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The large brokerages have come out with earnings that easily exceeded estimates. Unemployment is at a historic low. The market is finally starting to move up, and we can see an end to interest rate hikes on the horizon. These are good times.

I have two stocks that will capitalize on good market conditions and both could easily have 20% to 25% upside.

Applied Materials


is a stock under $18 that has a rock-solid balance sheet. With just under $6 billion in cash, AMAT has a mere $400 million in debt. Also, AMAT just announced a share-repurchase program of $5 billion, which could result in the buyback of more than 17% of outstanding shares.

AMAT is scheduled to earn $1.12 a share next year, giving it a forward multiple of around 16. Compare this with a projected growth rate of 15% and you have a P/E-to-growth ratio of just over 1 for a large-cap technology company. Those are my kind of numbers.

AMAT has seen its stock price drop about 15% from a recent $21 due to a glut in inventories. I consider this a buying opportunity and believe the risk/reward ratio is now in the court of the smart investor.

AMAT is a world leader in developing, manufacturing, marketing and servicing integrated circuit fabrication equipment. The glut in inventories hurts global demand for integrated circuits due to excessive supply; however, while supply is abundant right now, demand from the end-user is also high and will remain high given the insatiable demand the world has for consumer electronics.

AMAT has been punished too much for this rise in inventories. New orders were up 22% to over $2 billion. With AMAT's pristine balance sheet and future growth at 15%, I believe the stock is a great buy right now at the bottom of a cycle.

Into McCovey Cove

Goldman Sachs'


last earnings report was very similar to Barry Bonds having a ball teed up for him. Goldman went deep.

Merrill Lynch

( MER) and

Bear Stearns

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TheStreet Recommends

( BSC) came out with good earnings, but Goldman's were great. Goldman Sachs blew away earnings estimates of $3.29 per share with $5.08 in the first quarter. Goldman already has earned 42% of profits that were forecast for the entire year.

Goldman is the world leader in mergers, acquisitions, public common stock offerings and IPOs. Goldman is best in class in trading commodities, fixed income and equities. Equity trading resulted in a 94% jump in revenue. Fixed income generated revenue of $3.74 billion, 42% higher than its previous record.

Return on equity was a record 38.8% in the first quarter, beating Morgan Stanley's record of 36.3% in the first quarter of 2000. Earnings were up more than 60% on revenue that was up also over 60%. This would be like a major league ballplayer having a 100-home run season with 40 stolen bases; dominant is an understatement.

Goldman has become so dominant that it creates a snowball effect. Goldman gets sweetheart deals, like first crack at business with many Asian companies like


. CFO David Viniar told analysts that Goldman was seeing unprecedented trading and client activity in Japan and Asia, and that the level of deals pending is "significantly" higher than a year earlier. Rarely if ever have we seen fixed income, equities and mergers and acquisition at a high simultaneously. Goldman has encountered the perfect storm, and is profiting from it.

I could go on about the numbers, suffice it to say they were awesome. With a forward multiple of around 10 and a long-term growth rate of around 14%, this stock looks cheap. However, I believe the estimates are low. Merrill has a forward multiple of 12.8; if Goldman had the same P/E it would give the stock a 28% upside on multiple expansion alone.

Considering the perfect environment we are still in, the comments made about future deals by the CFO, and analysts being very wrong about the estimates this quarter, I believe this is a $190-$200 stock.

I would love to own this stock but am prohibited from doing so because I have a family member (my wife) who covers the stock as a sell-side analyst. For those (i.e., most readers) who don't have such restrictions, I highly recommend Goldman Sachs.

Remember, being poor is bad, staying that way is stupid.

At the time of publication Layfield was long Applied Materials although holdings can change at any time. A former All-American offensive lineman at Abilene Christian University, John Layfield played professional football for the then-Los Angeles Raiders and later in the World League. After wrestling in Japan, Mexico and Europe, Layfield arrived in the WWE in the mid-1990's. A former WWE champion, JBL was a featured wrester at WrestleMania 21 and can also be seen on

Friday Night SmackDown!

on UPN. Outside of the ring, JBL is a self-taught investor who was recruited to write a personal finance book,

Have More Money Now

, which was released in the summer of 2003. He has appeared on finance shows on CNN and Fox News Network. He is co-chairman of the Smackdown Your Vote! Campaign and he has joined both the USO and Armed Forces Entertainment (AFE) for tours through Iraq, Afghanistan and other Middle East countries. He regularly visits the Walter Reed Army Medical Center and the Bethesda naval hospital to meet with wounded troops.