June 9th, 2008 Recap

The DOW was up about seventy points today. The big news was the disappointing earnings projection from Lehman Brothers (LEH). This took down all of the financial stocks and got a lot of analysts talking about further writedowns in the sector. This affected two of my holdings, US Bancorp (USB) $30.95 and Goldman Sachs (GS) $165.76. Both are very well run companies that have, for the most part, steered clear of the sub-prime mortgage mess. I have a limit order in to buy more USB at $30. The stock is one of my dividend growth stories and is currently yielding more than 5%. If I'm able to pick up shares at $30, those shares will be yielding %5.67. For GS, I would like to see the stock get closer to $150 before pulling the trigger on more shares. The company is slated to report earnings on Tuesday, June 17th. Last quarter the stock sold off before the earnings announcement only to bounce back over $20 in one day after the announcement. I'm hoping we get another selloff going into earnings this time.

In other portfolio news, BE Aerospace bounced back over 11% today after finishing at a new 52 week low on Friday. I was lucky enough to pick up some shares at $27.03 on Friday and I sold those shares today at $30. It seems the only news I could find on the stock is that they are buying a division of Honeywell (HON) for over $1 billion. BE management commented that the acquisition will boost earnings "significantly" after 2009. To me that just didn't seem like the type of news that should move the stock that much. I suspect there is a good chance that we'll see BEAV sell off again unless oil turns a drops like a rock which I think is unlikely. For today, I was very happy to take an 11% gain in one trading day. I still own several shares of this stock.

McDonald's (MCD) $59.31 announced good same store sales growth for the month of May. This helped shares to climb over 4%.

Commodities and rails did well today. I had several winners in these areas as BNI, CHK, FCX & X all were up more than 2%.

Lastly, I initiated a position in Wal Mart (WMT) today picking up a small amount of shares at $59.30. I had been holding Nordstrom's (JWN) for several months, but it's become apparent that consumers are trading down right now and Wal Mart stands to do better in that environment much more than JWN. I would like to add to my WMT position below $58.