TOM HUDSON: The European economy may still be in trouble. Earnings season so far
has been mixed overall, but tonight`s “Street Critique” guest is becoming
more comfortable buying stocks in this environment. Bryan Perry back with
us, editor at cashmachine.com with us from Washington. Bryan, welcome
back, great to see you again.
BRYAN PERRY, EDITOR, CASHMACHINE.COM: Thanks, Tom. Good to be with
HUDSON: What gives you the comfort now to put new money to work in
the stock market?
PERRY: Coming into earnings season, there was a lot of companies that
pretty much laid an egg. We saw Oracle (NASDAQ:ORCL) come in and miss
estimates and the stock really cast a pall on earning season because it`s
such a bellwether. Intel (NASDAQ:INTC) warned about what they were going to
be able to earn. We saw Accenture come in light because, blaming it on
currency exchange issues. And we saw a number of other stocks that —
Juniper also missed their numbers and the stock got hit pretty hard. So
the tone coming in for tech season was very subdued. And with that said, I
think this is where you`re starting to see some catch-up now in some of
these names like Amazon and certainly Apple (NASDAQ:AAPL) is leading the
way, but it`s spreading out. It`s starting to broaden out for us.
HUDSON: You`ve name a lot technology companies there. You`ve got a
couple new picks with you tonight, beginning with the regional financial.
This has been a place where a lot of folks have looked lately. You like
New York Community Corp. NYB, the ticker symbol. It specializes on
mortgage, apartment building mortgages in New York City. What do you expect
out of NYB?
PERRY: We`re starting so see a big move here in regional banks
because they have limited sovereign if any sovereign debt exposure and
you`re starting to see this momentum out of the ADP reports for the jobs.
They`re starting to up tick here, so we`re starting to get momentum in the
psychology of household formation, small to medium sized business lending
and with the New York Community Bank, it pays a 7.7 percent dividend yield.
That`s just the highest in the sector. The stock trades at one times book
and has a payout ratio of 87 percent. I look for the profit margins to
increase from 37 percent to maybe 40, 45.
HUDSON: A big financial bull, especially with that dividend yield
you like. CVR Partners (NYSE:UAN) is another one. This company makes nitrogen
fertilizers. It came to the public market last April at 16, now it`s at
27. Still a rally ahead of it?
PERRY: Very much. My target is $40 a share between now and the end of
the year. Fertilizers stocks are volatile, Tom, but bear in mind that the
number one input that goes into making nitrogen fertilizer which is
predominantly used for growing corn is natural gas and natural gas prices
are $2.47, just a screaming low on natural gas, while fertilizer prices are
pressing to new highs, new record highs. So your profit margins are
expanding and the stock pays about an 8.5 percent yield here. We`ve made
very good money in the fertilizer sector, especially those that pay these
yields of 8-9 percent.
HUDSON: We got to leave it there. We`re short on time. Do you own
positions in these two stocks?
PERRY: I do, full disclosure, yes.
HUDSON: Great to see you, Bryan looking for some income and some
upside on stock prices tonight. Our guest this evening on “Street
Critique,” Bryan Perry, editor at cashmachine.com.