This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
"I've followed Gladstone Capital (NASDAQ: GLAD) for many years," says Mark Skousen in Forecasts & Strategies. Here, he chooses the business development company as a top idea for 2009.
"Gladstone is a business development company (BDC) run by the 'father of BDCs,' David Gladstone. Gladstone is a conservative investor who is careful in his lending.
"His investment company, Gladstone Capital, specializes in debt investments in small- and medium-sized companies that seek additional funding, recapitalization, debt reduction, and short-term bridge financing.
"Unlike other BDCs, Gladstone always has been prudent in its lending. It has no exposure to subprime mortgages and no exposure to home building -- but it is being hurt by U.S. recession fears.
"Though the shares are volatile, I think the stock is dirt cheap, having suffered a sharp sell-off due to the deep recession and financial crisis.
"It is off 70% so far this year, which is far too much, in my judgment. With any kind of economic recovery under an Obama administration, I expect Gladstone to be back in good form.
"The stock has shown some strength since reporting its fourth quarter earnings report, which looked pretty positive. Only three loans are in arrears, or less than 3% of its portfolio.
"Its quarterly dividend has been steady and rising -- paying 14 cents a month since 2006. And CEO David Gladstone assures me that its 14-cent a month dividend is solid. I rate GLAD as a strong buy."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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