TheStreet.com's Jim Cramer says the safety theme will come back if only because these companies' earnings will be good in six months.
Editor's note: Jim Cramer will present his 2009 stock outlook for the first time at TheStreet.com Investment Conference on Saturday, Oct. 25. Click for details.
Now they come after the Procter & Gambles (NYSE: PG) (Cramer's Take) and the General Mills (NYSE: GIS) (Cramer's Take) and the like, betting that the action will be better in the cyclicals with all of this money being printed worldwide.
Commodities are also coming back because of reflation. And we have to feel that many of the infra and ag names are finally sold out by the hedge fund redemptions.
Here I am speaking of a Freeport McMoRan (NYSE: FCX) (Cramer's Take), with its good yield and a belief that the hedge funds are at last done.
I don't buy it. I like a balanced portfolio, but I want to buy the GIS/PG all the way down because we are going into a recession, not going out of one. These companies pay dividends, raise dividends and have great commodity tailwinds.
"If you own a television, chances are you're quite familiar with the infamous squawking duck in Aflac's commercials. Aflac has also been in the news lately as the first American company to give shareholders a 'say on pay', or the ability to vote on executive compensation.
"Less well known, however, is Aflac's huge presence in the Japanese insurance market. In 2007, roughly 75% of the company's pre-tax operating earnings were generated in Japan.
"Alfac has been doing business in Japan for more than 30 years, and one in four Japanese households has an Aflac insurance policy. In Japan, Aflac sells healthcare policies for certain things that aren't covered by the national healthcare system, as well as life insurance. And, yes, they have a talking duck in their ads over there too.
"At a time when many financial companies are reporting massive write-offs, Aflac reiterated its target of 15% earnings growth this year, and double-digit growth in 2009. Aflac Japan is doing its part to help drive this growth with 19% operating earnings growth in the first quarter of 2008."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
MOST NOTEWORTHY: Drugstore.com, Sycamore and Aflac were today's noteworthy initiations:
Kaufman Bros. believes Drugstore.com (NASDAQ: DSCM) is well-positioned for long-term growth and significant margin expansion, led by share gains in the OTC and prestige beauty verticals. The firm started shares with a Buy rating and $3.25 target.
Merriman initiated Sycamore (NASDAQ: SCMR) with a Neutral rating and prefers to be on the sidelines given the company's concentrated customer base and lack of clarity on strategic priorities and ongoing business operations.
SunTrust Robinson expects the Aflac's (NYSE: AFL) cancer insurance policies in Japan to benefit from concerns about the national health system. Shares were assumed with a Buy rating and $79 target.
OTHER INITIATIONS:
Caris initiated Mylan (NYSE: MYL) with a Buy rating and $18 target.
NetSuite (NYSE: N) was assumed with a Hold rating and $22 target at Deutsche Bank.
Stanford initiated Time Warner (NYSE: TWX) with a Buy rating and $20 target.
Over the past year, we have been hearing a lot of bad news about investment banks and insurers. The slumping housing market, credit crunch and subprime mortgage troubles have been leading the headlines, so many of you are probably shying away from financial stocks as almost all the banks have been getting only bad publicity lately.
In the light of those worries about safe investments, CNNMoney is asking us to reconsider our opinions, claiming that there really are some quality stocks in these challenging financial times.
Berkshire Hathaway tops the list, mainly because of its CEO Warren Buffett, who has the experience of surviving previous recessions. While some investors may have impression that the company has a lot of tough times ahead, CNNMoney sees Berkshire with a lot of capital, which could be enough to steer it through the current economic storm. To support this argument, CNNMoney cites Keppler Asset management CIO Michael Keppler, who is convinced that Berkshire will be able to beat the difficult market.
So shareholders of Aflac (NYSE: AFL) had a really cool idea: wouldn't it be cool if the owners of the company got to have some say in how the top employees at the company were compensated?
I know: blasphemy. But on Monday the company best known for a duck voiced by Gilbert Gottfried became the first company to give its shareholders a say on pay. The result? A big fat nothing. More than 93% of shareholders approved of the $11.96 million compensation package that CEO Daniel P. Amos received for 2007. During Mr. Amos' 18-years at the helm, the stock has appreciated more than 3,000%. So here's a guy who deserves his big payday.
Amazingly, most shareholder resolutions suggesting say-on-pay proposals have been opposed by management and voted down by large institutional shareholders. It's hard to understand given that the votes are simply advisory. Why shouldn't the board hear how shareholders feel about the work of the compensation committee?
But with 93% of voters approving the CEO's package, the say on pay deal at Aflac changes nothing, which is not surprising. Companies that have strong enough corporate governance and shareholders awake enough to demand a say on pay are not likely to suffer from egregious pay problems. The executive compensation outhouses like Countrywide Financial (NYSE: CFC) would never have votes like this.
Financial Stocks to Love The subprime mortgage meltdown and resulting credit crisis have slammed financial stocks recently. But there are still some diamonds in the rough. They include Berkshire Hathaway, RBS, AFLAC, Raymond James and BOK. Financial stocks we love - CNNMoney.com
Big Mac's Local Flavor Once vilified for pushing America on the world, McDonald's lets countries invent their own buns, bags, and business practices. Now some ideas are making their way back home. Big Mac's local flavor - FORTUNE
Aflac (NYSE: AFL), which is a major insurer, has an off-beat message – at least, according to its commercials (which involve a noisy duck).
Well, the company has made some history this week. That is, the shareholders can vote "yes" or "no" on executive compensation.
While it is non-binding, it is still important. If anything, its recognition from Aflac that its shareholders have a say on things.
Funny enough, the company really doesn't need this in terms of pacifying shareholders. After all, Aflac has been a solid performer.
However, does this mean we'll see other firms join in the trend? Perhaps some. But, when it comes to giving up a little power, you're likely to see lots of resistance in the boardroom.
After hitting a one-year low of $48.79 last April, the stock hit a one-year high of $68.81 last week. AFL opened this morning at $66.26. So far today the stock has hit a low of $66.23 and a high of $67.85. As of 10:15, AFL is trading at $67.42, up $2.34 (3.6%). The chart for AFL looks bullish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just four months as long as AFL is above $55 at August expiration. Evergreen would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.
AFL hasn't been below $55 since October and has shown support around $61 recently. This trade could be risky if the slumping economy continues, but even if that happens, this position could be protected by the support the stock might find from its 200-day moving average, which is currently around $60 and rising. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AFL.
MOST NOTEWORTHY: RAM Holdings, State Street and Ericsson were today's noteworthy downgrades:
Banc of America downgraded shares of RAM Holdings (NASDAQ: RAMR) to Neutral from Buy as they believe the company could have increasing loss provisions related to RMBS and CDO exposure over the next several quarters.
State Street (NYSE: STT) was cut to Market Perform from Outperform at Keefe Bruyette on valuation and difficult comparisons in the second half of 2008.
HSBC downgraded Ericsson (NASDAQ: ERIC) to Neutral from Overweight and prefers Nokia (NYSE: NOK) at current levels.
Deutsche Bank upgraded China Mobile (NYSE: CHL) to "buy" from "hold," according toBriefing.com. The financial site also reports that JP Morgan downgraded Crocs (NASDAQ: CROX) from "overweight" to "neutral."
Douglas A. McIntyre is an editor at 247wallst.com.
"Value stocks are those whose prices are relatively low compared to their fundamental value, as measured by factors such as earnings and net worth," notes Mark Hulbert.
"Value stocks can be considered all-season stocks, as history shows that they can perform well in both up and down markets." Here, the editor of The Hulbert Financial Digest also offers a list of value stocks that recommended by the most advisors who have also beaten the broad market over the last decade on a risk-adjusted basis.
"Value stocks are to be distinguished from so-called growth stocks, which have relatively high price-to-earnings and price-to-book ratios.
"Consider first how value stocks perform during bear markets. Believe it or not, they on average actually tend to make money. It's not only that they lose less money than the overall market, they actually gain.
"Take the 2000-2002 bear market, for example, during which the overall stock market declined by 48.6% (as measured by the dividend-adjusted version of the Dow Jones Wilshire 5000 index (97199001:Dow Jones Wilshire 5000 Composite Index
"In contrast, according to data compiled by University of Chicago finance professor Eugene Fama and Dartmouth University finance professor Kenneth French, the average value stock over this time gained over 80%.
Female CEOs Make Gains in 2007 Female CEOs running major U.S. corporations grew from nine to a record 12 in 2007. For the second year in a row, the stock performance of women-led companies mirrored that of companies run by men. Female CEOs make more gains in 2007 - USATODAY.com
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"I like Aflac (NYSE: AFL) as a top conservative choice for 2008," says Chuck Carlson, editor of The DRIP Investor. "The stock is a true 'steady eddy' performer and represents a cornerstone holding for any dividend reinvestment-based portfolio.
"Aflac is the number one provider of "guaranteed-renewable" insurance in the U.S. and the number one insurance company in terms of individual insurance policies in force in Japan. The firm insures more than 40 million people worldwide.
"Aflac's products should see good demand going forward as copays and deductibles are likely to increase for US and Japanese workers over the next several years.
"From a dividend perspective, there's a lot to like. Dividends have increased for 25 consecutive years, and dividend growth has been impressive. Dividends have been increased twice in 2007. With the consensus earnings estimate of $3.80 per share in 2008, look for the firm to give shareholders a generous dividend boost next year.
"Overall, the company offers the stability and consistency investors crave during volatile markets and the stock should handily outperform the market in 2008. Investors should note that Aflac offers a direct-purchase plan whereby any investor may buy shares directly from the company, the first share and every share."
"Aflac (NYSE: AFL), is a true 'steady eddy' performer and represents a cornerstone holding for any DRIP portfolio," says Chuck Carlson.
In his blue-chip service, The DRIP Investor, the advisor covers quality stocks for long-term investing, with an added focus on dividend reinvestment plans. Here's his latest on this insurance company.
"Stocks that hold up well during rocky market periods tend to be leaders when markets resume their upward move; one stock that has shown excellent relative strength in recent trading is Aflac.
"The stock, with the well-known (and maybe even a little annoying but always memorable) duck for its mascot, is trading just off its 52-week high. The company's per-share profits have beaten expectations in each of the last three quarters, and record per-share profits are slated for 2008.
"From a dividend perspective, there's a lot to like. Dividends have increased for 25 consecutive years, and dividend growth has been impressive. Finally, the company has an extremely investor friendly dividend reinvestment plan, including direct purchase for initial shares, and no fees on the buy side.
"Aflac is the number one provider of "guaranteed-renewable" insurance in the U.S. and the number one insurance company in terms of individual insurance policies in force in Japan. The firm insures more than 40 million people worldwide.
TheStreet.com's Jim Cramer says the safety theme will come back if only because these companies' earnings will be good in six months. 
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