As October -- what has been one of the spookiest ever -- comes to an end today, many will go home this evening to face the ultimate challenge: Trick or Treat. In the market in the past month, heck, in the past year, it seems that no matter what we did we always ended with a trickster. Even some of the most stable, beloved stocks found it fitting to lose half their value. If it was market darling Apple, or whole sectors like oil and commodities, stocks in general sank, often setting new 52-week lows, multi-year lows, or even all-time lows during October.
So now, with so many stocks beaten down so much, we have to find which could be the next treat, and which the tricks.
Wal-Mart Stores Inc. (NYSE: WMT) is the only Dow Jones Industrial company that is actually up this year. Investors have assumed that as the recession hits harder shoppers will turn to lower-cost venues such as Wal-Mart -- a trend that has already started. WMT shares are up 15% year-to-date and 21% over the past year, after tumbling 8% during the tough month of October. Wal-Mart -- definitely a treat.
General Electric (NYSE: GE) has exposure to the financial crisis through its financial arm and has been punished accordingly with shares down 20% over the past month alone. But is it time to buy GE? The big conglomerate is cutting costs and keeps reiterating guidance and has also maintained its triple-A rating. Could there be losses hidden in its operations? Maybe, but if it could continue growing as it did, it seems pretty cheap at under $20. Mind you, this one has never been a high-flying stock, and the uptick in the share price could take some time. Still, I'd categorize it a treat now.
Ford Motor Co (NYSE: F) and General Motors Corp. (NYSE: GM) -- Could these tricksters turn into treats? Well, one school of thought says buy what Uncle Sam is buying. While the Treasury has apparently stopped talking to automakers for now, it's more than likely that some form of government bailout will occur after the election. Does this mean they're out of the woods? Not by a long shot as they're lacking and lagging compared to competitors. But a short-term, very risky trade? That's a definite possibility.
Sears Holding (NASDAQ: SHLD) - If Wal-Mart is at one end of the retail spectrum, Sears is at the other. This trickster may find it has a hard time staying in business. SHLD plummeted 33% in October.
Circuit City (NYSE: CC) actually trades at a quarter today, up from 17 cents last week, but down 64% this month. The electronic retailer got a notice from the NYSE and could face delisting. But as Brian White has noted, its assets seem to be worth more than its market cap. Would you take a chance with this trickster in hopes of a buyout? I wouldn't. Along with Sirius XM Radio Inc. (NASDAQ: SIRI), another popular stock that reached penny territory and stayed there, if there is light at the end of the tunnel, it's rather faded and very far off.
Lockheed Martin (NYSE: LMT) has been often hailed as the defensive defense stock. But could the outcome of the election affect the world's largest defense contractor? Will there be changes to military spending? It seems investors may have started considering the possibility, moving LMT out of favor. By forecasting 2009 well below expectations, LMT didn't help much either. LMT declined 22% in October.
Potash Corp. of Saskatchewan (NYSE: POT), Agrium (NYSE: AGU) and Mosaic (NYSE: MOS) are three fertilizer companies that were in favor up until quite recently -- June/July -- when they all set 52-week highs. Since then, a sharp selloff found these three slashed by over 75%. Could it be time to get back into these once darlings? Some definitely think so and find Potash, which could fertilize our pumpkin patches, especially attractive.
Berkshire Hathaway (NYSE: BRK.B) is definitely Sheldon Liber's treat as he decided to buy just as everyone was selling. Even if Berkshire lost 17% of its value in October, hitting a 52-week low, would you go against Warren Buffett?
Apple Inc. (NASDAQ: AAPL) was once everybody's treat. The past year, not so much, as the stock fell from a high of near $203 to $85, declining 15% in October. But ever since it hit that $85 low on October 10, the stock has sailed higher, trading today around $108 for a very sweet treat of 25% gain. You try to go against iPhone's phenomenal sales and trendiness.
Some standard stock treats include Procter & Gamble (NYSE: PG), which just beat estimates this past week, Johnson & Johnson (NYSE: JNJ), which found itself downgraded to Neutral this past week, causing some to consider the price weakness a buying opportunity, and Colgate-Palmolive (NYSE: CL), which continues to be viewed as a defensive gem.
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