Note: This afternoon a long time friend who I haven’t seen in several years passes through Dallas and spends the evening. If history is any guide, that means a late night involving too much Scotch. Barring something significant occurring today, I will probably not post a Morning Call tomorrow.
Economics
a rising tax and regulatory burden (Government has never proven that it could solve economic problems efficiently or satisfactorily.) The Farm Bill disaster:
http://article.nationalreview.com/?q=NTQ4YjFhMjhiYTIyYjFmMTkzZjYwN2E1MjYxNThkODc=
The headline news event yesterday was Treasury Paulson’s speech outlining proposed changes in the regulation of the financial industry designed to avoid another 2007-2008 meltdown. You can read the details in most newspapers so I won’t waste the space listing them. Just two comments: (1) whatever the final plan is, it will probably in no way resemble Paulson’s plan, (2) the most stunning part of the proposal was to further empower the Fed which was one of the primary contributing causes of the credit crisis in the first place. Barry Ridholtz take:
http://bigpicture.typepad.com/comments/2008/04/hank-paulsons-c.html
The interest on your second mortgage may not be deductible:
http://bigpicture.typepad.com/comments/2008/03/uh-oh-carsvacat.html
The cost of credit default swaps (note Wells Fargo):
http://bespokeinvest.typepad.com/bespoke/2008/03/bank-and-broker.html
Politics
Domestic
The candidates on earmarks:
http://www.reason.com/news/show/125689.html
International War Against Radical Islam
The Market
Technical
The DJIA versus the Dow Transports:
http://bespokeinvest.typepad.com/bespoke/2008/03/djia-vs-dow-tra.html
Fundamental
Aggressive Growth Buy List
Company Close 3/31 Buy Value Range
Accenture Ltd $35.17 $32-37
Alcon 142.75 140-161
Amphenol 37.25 35-40
Donaldson 40.28 36-41
Ecolabs 43.43 43-49
Medtronic 48.37 44-51
Microsoft 28.38 26-30
SAP Inc 49.57 46-54
Staples 22.11 20-23
Suncor Energy 96.35 86-99
Company Highlight
Medtronic Inc. (MDT) is the world’s largest manufacturer of implantable biomedical devices in the cardiac, neurological and vascular markets. The stock of MDT has experienced some weakness recently based on a shortfall in revenues in implantable cardioverter defibrillators. That appears to be temporary phenomena. The company seems poised to return to its historic growth rate in earnings and dividends (15-20% annually) and return on equity (20-22%). Facilitating this is:
(1) the company’s strong R&D program and the resulting product pipeline:
(a) MDT expects to launch 25 new products in the next 12 months in its largest division--the cardiac rhythm disease management division,
(b) the company is expanding its offerings in the growing heart valve tissue market,
(c) Medtronics recently received regulatory approval for a new line of neurostimulation systems to treat chronic pain,
(d) MDT recently launched its FDA approved time continuous glucose monitoring systems.
(2) an aggressive acquisition program:
(a) in late 2007, the company expanded its spinal division through the purchase of Kyphon,
(b) in mid 2007, MDT acquired O-arm Imaging System assets which offer two and three dimensional imaging for surgery,
(3) expansion into international markets.
MDT is rated A++ by Value Line, carries a 32% debt to equity ratio and its stock yields 1.1%.
http://finance.yahoo.com/q?s=MDT
Subscriber Alert
The stock price of Quaker Chemical (KWR-$31) continues to smoke to the upside. Indeed, it looks like the stock of a company about to be bought out. Our discipline says that we continue to take profits; therefore, at the Market open this morning, the High Yield Portfolio will Sell an additional one eighth position in KWR.
The stock price of Reliance Steel (RS-$59) has risen above the upper boundary of its Buy Value Range. Accordingly, RS is being Removed from the Aggressive Growth Buy List. The Aggressive Growth Portfolio will continue to Hold this stock.
At the Market open this morning, the Aggressive Growth Portfolio will buy an additional one tenth position in Donaldson (DCI-$40).
News on Stocks in Our Portfolios
More Cash in Investors’ Hands
