mentioned, Wonder positions itself as the low-cost supplier. Its main Jinzhou City facility is extremely efficient, incorporating the latest DNC (Direct or Digital Numerical Control) technology, which enables fast changeovers between production runs. Where other manufacturers measure their SKU changeover in shifts, Wonder's changeovers are measured in minutes, literally as few as 39 minutes. In addition, the production lines are highly automated, allowing for an alternator to be completed every 21.8 seconds when the line is at speed.
        In terms of quality, the company has received 13 customers awards for excellence. The company also works closely with an extensive local supplier network, which further enables a control over the quality of its manufacturers and in terms of just-in-time inventory management.

        The Chinese automobile market has experienced considerable growth in recent years. In 2003, 2004 and 2005 automobile sales increased by 35%, 15% and 12.6% respectively. In 2006, China produced more than 7 million automobiles, and is projected to reach 10 million units by 2010. (In fact, on March 2, 2007, the government reported that car ownership in China was up 33.5 percent, reflecting the country's continued meteoric annual GDP growth rate of 10.7% in 2006.
        The company believes that the overall parts market will triple in China alone through 2010 - A faster growth rate than the overall market, which is sensible since older cars need more replacement parts.
        Wonder also projects organic growth as a result of: 1) its continued and increasing OEM relationships with international footprints, 2) the Chinese automotive market growth and 3) prospective forays into international markets.
        Spurring Wonder's growth opportunities are efforts by the major manufacturers to source parts in China. GM, VW and Ford all have major initiatives underway to develop local sources of supply in China. For example, last year Ford Motor Company announced that it will source about $2.5 billion of parts, opening a purchasing office for this purpose.
        This is partially due to pressure from the central government to increase local content, but it also follows a well-established model used by foreign competitors elsewhere. Though there is no official policy in place, the market is reacting like there will ultimately be a local content policy in China. China's unofficial goal is to become the world's largest auto market by 2015, thus manufacturers are treating China as a long-term opportunity.
        One point of weakness for Wonder Auto is its reliance on a few large customers for the bulk of its sales volume. For example, sales to Beijing Hyundai Motor Company increased by 96% to 19% of gross 2006 revenues. And, sales to Shenyang Aerospace Mitsubishi Motors increased by 132% during 2006, accounting for 18% of the company's 2006 overall revenues. Thus, only two companies accounted for almost 40% of the company's total sales. The company's plan to increase exports to 30% should counter this over-reliance on a few large customers.
        The consensus analyst estimate calls for earnings of $0.54 per share on revenues of $100.2 million in 2007, and earnings of $0.70 on revenues of $125.5 million in 2008. Based on these estimates, Wonder shares currently trade at 14X the 2007 estimate and a very low 11X the forward year estimates. For a firm expected to grow its revenues by nearly 40% in 2007 and a further 25% in 2008, these trading multiples are surprisingly low. We are initiating coverage on Wonder Auto Technology with a Buy rating and price target of $11.00 which represents a still low 20X the 2007 earnings estimate. From the current price of $7.30, this represents price appreciation potential of 51%."

        Charles Allmon: "Genuine Parts (NYSE: GPC; $49.90) has had revenues up 56 times in 57 years, profits up 44 of 46 years, dividend increased 50 consecutive years. Founded in 1928, GPC has never reported a loss year, beginning in 1929. This fine company distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials.
        Here's what management had to say on March 2: "Our progress in 2006 follows 8% increases in revenues in both 2004 and 2005 and we remain encouraged by the positive trend in total sales growth for the Company. Net earnings for the year were $475 million, an increase of 9% compound to 2005, and earnings per share were $2.76, up 10%. 2006 represents our third consecutive year of double-digit growth in earnings per share.
        "With another record year behind us, we have now increased sales in 56 of the last 57 years and increased profits in 44 of the last 46 years. We are proud of this record and we feel that it reflects our unending commitment to steady and consistent growth at Genuine Parts Company."
        "Our year-end ratio of current assets to current liabilities was 3.2 to 1 and working capital as a percentage of sales improved for the third consecutive year to 25%. Cash flow from operations was consistent with last year at $434 million and, after deducting dividends and capital expenditures, we generated positive free cash flow of $79 million. At December 31, 2006, our total debt was $500 million, which was unchanged from the prior year.
        "During 2006, we used our cash to repurchase 2.9 million shares of our Company stock. We continue to view this as a good use of cash and, at out August 2006 Board meeting, our Directors authorized an additional 15 million shares for repurchase. As of December 31, 2006, we have 15.3 million shares available for repurchase under our current program. We will continue to make opportunistic share repurchases in 2007. We also invested $126 million in capital expenditures in our businesses and we returned $228 million to shareholders through dividends paid in 2006."
        "Again in 2006, each of our four business segments contributed to our overall progress for the year. Motion Industries, our Industrial Distribution company, reported very strong results, with its sales increasing 11% for the third consecutive year. Looking ahead to 2007, the outlook for the industrial markets served by Motion is promising. The manufacturing sector of the economy, as measured by the Industrial Production and Manufacturer Capacity Utilization indices, remains healthy and customer demand is likely to provide us further growth opportunities. EIS, our Electrical/Electronic segment, also benefited from the strength in the manufacturing sector and, in 2006, reported a 20% increase in sales for the year. We expect 2007 to be another good year for EIS.
        "S.P. Richards, our Office Products company, improved sales by 7% for the year, and this follows an 8% increase in sales in 2005. The Office Products Group generates consistent and steady results and we are encouraged by its performance in 2006. This year's solid progress reflects our product and customer expansion efforts and the continued development of effective marking programs and dealer services."
        "The Automotive Parts Group, our largest business group, increased sales by 3% in 2006, following 6% increases in 2004 and 2005. Core NAPA operations, which excludes our Johnson Industries subsidiary, improved revenues by 5%, so the progress made in our ongoing Automotive operations was somewhat offset by our decision in 2005 to downsize the operations at Johnson Industries. We continue to believe this was the right decision for the Company. Looking ahead, we expect our Automotive growth initiatives to position the group for solid progress in 2007 and beyond. In addition, market factors such as total vehicles on the road, the age of mix of the vehicles and miles driven, remain positive for the industry and they create excellent growth opportunities for the Automotive Parts Group."
        "We are pleased with the sales and earnings achieved in 2006 and we feel good about the equity of our balance sheet and our strong financial condition. As we move into the new year, we are well positioned to show additional progress in these areas in 2007."
        On 12-31-06 total assets were $4,496,984,000, current assets $3,835,127,000, current liabilities $1,198,768,000, cash and equivalents $135,973,000, long term debt $500,000,000, other long term liabilities $187,509,000, shares outstanding 170,531,000, shareholder equity $2,549,991,000 ($14.95 per share), return on shareholder equity 18.6%, positive cash flow, LIFO accounting. [Company address: 2999 Circle 75 Parkway, Atlanta, Georgia 30339. (770) 953-1700.]"
        Allmon's Comments: If anyone knows of a better growth record, do let me know. Here is a company supplying needed products to a broad consumer market. I probably have visited a score of GPC's NAPA dealers around the U.S. Whenever the opportunity comes up, I like to step into a NAPA shop, chat with the personnel, and inquire about their parent company. These shops are always spotless. Never have I seen a sloppy operation, or encountered rude employees. More that one volunteered "I own a piece of the company."
        The $500 million in long term debt has not changed, about 19% of shareholder equity. Return on shareholder equity has been remarkably consistent. Profit margins, too, are consistent over many years. What's ahead? Probably more of the same. Revenues should top $11 billion in 2007. Management forecast earnings in the $2.95 range, a good gain. GPC made a ton of money for us in years past. At a P/E of 15 or lower, I expect to load up again. You should, too! Great company!

Dr. Robert Valuk: "A technique the author uses to make large returns is to target possible buyout candidates, purchase the stocks, and write covered calls with strike prices above the stocks' current purchase prices. The covered call option is usually at least six months in the future. This approach has worked well for us with Avis, ServiceMaster, Tyco, Sovereign Bancorp, Fidelity National Financial (and all the companies involved with FNF), AT&T, and more. We prefer to purchase candidates that pay dividends, but any possible buyout/spin-off will do.
The following are companies that may see some buyout activity in the future. Motorola (MOT) may buy another company or actually put itself up for sale; Carl Icahn has increased his ownership of Motorola and is seeking a seat on its Board of Directors. Landry's Seafood Restaurants (LNY) is rumored to be "on the block." Ceridian (CEN) is being discussed. Sysco (SYY) is mentioned by Jim Cramer as a "solid, cash-producing, unloved company." National Home Health Care (NHHC) refused an offer of 12; large shareholders of National Home Health Care are irritated to say the least and will pressure the Board of Directors to entertain buyout offers. The author has not yet purchased any of these issues, but when he does he will limit any purchase to 300 shares or less and will write covered call options on purchases that offer this feature. Ashland (ASH), A.O. Smith (AOS), Tyson Foods (TSN), Vishay Intertechnology (VSH), and General Dynamics (GD) also have potential for spin-off moves. Keep your eyes on these companies."

        John Eckel: "High quality large-cap U.S. companies are attractively valued and may be the safest place if the U.S. economy slows further. We believe individual stocks such as Berkshire Hathaway, Coca-Cola, 3M, Johnson & Johnson, JP Morgan Chase, Wal-Mart, eBay, Expedia, Microsoft, and Compass Minerals should do well in this environment. Mutual funds that are well-positioned to benefit from undervalued large-cap stocks include Weitz Value, Vanguard Value Viper (an ETF), Fairholme, Oakmark, Oakmark Select, Leuthold Select Industries, Selected American Shares and Tweedy Browne American Value.
        We also believe foreign stocks and funds such as Tweedy Browne Global, Third Avenue International Value, Artisan International Value, Harbor International, Longleaf International, and Franklin Mutual Discovery should perform well, and would benefit if the U.S. dollar declines further.
        A slowing economy takes some of the risk of bond investors because long-term interest rates are less likely to rise which would cause bond prices to fall. FPA New Income, Loomis Sayles Bond, and Pimco Total Return take a very cautious approach and offer well-diversified portfolios of bonds."

       Yiannis G. Mostrous, Associate Editor, Personal Finance, KCI Communications, 1750 Old Meadow Rd., Ste. 301, McLean, VA 22102, www.kci-com.com, finds a Japanese financial company that should benefit from the recovery in the Japanese economy and the rally in its stock market.
       A month ago, the Bank of Japan (BOJ) raised interest rates from 0.25 percent to 0.5 percent, taking one more step - albeit a small one - down the path of interest rate normalization.
       The BOJ was right in raising rates - and should have done this long ago - as the Japanese economy continues to grow, with profits and sales increasing for Japanese corporations, in the process beating market expectations. In addition, unemployment is falling at a low but stable pace, and it should continue doing so.
       Normalization of rates increases the alternatives available to the Japanese to use their huge bank deposits (51% of their financial assets) in more productive and profitable ways. Yet many investors don't think Japan's deflation years are over, and they're not buying Japanese stocks.
       A prime example: In mid-February, the Topix index (based on share prices of First Section companies on the Tokyo Stock Exchange - Editor) made a 15-year high and hardly anyone noticed. This is in stark contrast to the beginning of 2006, when people couldn't get enough of Japan. The fact is, Japan is enjoying a secular bull market that commenced in 2003 and in the process has offered returns twice as high as the Standard & Poor's 500 index.
       As the Japanese economy has been improving, Tokyo is gradually becoming one of the best real estate stories globally, as sustained low vacancy (1.5 percent) has resulted in continued rent and land price inflation.
       Land prices for high-end commercial properties in Tokyo rose as much as 40 percent last year, and the same trend is occurring in other areas in Japan. At the same time, office rent growth in central Tokyo accelerated in 2006, with the average [annual] rent growth reaching 8% in the city's five central wards. Furthermore, growing demand for office space is spilling over into peripheral markets.
       Fund flows into Japanese real estate continue to grow. Investment banks around the world are putting together private equity funds for investing in Asian real estate, and Japan has become one of the main destinations.
       Mizuho Financial Group (NYSE: MFG) is one of Japan's major financial holding companies. Its main subsidiaries, Mizuho Bank and Mizuho Corporate Bank, are involved in retail and corporate business, respectively.
       Mizuho has expanded its branch network and continues to expand its domestic business, concentrating its efforts in retail lending as well as lending to small- to medium-sized firms. Banks will be big beneficiaries of the changes that are taking place in Japan as more people, especially the soon-to-be-retired baby boomers, use some of their retirement benefits to boost their holdings in investment trusts in an effort to improve their retirement years.
       Furthermore, as domestic credit growth starts to pick up, banks will be the prime beneficiaries to cash in on that action. Buy MFG below 15.

       Neil George, Editor, Personal Finance, Neil George's Inner Circle, Bond Desk, and By George, KCI Communications, 7600 Leesburg Pike, West Building, Ste. 300, Falls Church, VA 22043, www.pfnewsletter.com or www.neilsinnercircle.com, thinks the despair about sub-prime mortgage defaults is way overdone and he recommends a mortgage company that's managed to keep its head above water.
       We have some delinquencies in mortgages extended to less-than-stellar credit risks. As a result, the sky is falling and the US economy is doomed. It isn't, though. This is bad for a collection of companies, but it won't bring down the entire market.
       First, let's look at the sub-prime market. The bulk of sub-prime mortgages (about 60%) are part of only ten financial companies. We don't own a single one of them and don't plan to. Even if these went belly up, along with the rest of the small fry, that's only $200 billion worth of mortgages out of nearly $9 trillion - a small fraction.
       Although folks are in a tizzy over delinquencies and defaults, the mortgage market - including sub-prime - is running at 0.5% on a 90-day trailing basis. That's low by normal standards. The headlines may say that sub-prime default rates are soaring, but the reality is that fourth-quarter rates were around 4.9%, up from 4.7% for the same quarter a year ago.
       We'll see some resolution to defaulted mortgages (i.e., foreclosures). But out of the $17 trillion worth of US housing, most experts see only about a million of those homes go through the [foreclosure] process.
       The sub-prime chatter has been weighing on the stock and bond market. We've seen this before and will see it again. However, we've had two plans that serve us well.
       First is to know the difference between a stock and a company. We don't have a problem with the companies or their markets, only with the short-term stock price movements.
       Take Thornburg Mortgage (NYSE: TMA). This stock is beaten up whenever the mortgage market has bad news or when folks start whining about interest rates. Yet, it's not about what kind of a loan or bond portfolio you run, only that you're good at running it.
       Even if you operate in the lower end of the credit spectrum (Thornburg doesn't), you can run a successful operation if you proactively deal with market and credit risks. If you don't, you pay. Despite the meltdown in a handful of its poorly run peers, Thornburg is flat for the year so far. That's impressive, given all the hype from the doom and gloomers.
       Second is to buy when the stock price of a solid company is down. Thornburg is a prime example. With the price decline recently, the stock is a buy, even more so given Thornburg's and its mortgage portfolio's quality. That's what top management is doing, too. It's been filing to buy hundreds of thousands of shares with its own cash. That's what we continue to recommend. Buy Thornburg Mortgage up to $31.25.

       Ivan Martchev, Editor, Vital Resource Investor and Global Viewpoints, Associate Editor, Personal Finance, KCI Communications, 7600 Leesburg Pike, West Building, Ste. 300, Falls Church, VA 22043, www.kci-com.com, says T. Rowe Price's health care fund has outperformed many of its peers and can profit even more from the health care boom and the graying of America.
       The graying of America is one of the most often advertised demographic trends in the stock market. The longer people live and the more money they have, the more they spend on health care as they grow older.
       So far, it's been working. Since the all-time high in the Standard & Poor's 500 in 2000, the most important benchmark index has returned 3%, including dividends reinvested. In comparison, T. Rowe Price Health Sciences Fund (PRHSX) has returned 76%, a spectacular out performance. The fund has beaten the S&P 500 in five of those seven years. So far, the conclusion that you're better off with health care than the overall market is easy to make.
       The demographics are impressive, but the risk is political in this case. It's highly unlikely that anything major will happen on the health care front in the next two years before the presidential election, even with a Democratic Congress. But should a Democrat win the presidential elections in 2008, health care stocks and health care funds will have a difficult time, just as they did in 1993-94.
       We don't expect political issues to arise until late 2008. Until then, it's back to stock picking for T. Rowe Price Health Science managers Dr. Kris Jenner and Laurie Bertner. Their picks have been good, but you need to keep in mind that this fund has a little more biotechnology exposure than the average health care fund, even though those biotechs have evolved into large and much more stable companies than the start-ups they were just ten years ago.
       T. Rowe Price Health Science has a big position in Gilead, Cephalon, Genentech and Amgen, all leading biotechnology names with strong pipelines. The fund also has a significant position in Swiss pharmaceutical giant Roche Holdings, which became well known for its successful drug treatment of avian flu. Roche also owns 55.8% Genentech, so the fund implicitly has a much larger position in this leading biotech than appears at first glance.
       Other notable portfolio positions are with HMOs United Health and WellPoint. The former found itself in serious hot water last year with an options pricing scandal that cost the old CEO his job and contributed to the fund's underperformance last year against the S&P 500.
Because of the faster growth of the fund's top holdings, its volatility is higher than the average health care fund that invests in the Johnson & Johnsons of the world. Yet, the fund's growth allows it to beat better than 80% of its peers, with annualized returns of 2.4% for one year, 10% for three years and 8.8% for the last five years.

       Nicholas Vardy, CFA, Founder, London Junto, Editor, Vardy's Global Bull Market Alert, Vardy's Global Stock Investor, & The Global Guru, Managing Director, Hayek Capital Management, 16 Queens Gate Place, South Kensington, London SW7 5NY UK, www.globalbullmarketalert.com or www.theglobalguru.com, points out that contrary to conventional wisdom, there may be a shortage - not a glut - of skilled labor around the world. So much for outsourcing and offshoring!
       Staffing agency Manpower Inc. recently released the results of a survey of nearly 37,000 employers in 27 countries. More than four out of ten employers around the world are having trouble hiring the right kind of staff for the right kind of money. And the problem is getting worse. That means cost-cutting strategies, like offshoring and outsourcing work to low-wage countries, are running out of gas far sooner than many expected.
       The salaries of information technology (IT) workers from Central Europe to India are rising by double-digit percentages every year. And the number of highly qualified workers is surprisingly low. Multinationals have reacted swiftly, moving operations to ever lower-cost centers. Nokia, which already employs nearly 5,000 people in Hungary, recently announced that it is building a new handset factory in Romania.
       Labor shortages in China are forcing companies to boost wages as the supply of surplus labor from the countryside tapers off. Salaries in China jumped by an average of 8.4% last year, with some factory salaries surging as much as 40%. One out of seven Chinese workers switched jobs last year and turnover in some low-tech industries is approaching 50%.
       Both rising wages and turnover are affecting how companies operate in China. Factories are seeing their margins shrink to 5% - half of what they were only a few years ago. General Motors, Honda, Motorola, and Intel all have shifted some manufacturing or research to inland locations, where wages can be half what they are on the coast. Others are looking to lower-cost countries such as Vietnam or Indonesia.
       The pressure has as much to do with skills as with sheer numbers. McKinsey & Company estimates that only about 10% of Chinese candidates for high-value-added jobs like finance, accounting, and engineering are qualified to work for a foreign company. More than 75,000 jobs for such managers are expected to be created over the next five years. Yet today, China has fewer than 5,000 managers with those skills.
       India produces 400,000 engineering graduates a year (five times as many as the United States) and a stunning 2.5 million university graduates overall. Yet only about a quarter of India's college graduates are up to snuff. The odds at top Indian companies are even worse.
       In-house training programs for new recruits at top Indian IT services firms such as Infosys, Genpact, and Tata Consultancy Services fill some of the gaps. But by 2010, India will have a shortfall of 150,000 IT engineers and 350,000 business-process staff.
       Jim Rogers is fond of noting that no one can repeal the law of supply and demand. The global labor shortage proves a corollary: In the long run, there is no free lunch.

       John Dessauer, President, John Dessauer Investments, Inc., Editor, John Dessauer's Investor's World, 8679 Blue Flag Way, Naples, FL 34109, www.dessauerinvestorsworld.com, thinks some retailers will continue to do well despite all the worries about housing's weakness and the economy's imminent demise.
       Wall Street and the crowd are afraid that the housing slump will dent consumers' ability to keep spending. Solid job and income growth keep consumer finances healthy. Our retail stocks have done well, and they should keep doing well.
       Kohl's (NYSE: KSS, $78.47) shocked Wall Street with a 4.4% rise in February same-store sales and fourth fiscal quarter earnings up 29% (five cents a share better than expected). This news prompted one analyst to raise Kohl's to a Buy. Kohl's earned $3.31 a share in fiscal 2007 (ending January 31). Based on a very strong fourth quarter, analysts have raised estimates for this fiscal year to $3.83 to $3.95.
       Kohl's earnings have more than doubled in the last five years. The stock, however, is right where it was five years ago. Analysts now say Kohl's can keep growing earnings at a 17% annual rate. That indicates potential earnings of $7.25 a share in five years. The stock will follow earnings, doubling in five years or less. Kohl's is a Buy.
       Abercrombie & Fitch (NYSE: ANF, $76.49) finished fiscal 2007 (ending February 3) on a strong note. For all of fiscal 2007, ANF earned $5.59. Management says first-half results will be
        $1.47 to $1.52, well above the $1.34 earned in the first half last year. Abercrombie not only has a strong balance sheet and high profit margins but has been doing an excellent job managing its stores and merchandise.
       Analysts disagree, however, about Abercrombie's ability to stay ahead of the competition. The doubters see long-term growth of 14% a year. Others say the stock, at less than 15x this year's estimated earnings, is trading at a discount to its peers. That discount is not warranted, based on the company's past performance. Abercrombie has more than doubled earnings in the past five years and can lift earnings to nearly $9.00 a share in the coming five years, so I still rate it a Buy.
       Home Depot (NYSE: HD, $38.08) is not doing as well as our other retail stocks, due to the housing hysteria. The stock is very attractive for above-average long-term growth potential. Home Depot owns 87% of its stores, on prime properties. The balance sheet is strong. I have seen calculations that the break-up value could be $56 a share. Home Depot could become the target of a private equity buyout or a leveraged buyout by management and others.
       Home Depot is growing overall sales even though same-store sales are declining. If new management is successful, we will see same-store sales grow again. As the housing market stabilizes and begins to grow again, Home Depot has the potential for more pleasant surprises. At just 14x the midpoint of depressed earnings estimates, Home Depot is undervalued and is a Buy.

       Jim Collins, Editor, OTC Insight Listed Insight, and Biotech Investor Insight, Chairman and CEO, Insight Capital Research & Management, Inc., 2121 North California Blvd., Ste. 560, Walnut Creek, CA 94596, www.icrm.com, likes a small telecom-equipment company that makes key products in growing areas.
       C-COR Incorporated (Nasdaq: CCBL) is a global provider of integrated network solutions that include access and transport equipment, software solutions, and technical services for broadband networks. The company primarily serves cable operators throughout the United States.
       C-COR operates through three business segments: C-COR Access and Transport, C-COR Solutions and C-COR Network Services. C-COR Access and Transport includes the flexible, scalable amplitude-modulation head end/hub optical platform and line of optical nodes, a full offering of radio frequency amplifiers, and an Ethernet optical transport system for business services applications.
       The C-COR Solutions product portfolio includes "on demand" content-management systems, including software and hardware, for delivery of video on demand and digital advertising as well as application-oriented operations support software for network and service assurance, workforce management and policy management and bandwidth allocation.
       C-COR Network Services offers network operators a comprehensive set of technical and operational services that are designed to facilitate a smoother transition to next-generation network infrastructures and operations. Services provided by the unit include outsourced operational services, network design and engineering, network integration, outside plant and construction services and consulting.
       Last month, C-COR announced that it is providing the Hybrid Fiber Coax (HFC) networks of two major travel hubs in Asia. Singapore's Changi Airport and Thailand's new Bangkok Suvarnabhumi Airport are deploying C-COR's 1GHz broadband amplifiers and optical transmission equipment to deliver an in-house suite of cable TV services.
       Changi, one of the newest and busiest airports in Asia, is deploying a full suite of C-COR's HFC equipment, which will deliver in-house cable services across Changi's Terminal 3, opening in 2008, and also provide a separate cable TV system for the public.
       For the second quarter of fiscal 2007, which ended last December 29, CCOR reported net income of $0.12 per share, compared with a loss of $0.33 reported in the prior year. Total revenue increased 20% to $80.1 million. Bookings in the second quarter of fiscal year 2007 were $98.2 million for a book-to-bill ratio of 1.23.
       Demand for C-COR's offerings, however, depends significantly upon the size and timing of capital spending by cable network operators, which can be difficult to predict. Additionally, the company depends on a small number of customers in a single industry.
       C-COR's stock reached a multiyear high on February 22, 2007 before retreating modestly. Of the approximately 41.5 million shares in float, 740,005 trade daily. Banks and mutual funds own 37% and management owns an additional 5% of the shares outstanding. The stock has a relative strength of 94 and receives a rating of A-minus for accumulation/distribution.

       James Lowell, Editor, Fidelity Investor, ETF Trader, The Rankings Service, Editor-in-Chief, The Forbes ETF Advisor by Jim Lowell, 186 Crescent Rd., Needham, MA 02194, www.fidelityinvestor.com, thinks the market may turn towards growth stocks and suggests some ETFs - plus a couple of Fidelity funds - that may do well.
       This year, the markets have taken an obvious (and I think right-minded) turn from chasing performance wherever it can find it to placing a premium on securing lower risk. That doesn't mean that last year's hottest growth areas won't repeat the pattern. But it does mean that this year, large-cap growth stocks look relatively better valued than large-cap value stocks or mid- and small-cap equities.
       First Trust IPOX-100 Index Fund (FPX) measures the performance of the top 100 companies in the IPOX Composite Index ranked by quarterly market cap. The last time we reviewed this ETF, we said that the FPX belongs on a watch list (as a concentrated way to "diversify' a growth-oriented portfolio), but since then I've put a Buy rating on it as much for its uniqueness as for its focus.
       iShares S&P 500 Growth Index Fund (IVW) represents the large-cap growth stocks in the Standard & Poor's 500. Growth stocks here account for 306 out of the 500's overall holdings. If diversification in the large-cap blue-chip growth sector is the objective, this is a solid choice.
       Fidelity NASDAQ Composite Index Tracking Stock (ONEQ), which seeks to mimic the behavior of the total basket of stocks that trade on the Nasdaq, isn't your typical large-cap growth ETF by virtue of its focus on technology and biotech as opposed to major pharmaceutical companies. It's Fidelity's one and only ETF.
       Rydex S&P 500 Pure Growth ETF (RPG) tracks companies that exhibit strong growth characteristics relative to the S&P 500's group of names. This is a uniquely concentrated way to filter "growth" from the S&P 500 beans - and could serve as a complement to the IVW above.
       Fidelity Growth & Income's (FGRIX) charter sets no income requirement, but it does seek current income as well as capital appreciation. While in practice eq