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8. Utilities? Sanford Bernstein put out a piece last week that talks about the need to cut dividends for many once-solid utilities companies because of an inability to fund the amount of debt. A whole sector that is too tough to invest in.
9. Media? Oh, please. This area is headed for massive bankruptcies because of a gigantic decline in advertising. There's nothing investible here save Google (GOOG), but I would wait until that stock goes below $300 -- just today Collins Stewart cut numbers on the stock.
10. Oil? Investible. A great place to go. As is gold. But there are only a few gold stocks, and the integrateds are the only oils worth trusting because we are going into the spring at a historic low point for nat gas stocks.
Which leaves the staples. Here is a group that is benefitting from almost every one of the things that are working against all other groups. The financings? They have rock-solid balance sheets, they don't need the money. The raw costs? All going in their favor. There should be huge gains in margins as the revenues stay up and the raw costs come down beginning in the next quarter. The advertising costs -- a huge part of the business for a Coke (KO) or a Pepsi (PEP) or a Colgate (CL) -- are coming down and at last are negotiable. The transport of the goods to the stores, a step function down as gasoline has gotten so cheap. That's why this group should go higher as the uncertainty in all sectors (save gold and maybe oil) is just off the charts. It is why I own General Mills (GIS) and PEP and Unilever (UN) and Johnson & Johnson (JNJ) in Action Alerts PLUS and feel confident about the entire group here. Even one of my least favorites, Campbell's (CPB), reported a decent quarter with good margin growth this morning.It is, alas, the place to be, as people give up on a 2009 turn in the economy and accept that the only real growth is in staples, drugs (unless the dollar keeps strengthening), biotech, gold and maybe oil. Random musings:
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