This should prove to be a good study of professional prognostication. Last December, Fortune Magazine predicted the best stocks to hold in 2008, directing investors to ten specific stocks the magazine thinks will perform well this year.
How are these stocks holding up so far, compared to the indexes? The S&P 500 Index is down 5.46%, the Nasdaq is down 9.21%, and the Dow Jones Industrials Average is down 3.32%.
Annaly Capital Management (NLY). “It buys mortgage-backed securities issued by government-sponsored enterprises like Fannie Mae and Freddie Mac…” Down 5.5%.
Berkshire Hathaway (BRK.B). “Warren Buffett knows how to exploit panics.” Down 9.73%.
Dick’s Sporting Goods (DKS). “Dick’s emphasizes a store-within-a-store sales approach. Each department has its own look and staff, which appeals to the enthusiast who purchases a lot of sporting goods.” Down 4.43%.
Electronic Arts (ERTS). “Still, if there’s one tech niche that should be immune to a slowdown, it’s videogames… It’s now the No. 2 developer of Wii games, behind only Nintendo.” Down 10.87%.
Genentech (DNA). “Even with the FDA setback, Genentech is still expected to grow earnings 18% next year.” Up 7.22%.
General Electric (GE). “Immelt has sold off laggard operations such as insurance and plastics, putting more emphasis on manufacturing and infrastructure businesses. The timing has been excellent.” Down 12.44%.
Jacobs Engineering (JEC). “in a slowing economy, you want to own companies that can demonstrate superior earnings growth regardless of what’s happening around them.” Down 6.89%.
Merrill Lynch (MER). “Yes, Merrill’s shares deserved a punishment for the firm’s mortgage-related bungling. But the public flogging has far exceeded the transgression, which is why smart investors should buy this stock before everyone else comes to their senses.” Down 12.38%.
Petrobras (PBR). “Petrobras is cheap enough, at 16 times earnings, that it can be a winning investment…” Up 11.78%.
St. Joe (JOE). “… [W]hen Florida real estate does rebound, investors will be kicking themselves for not recognizing today’s $28 stock price for St. Joe Co.” Up 12.56%.
In general, these picks have shown poor performance this year, but 2008 isn’t over yet.
[Fortune Magazine: The Best Stocks for 2008, December 12, 2007.]