Jubak's Journal -- Jubak's Picks

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Jubak's Picks

Anyone writing about stocks has a unique test to pass. It's not enough for my Jubak's Journal columns to be models of clarity or compelling in their logic. (Which, of course, they are.) Or even that they teach you something about how to invest, as I try to do in each outing.

These columns also need to help you make money. So it's been a goal of Jubak's Journal from its first outing in May 1997 to track the performance of my stock picks here.

Not every stock I mention in a column is a Pick. Some I’d call "stocks for further research." Some are picks for another day at another price. (For the rules of Jubak's Picks including the fine print on disclosure and restrictions on my personal trading, click here.) But, in Jubak's Journal, whenever I name a stock a Jubak's Picks with a target price, I add it to this page where you'll find a record of its performance since I added it to the list.

When I sell a stock out of that group, it goes to the end of the list in a section called "Recently dropped stocks." (I also track the performance of each one of these sells since I dropped it from the list.) At the end of each quarter, I report on the performance of Jubak’s Picks for the recent three months, and for longer periods up to the life of the portfolio. You can find the most recent quarterly results in the Jubak's Journal posted Oct. 6, 2008.

One final caveat. Jubak's Picks is not intended to be a balanced portfolio. It is limited to stocks, and individual investors need to do their own careful asset allocation to determine which of these stocks -- if any -- fit their portfolios and what other assets should go into their portfolios.

Quotes delayed at least 20 minutes. To track performance in Jubak's Picks fairly, the "Price Then" displayed is the closing price on the date each add/drop was made. Until we have a closing price on the first day of the pick, we display the previous day's close as a placeholder.

Company	Symbol	Date Picked	Price Then	Price Now	Today's Change	Jubak's Gain/Loss
Exxon Mobil Corp	XOM	12/23/08	$75.10000	$81.63	unch	8.70%
Why buy Exxon Mobil (XOM) when oil prices are collapsing and as I'm selling oil and gas exploration and production companies such as Devon Energy and Ultra Petroleum? First, because as an integrated oil company, Exxon Mobil makes money refining oil and then selling gasoline and other refined products. That dampens the effect of falling crude oil prices on Exxon Mobil's revenue and earnings. (The company often makes a bigger refining profit as crude oil prices fall, for example.) That's one reason Exxon Mobil shares are down just 18% in 2008 as of the close on Dec. 19 and the shares of an exploration and production company such as Apache, down 30% this year, or Anadarko Petroleum, down 43%. Second, because with its huge cash flow, the $37 billion in cash in its vault and the 2.4 billion of its own shares that it's holding, Exxon Mobil is perfectly positioned to pick up the pieces as overextended oil companies crash. And, third, because while the dividend was a small 2.1% as of Dec. 19, the stock still pays you to wait for a turnaround in oil prices and oil stocks. These days 2.1% isn't anything to sneeze at: A two-year Treasury note yields just 0.74%. As of Dec. 19, I'm adding shares of Exxon Mobil to Jubak's Picks with a target price of $91 a share by December 2009. (Full disclosure: I'll be adding Exxon Mobil to my portfolio three days after this column is posted.)
JP Morgan Chase ADR Rep 1/4 Share of 5.49% Cumulative Pref S	JPM-G	12/09/08	$40.70000	$44.00	unch	8.11%
Since I added shares of JPMorgan Chase (JPM-G) to my portfolio on Dec. 9, the shares of the bank's common stock and this preferred issue have moved in opposite directions. The preferred shares, which yielded 7.6% when I bought then, have gone up in price by about 10% while the bank's common stock, JPM, has tumbled by about 12%. This is roughly what I'd expect at this stage of the recovery in the financial markets. Corporate bonds -- or in this case, bondlike shares -- with their hefty current yields are rallying as investors gradually take on more risk. Modest amounts of money flowing into the corporate debt sector has the effect of lowering the spread between these corporate bonds and ultrasafe Treasurys. That spread had climbed to near-historic highs as investors have swarmed to buy Treasurys in a stampede for safety. But with Treasurys paying almost nothing, some adventurous souls have tiptoed into higher-yielding corporate bonds. Presto -- a modest rally in the corporate bond sector. I think this trend will continue until investors get comfortable enough to buy financial stocks themselves. Until then, I'm hanging on to these preferred shares. (Please note that while you can find a current price for these shares on MSN Money by using the ticker JPM-G, to get news on JPMorgan Chase, you'll need to check the symbol of the common stock, JPM.) As of Jan. 6, I'm raising my target price on JPMorgan Preferred to $46 a share by December 2009. (Full disclosure: I own shares of JPMorgan Chase Preferred G in my personal portfolio.)
Energy Transfer Partners LP	ETP	11/11/08	$35.75000	$37.40	unch	4.62%
This company owns and operates 14,000 miles of intrastate natural-gas pipelines, 2,500 miles of interstate natural-gas pipelines, three gas-processing plants, 14 gas-treatment facilities and three gas-storage facilities. Natural-gas pipeline and storage companies make their money from volume, so a sagging U.S. economy will cut into Energy Transfer Partners (ETP) revenue from existing pipelines. But the company's new pipelines -- the recently acquired Transwestern Pipeline and the new Cleburne and Mid-Continent Express pipelines -- should more than make up for the shortfall. (The company has also recently expanded its propane business by purchasing nine small propane companies. Energy Transfer now has 1 million propane customers.) The master limited partnership units have dropped 35% from their January highs. That's brought the dividend yield up to 9.33% as of Nov. 10. In reporting its third-quarter results, the company said it had sufficient cash flow to raise its dividend but would not do so at this time in order to preserve liquidity in uncertain times. The company last raised its distribution in August. In my opinion, Energy Transfer Partners is a good way to get paid a high yield while you wait for a recovery in the energy sector in particular and the economy in general. As of Nov. 11, I'm adding it to Jubak's Picks with a December 2009 target price of $42 a share. (Full disclosure: I will buy Energy Transfer Partners for my personal portfolio three days after this column is posted.)
ONEOK PARTNERS LP	OKS	10/07/08	$41.71000	$50.55	unch	21.19%
Oneok Partners (OKS) has rallied past my $52-a-share target price. But I'm not going to sell quite yet. Shares of the high-yield gas pipeline master limited partnership have rallied strongly on the Federal Reserve's interest-rate cut. When the Fed lowered its benchmark rate by half a percentage point to 1%, everything with a yield above that rate became more valuable. Odds are, this wasn't the Fed's last cut, so I think investors are likely to see even more appreciation in these shares. And the price is likely to get a boost when the partnership reports third-quarter earnings Nov. 5. Look for news of increased revenue from the start of operations in the third quarter of the Overland Pass pipeline. As of Oct. 31, I'm raising my target price for Oneok Partners to $58 a share by June 2009 from the prior target of $52 by December 2009. (Full disclosure: I own shares of Oneok Partners in my personal portfolio.)
Petroleo Brasileiro ADR Reptg 2 Ord Shs	PBR	8/26/08	$51.54000	$26.94	unch	-47.73%
It's tough to take any company's future prospects on faith, especially in the current market, but that's exactly what you have to do with Petrobras (PBR) right now. I think the stock is a high-risk play but the best way to own a piece of Brazil, which is, I'd argue, one of the two key economies of the next 20 years. (China is the other.) On Oct. 14, Petrobras announced that the release of its eagerly awaited strategic plan would be delayed until the first half of December. That leaves investors unable to answer what are key questions during the current financial crisis. The company has said it will generate enough cash from operations to fund its investments over the next two years. By that time, Petrobras expects the financial markets will have passed the crisis stage. But investors need something more than blanket reassurance given the gigantic amounts of capital that Petrobras needs. (Especially since changes in the relationship between the company and the national government could significantly reduce the company's ability to raise capital. We'll know more about those changes, if any, when the plan is released.) The company has plans, for instance, to build five refineries at a cost of $40 billion. A pilot plan to tap into the huge deep-water reserves the company has discovered recently would cost another $40 billion. But it isn't clear from the data provided by the company if that cost includes just capital expenditures or adds production costs and taxes. The delay in the plan also means that investors still don't have firm numbers on the size of the company's proven and probable reserves. On the other hand, the company could be sitting on the biggest additions to global oil reserves discovered in the past 20 years. The ultra-deep-water Tupi field could have between 5 billion and 8 billion barrels of recoverable oil equivalents. Speculation, and that's quite frankly all investors have, says the Carioca field, in the same offshore Santos Basin, might be five times as large as Tupi. Right now you can buy the company's very real earnings and its speculative potential for about five times projected 2009 earnings. I think that's a reasonably cheap price for this high-risk, high-reward package. As of Oct. 17, I'm setting a target price of $41 a share by December 2009. (Full disclosure: I own shares of Petrobras in my personal portfolio.)
Transocean Ltd	RIG	8/1/08	$137.61000	$54.32	unch	-60.53%
It's only logical that shares of an oil-drilling-rig company like Transocean (RIG) to Jubak's Picks. The Nov. 2007 merger of Transocean and its chief rival GlobalSantaFe combined the world's No. 1 andshould sell off along with the price of oil. As oil prices drop, oil companies cut their budgets for exploration and development. At some point down the road, that will translate into lower earnings for the companies that lease drilling rigs. But enough to justify a 53% drop in share price from July 15 through Oct. 23? I don't think so. I think what we're seeing here is panic selling by investors -- hedge funds, mutual funds and private-equity funds -- that need to raise cash and that are now selling off anything in their portfolios that will bring in some bucks. Even if the current selling price makes no sense. And it doesn't in the case of Transocean. The company specializes in deep-water rigs, and that's the part of the market that's least likely to see big numbers of cancellations and big drops in day rates. The supply of deep-water rigs was so tight and the demand so high before the plunge in oil prices that customers are rightly worried that if they lose their place in line now, they won't be able to lease a deep-water rig for two to three years. The Wall Street analysts who are cutting their earnings estimates for Transocean are doing it with a scalpel rather than a meat cleaver. Estimate cuts for 2009 are now on the order of 2% to 5%. That's not enough to justify a 50% drop in share price. Transocean is now selling at about four times projected 2009 earnings per share. But maybe Wall Street estimates are still way too optimistic. So then value the stock in other ways. The book value -- that's the value of the stuff like deep-water drilling rigs that Transocean owns at the price the company paid for them -- per share is $46.91. That's not so far below the stock market price of $69.45 on Oct. 23. Book value underestimates the value of assets, such as drilling rigs, that have climbed in value since they were first purchased. Using measures that try to capture the current value of Transocean's assets gives a much better estimate of the value of tangible stuff that supports the company's business. The net asset value, for example, for the company comes to $97.58 a share, calculates Jefferies & Co. The replacement value -- what it would cost to duplicate Transocean's biggest-in-the-industry fleet of deep-water rigs today -- comes to $123.97 a share. As much as I'd love to reduce the heavy overweighting of Jubak's Picks to the energy and natural-resources sectors, there's no way I'm going to sell tangible assets worth $124 a share for $69 a share. I know I've got no idea where the selling might stop on this stock, but I'm willing to hold for a price that more accurately reflects the company's long-term value -- especially since, unlike the big boys, I'm not facing pressure from antsy investors to sell, and I don't have losses from risky bets that I need to cover. As of Oct. 24, I'm setting a new target price for Transocean of $117.60 -- that's a 20% premium to net asset value per share -- by December 2009. (Full disclosure: I own shares of Transocean in my personal portfolio.)
Gorman-Rupp Co	GRC	6/24/08	$43.54000	$30.40	unch	-30.18%
So far, Gorman-Rupp (GRC) has dodged the worst of the U.S. recession, but it's unreasonable to expect that to continue. On Oct. 23, the company announced third-quarter earnings of 44 cents a share, up 35% from the third quarter of 2007 and 2 cents a share above Wall Street projections. Sales grew 13% from the third quarter of 2007. Order backlog increased to an all-time high of $128 million, equal to about one and a half quarters of sales. But both the order backlog and the increase in revenue were dependent on stronger-than-expected growth in demand for the company's water pumps and related equipment in international markets where growth is just now slowing. In other words, Gorman-Rupp hasn't so much dodged a bullet as delayed its impact, thanks to international economies that kept growing as the U.S. economy stalled. Wall Street expects fourth-quarter growth of 17% from the fourth quarter of 2007, then a drop in earnings in 2009 by a little more than 1%. I doubt that the real news will be as positive as that forecast, but the company's exposure to the kind of infrastructure projects that will be part of President-elect Barack Obama's economic stimulus package should keep the bottom from falling out of earnings. I don't think these shares are terribly risky at recent prices, though: At the Dec. 10 closing price of $28.29, the shares traded at just 16.4 times projected 2009 earnings per share, giving investors a buffer against a big drop on a modest earnings disappointment. For Dec. 12, I'm setting a target price of $35 a share as of December 2009. That's down from my June 2008 target price of $49 by March 2009. (Full disclosure: I own shares of Gorman-Rupp in my personal portfolio.)
Middleby Corp	MIDD	5/20/08	$57.41000	$29.42	unch	-48.75%
Middleby (MIDD) is closing in on my December target price of $66 a share. Here's what I do when that happens: 1. I check to see whether anything has changed at the company since I last set that target price. 2. If nothing has changed for the positive, I sell at the target. If you do this review and find something has changed for the negative, then sell without waiting for the target. 3. If something has changed for the positive, I incorporate the good news into my calculations and see where that leaves me for a new target price. If the new prices would give me an acceptable potential return for holding the stock, that's what I do. If the target price is up but the gain is piddling, the stock is still a sell. In the case of Middleby, the company has just kept chugging along with its strategy of buying smaller competitors in order to break into additional market segments or increase its clout in its existing businesses. The company should have solid product lines but show inflated costs that it can reduce by applying its buying power or larger sales force. Since the May update, Middleby has acquired TurboChef Technologies, a smaller maker of high-speed cooking equipment used in locations such as convenience stores. This is a market segment where Middleby didn't have a presence. Three customers – Starbucks, Dunkin' Donuts and Subway -- make up about 50% of TurboChef's sales. Middleby plans to get at least $23 million in cost savings. This deal won't add anything to earnings until the third quarter of 2009, but it is an indication that Middleby is sticking to its core strategy even in a tough economy. The company's existing businesses aren't doing badly either. KFC is introducing new low-fat grilled chicken products that depend on Middleby's convection ovens, and the war between Domino's Pizza and Yum Brands' Pizza Hut over guaranteed fast delivery is being fought with Middleby equipment. Only about 10% of Middleby's sales come from the casual-dining restaurant segment that has been hit hard by the U.S. economic slowdown. The rest comes from fast-food or quick-serve food outlets, where growth has held its own. The third piece of positive news for Middleby comes from a slowdown -- and perhaps even a decline -- in steel prices. Depending on which steel market you watch, the price of steel, Middleby's key raw material, is holding flat or declining. Either would be good news for the company, which has been fighting soaring steel prices. These three bits of positive news for Middleby are enough to lead me to increase my target price, as of Sept. 23, for Middleby to $75 a share by October 2009 from my prior target of $66 by December 2008. (Full disclosure: I own shares of Middleby in my personal portfolio.)
US Bancorp (Del)	USB	4/11/08	$32.62000	$24.01	unch	-26.39%
US Bancorp (USB) reported third-quarter earnings of 32 cents a share Oct. 21. That included 18 cents a share in previously announced losses on securities in the bank's portfolio. At 32 cents a share, the bank missed Wall Street earnings estimates by 17 cents a share. Without the portfolio losses, the bank's core earnings slightly beat estimates. The quarter actually looks pretty good once you dig beneath the earnings number. Net interest income climbed 18% from the third quarter of 2008 (and 5% from the second quarter) as net interest margin roles and loan volume climbed. Noninterest income from fees in the company's asset management and corporate cash management business fell modestly. Nonperforming assets climbed, but from very low levels, finishing the quarter at 0.88% of loans, up from 0.68% in the second quarter. Reserves ended at just 1.71% of loans, up 0.11 percentage point from the second quarter. The company has also announced that it received $6.6 billion from the U.S. Treasury in exchange for preferred stock and warrants under the government's $700 billion financial rescue program. Like many of the banks that have recently received government billions, US Bancorp doesn't need the cash to buttress an already strong balance sheet. Before the deal, its Tier 1 capital ratio was 8.5%, well above the 6% ratio that regulators call 'well-capitalized.' The Tier 1 ratio will climb to 11.4% after the deal. I would be very surprised if US Bancorp doesn't use its capital strength to acquire a weaker bank. There are certainly enough of them out there right now. As of Nov. 4, I'm keeping my target price at $44 a share but stretching out the schedule to December 2009 from December 2008. The yield on these shares was 5.7% as of this week, so you are being paid to wait. (Full disclosure: I own shares of US Bancorp in my personal portfolio.)
Kinross Gold Corp	KGC	4/4/08	$23.36000	$17.73	unch	-24.10%
Kinross Gold (KGC) ran through my December 2009 target price of $16.25 a share on Dec. 10. But I'm not selling these shares yet. The Federal Reserve's recent decision to cut its target interest rate to a range of 0% to 0.25% has set off a significant decline in the dollar that is by no means over. Foreign investors who were gobbling up dollars in a flight to safety have stopped buying in recent days. And gold has started to regain its appeal as a stable store of value in a world where the U.S. dollar and just about any commodity you can name from oil to copper is falling in price. The Fed's cut also gave gold a comparative boost: When Treasury bills aren't paying anything in interest gold, which never pays interest, isn't at a significant disadvantage. With all this as background, as of Dec. 23, I'm raising my target price on Kinross Gold to $19.75 by June 2009. (Full disclosure: I own shares of Kinross Gold in my personal portfolio.)
Enbridge Inc	ENB	12/18/07	$38.41900	$33.76	unch	-12.13%
Enbridge (ENB) has held up well during the bear market. The total return -- price gains of 4.56% and dividend payments of $1.32 a share since my December 2007 buy -- comes to 8.4%. Some of that is the result of the stock's dividend, about 3.1% as of Sept. 22. But more, I think, is related to on-track progress in the company's new pipeline and wind-power projects. As these projects go into service, they go from being a drain to being a contributor to Enbridge's bottom line. For example, the Waupisoo Pipeline, to bring oil from the Alberta oil sands to Edmonton, went into service in the second quarter, a month ahead of schedule. The company's Ontario Wind Project is on track for completion later this year. The Alberta Clipper project remains on schedule for 2010. It has also helped the stock that the company has been able to raise $1.4 billion from its sale of a 25% interest in Spanish pipeline company Compania Logistica de Hidrocarburos. That's capital that Enbridge doesn't have to raise in today's volatile financial markets. As of Sept. 23, I'm increasing my target price for shares of Enbridge to $48 a share by February 2009 from my prior target of $46 by December 2008. (Full disclosure: I own shares of Enbridge in my personal portfolio.)
Fortescue Metals Group Ltd	FSUMF	12/19/07	$5.25000	$1.52	unch	-71.05%
Shares of Australia's Fortescue Metals Group (FSUMF) have been taking a beating. That's because of: fears that the Chinese steel production will slow and take down iron ore prices, worries that the world financial crisis will make it impossible for Fortescue to raise the money it needs for expansion and the economic slowdown in the Australian economy that has taken down Australian share prices and the value of the Australian dollar. Let's go through these one by one. First, Chinese steel production does indeed look to be slowing, and the best guess is that it will slow enough that world iron prices will go up as much as 15% this year or as little as nothing. That would be a huge retreat from the 80% price increases that iron ore miners got in 2008, but so far, at least, we're not looking at a collapse in iron ore prices. Second, Fortescue finished the past quarter with $430 million in cash. That was up by $300 million from the quarter before. The increase came from the sale of a $100 million preference-share offering, $210 million in ore prepayments and $450 million in sales. Third, the Australian economy still looks rocky, but the Australian stock market is gaining some support from investors who think the selling has been overdone. Fortescue increased its estimate of project reserves at two sites, Cloud Break and Christmas Creek, by 572 million tons. (About 143 million tons of that is in proven reserves.) The company has announced plans to increase production to 80 million tons a year during 2009. The company has said it can pay for this expansion from internal cash flow -- the $100 million from the financial offering will help as well -- but any drop-off in iron ore orders would put the company's schedule for the expansion at risk. Fortescue can't easily borrow more money because of restrictive covenants on its existing debt, and another equity offering would seem unlikely in the current financial market. All in all, this stock remains what it has been since I added it to Jubak's Picks last November -- a highly risky bet with a very high potential return. Right now investors are experiencing the downside of that trade-off. I think we'll see a return to the upside in 2009. As of Oct. 21, my target price for Fortescue is $5 a share by December 2009. (Full disclosure: I own shares of the company in my personal portfolio.)
Plum Creek Timber Co Inc	PCL	11/16/07	$43.22000	$33.11	unch	-23.39%
I was ridiculously early in buying Plum Creek Timber (PCL) for the prime development land it owns on Nov. 16, 2007. After all the housing market has continued to tank and any recovery looks no closer than 2009. But being early this time hasn't cost Jubak's Picks anything: In fact Plum Creek shares are up 9.7% from Nov. 16 through July 30. Add in the two dividends we've collected and the return is well over 10%. So how has the stock done so well while home activity in the U.S. went from slower to slower? First, because the rural land that Plum Creek Timber owns is holding up in value. The company owns 1.2 million acres of higher-and-better-use land, acreage that will one day host houses and commercial buildings, plus 7 million acres of other timberland. Revenue from real estate sales in the first six months of 2008 is running even with revenue in the first half of 2007. The company sold 26,000 acres of land in the second quarter at an average price lower than in 2007, but the land sold was lower quality than in 2007. In the real estate slump bargain hunters are willing to trade down in quality for price, the company told investors in its July 28 conference call. Second, the company was able to balance a decline in the price it received for its saw logs for timber and an increase in the price of wood pulp. Plum Creek, in fact, took advantage of the increase in wood pulp prices by increasing its wood pulp harvest by 250,000 tons above plan in the quarter. For the period, the company reported earnings of 22 cents a share. That was down significantly from the 33 cents a share reported in the second quarter of 2007 but also way above the Wall Street consensus estimate for the quarter of 16 cents. As of July 30, Plum Creek, organized as a real estate investment trust, was yielding 3.46%. As of Aug. 1, 2008, I'm raising my target price on Plum Creed to $53 a share by December 2008 from the prior target of $49 by October 2008. (Full disclosure: I own shares of Plum Creek Timber in my personal portfolio.)
Rayonier Inc	RYN	11/9/07	$46.02000	$30.00	unch	-34.81%
On April 22 Rayonier (RYN) beat the Wall Street consensus by 6 cents a share. Revenue, however, fell 5.2% from the first quarter of 2007 and missed Wall Street estimates by about $4 million. The upside earnings surprise came from better-than-expected prices on sales of real estate. The revenue shortfall was a result of the continued slump in timber prices. For the second quarter and for all of 2008, the company told Wall Street to expect earnings below those in the comparable periods of 2007. A day after the earnings report, Rayonier announced it would begin a 6,300-acre development in Flagler County, Fla., in partnership with Atlanta developer Cousins Properties. I don't think this is a sign of a bottom in the real-estate market but rather an effort by Rayonier to be ready -- in one of the fastest-growing counties in the United States -- for the turn when it comes. Rayonier owns 14,516 acres in Flagler County. As of April 29, I'm going to leave my target price for Rayonier at $55 a share by November 2008. The shares currently pay a dividend of 4.7%. (Full disclosure: I own shares of Rayonier in my personal portfolio.)
Thompson Creek Metals Co Inc	TC	06/26/07	$15.47080	$4.87	unch	-68.52%
As recently as Oct. 17, I wrote that I didn't think Thompson Creek Metals (TC) was a $6 stock. I was right! On Nov. 10, shares hit $3.39. That's a total decline of 80% since the end of 2007. The most recent drop came despite a third-quarter report from the company Nov. 6 that showed molybdenum production climbing to 6.5 million pounds, sales of 6.9 million pounds, an average realized price of $32.85 a pound and earnings of 74 cents a share, a solid 7 cents a share above the Wall Street consensus. The problem is that while the price that Thompson Creek is getting for its molybdenum under long-term contracts is still north of $32 a pound, the spot price of the metal used in steel production has fallen to $10 a pound. Those contracts, which make up about 75% of the company's sales, are based on a price that lags the spot price by one or two months. With global steel production still falling, it's only a matter of time before those contracts reset much closer to the spot price. The good news is that, at $10 a pound, Thompson Creek is still making money. Its cash cost of production was $7.25 in the third quarter. The company also had $152 million in cash on its balance sheet at the end of the quarter, so it is in no danger of running out. The company has also prudently put plans to develop the Davidson mine in British Columbia on hold. So far, the company is going ahead with plans to expand production at the Endako mine, also in British Columbia, at a cost of $145 million in 2009. The bad news is that global demand is still falling along with global steel production. I think China's huge $586 billion stimulus plan, announced Nov. 10, will start to increase steel consumption and production in China sometime in the second half of 2009. Spot molybdenum prices could well move lower in the short term until steel makers start to order again. Thompson Creek's realized price could fall to $22 a pound in the fourth quarter and average $14 a pound in 2009, according to Canaccord Adams. At $3.39 a share, the market is valuing Thompson Creek at twice cash on hand and well below the company's book value of $6.49 a share. I was too optimistic in my projected price for molybdenum at $24 a pound in 2009, but this still isn't a $3.39-a share-stock. As of Nov. 11, I'm setting a share price of $9.90 a share for December 2009. (Full disclosure: I own shares of Thompson Creek Metals in my personal portfolio.)
Yara International Each Repr 1 ADR	YARIY	05/22/07	$29.50000	$23.15	unch	-21.53%
Yara International and fertilizer stocks in general have been hit with a one-two punch of lower farm-commodity prices and tight credit. But I think the imagined damage far outweighs the real, at least if you look past the next six months or so. The logic behind the panic that has taken down the sector runs like this: The drop in farm prices reduces the ability of farmers to buy fertilizer at current high prices. With prices for things such as corn and wheat so far off the highs, farmers don't have much reason to invest in expensive fertilizer in order to produce bigger crops. I think this logic falsely inflates what is indeed a short-term drop in demand into a long-term slump. First, the drop in demand that fertilizer makers are seeing is largely a result in farmers holding back on their usual pre-buying for the next growing season. With credit tight, farmers are more than willing to hold off and take a chance that prices will be down if they wait a few weeks or months to order. Second, I think this logic doesn't take into account the gradual thawing that we're seeing in the credit markets. The evidence is slight, I admit, but it looks like the credit markets will, if not return to normal, at least turn the tap on lending a bit. It will be easier for farmers to get credit three months from now than it is today. (That will be especially true in Brazil, one of Yara's key growth markets.) And third, this logic forgets the time-honored response of farmers the world over to lower prices: They don't cut back but instead plant more because it's the only way to make up for falling prices. I've cut my 2009 earnings-per-share estimates for Yara by 20%, and that still puts this stock in the cheap enough to keep with a price-to-earnings ratio of 3.5 on projected 2009 earnings per share. As of Oct. 17, I'm setting a target price of $38 a share by December 2009. (Full disclosure: I own shares of Yara in my personal portfolio.)
Maxwell Technologies Inc	MXWL	01/23/07	$12.55000	$5.50	unch	-56.18%
Maxwell Technologies (MXWL) inched a little closer to rewarding patient investors in the first quarter of 2008. On May 6, the company reported earnings of $17.3 million for the first quarter. That's an increase of 38% from the first quarter of 2007. The company still reported an operating loss for the period, but it shrank to $3.4 million from $4.5 million in the first quarter of 2007. Gross margins climbed to 30% from 29% in the fourth quarter of 2007 as the company improved manufacturing efficiency. The company's cash, a critical resource for a company that's still generating losses, fell to $28.6 million in the quarter compared with $30.2 million in the fourth quarter of 2007. But the most important -- and most favorable -- news came from the company's ultracapacitor business, where revenue climbed by 64% to $5.4 million from the first quarter of 2007. The potential for devices that can quickly store and then discharge energy in electric and hybrid cars, in wind power and in the utility grid is, after all, the reason that I added this stock to Jubak's Picks on Jan. 23, 2007. The company also announced May 6 that it would open a customer support office in Germany for European automakers and suppliers using its ultracapacitor technology. The company also reported that a big deal it had announced in the fourth quarter of 2007 -- to supply ultracapacitors to Continental, a German auto supplier, for use in a hybrid that BMW is expected to launch in the 2010 model year -- remains on schedule. As of May 9, I'm keeping my target price at $14 a share by December 2008. (Full disclosure: I own shares of Maxwell in my personal portfolio.)
Deere & Co	DE	01/12/07	$49.66500	$42.89	unch	-13.64%
So why haven't I set a new target price for Deere (DE) -- and other Jubak's Picks -- more quickly? There's nothing that I know that's harder in investing than setting target prices in the panic of a bear market. This market doesn't care about fundamentals, and any target you set based solely on fundamentals is going to look ludicrous. And it won't be very useful either. Yet incorporating sentiment-dependent factors such as price-to-earnings ratios into the analysis is also subject to wide errors, since the panic that is compressing P/E ratios so quickly now can easily turn around, leading to a spring-back in valuations. So let's start with what we know about the fundamentals -- difficult enough to figure out in an economy that is slowing daily. We know that farm prices aren't collapsing. In fact, the most recent crop report out of the U.S. Department of Agriculture was bullish on commodity prices, especially for corn. The corn harvest is behind where the harvest stood at this time in 2007, and that's bullish for prices. We also know that the capital arm of the company, John Deere Capital, was able to tap the commercial paper market as recently as Oct. 1 to raise $89 million in short-term 29-day financing. The cost was about 0.4 percentage points over what Deere paid in a normal market, the company told Wall Street analysts on Oct. 2. That's a great sign for Deere, since the commercial paper market has been locked shut except for the very highest-quality borrowers and since Deere finances some of its sales. Because Deere does about 30% to 40% of its sales for cash rather than credit, I'd say the company's sales are about as well-shielded from the current financial crisis as possible. That doesn't mean sales won't feel any effect. Financial turbulence in Brazil and Russia, two of the company's fastest-growing markets, will hurt sales, especially since Deere's sales in those markets are financed locally. And the move toward recession certainly won't help sales in Deere's construction or home businesses. All in all, I think Deere's growth rate will slow in the fiscal year that ends in October 2009; I think its cost of capital will rise; and I think the price-to-earnings multiple that the stock market assigns to Deere's earnings growth will contract. But that still makes this a stock to own, because the decline in the share price of 46% in the past month has discounted all that and more. As of Oct. 10, I'm lowering my target price to $62 from the prior $101 and stretching out my schedule to December 2009 from March of that year. (Full disclosure: I own shares of Deere in my personal portfolio.)
Goldcorp Inc	GG	5/30/06	$30.55000	$29.23	unch	-4.32%
On May 5, GoldCorp's (GG) announced first-quarter earnings of 23 cents a share, 2 cents a share above Wall Street expectations. Revenue climbed 32% from the first quarter of 2007 but, at $627 million, still came in below analyst projections by $46 million. Cash costs in the company's gold operations -- that's costs net of sales of copper and silver -- for the quarter climbed to $240 per ounce from $181 an ounce in the same quarter of 2007. That still leaves Goldcorp with one of the lowest cost structures in the gold industry. The company also announced that its big Penasquito mine in Mexico remains on schedule for the first gold pour from ore in 2008. The company recently upgraded proven and probable reserves for the mine to 13 million ounces of gold and 864 million ounces of silver. As of today, May 6, I'm raising my target price for Goldcorp to $46 a share by December 2008 from my prior target of $41 by October 2008. (Full disclosure: I own shares of Goldcorp in my personal account.)

Recently Dropped

Company	Symbol	Date Dropped	Price Then	Price Now	% Change Since Dropped
Chesapeake Energy Corp	CHK	01/06/09	$18.13000	$18.13	0.00%
We're still in a bear market until stocks -- and the economy -- show me otherwise. And in a bear market, when you get handed a rally, you sell. So as much as I like the long-term prospects for Chesapeake Energy (CHK), I'm going to sell the shares out of Jubak's Picks with this column. From Dec. 5 through Jan. 6, the shares gained 38%. I don't think that gain will hold: We're headed into the weak shoulder period for natural gas between the winter heating season and the summer cooling season. The U.S. economy continues to stumble along with manufacturers reporting low levels of capacity utilization. That's not good for natural-gas prices. And I think we're still at least nine months away from a bottom in global energy demand. I'd love to buy Chesapeake back later in 2009, but I'm going to take what the bear market has given me in a belief that a true energy rally is quarters away. I'm selling these shares with a 66% loss as of Jan. 6 from my April 22, 2008, purchase price of $53.68. This sell will leave Jubak's Picks 48% in cash as of Jan. 6. (Full disclosure: I will sell shares of Chesapeake Energy out of my personal portfolio three days after this column is posted.)
Devon Energy Corp	DVN	12/23/08	$63.02000	$70.98	12.63%
I hate to do this. In my opinion, for the long term, Devon (Devon) has one of the best production and development pipelines in the oil industry. I would want to hold this stock for five years or more -- once we get past 2009. But 2009, especially the first half of 2009, will be a train wreck for most exploration and production companies. Without the big refining and marketing businesses of the integrated majors such as Chevron and Exxon Mobil to act as a buffer, these companies are exposed to the full force of falling oil prices. And though oil prices, which are down by more than $100 a barrel as of mid-December from their July high at $148, can't tumble another $100 a barrel, the effect of lower oil prices on company earnings is still working its way into earnings reports as hedges that had protected oil and gas producers from the worst of the decline expire with 2008. I haven't been able to find a single oil or natural-gas producer that has a higher percentage of production hedged against price declines in 2009 than it had in 2007. In the short term, the industry is also headed into February and March, when oil demand drops even without a global slowdown. And oil is building up to record levels in storage tanks; oil in storage at the Cushing, Okla., hub, for example, has climbed in 11 of the past 12 weeks, to the highest level since May 2007. That means there's plenty of oil around to keep oil prices stuck at current low levels for a while despite any uptick in demand or any reduction in supply from the Organization of Petroleum Exporting Countries. So I'm selling exploration and production company Devon Energy out of Jubak's Picks with this column. I have every intention of buying the shares back in six months at what I hope will be a lower price. The shares have gained 10% since I added them to the portfolio on July 18, 2006. (Full disclosure: I will sell the shares of Devon I hold in my personal portfolio three days after this column is posted.)
Ultra Petroleum Corp	UPL	12/23/08	$32.23000	$38.14	18.34%
What goes for oil exploration and production companies applies in spades to domestic natural-gas exploration and production companies such as Ultra Petroleum (UPL). I think gas prices in the United States aren't likely to recover markedly in the next six to nine months and could fall even further as slowing U.S. economic growth cuts into industrial demand. And, like oil producers, most natural-gas producers will feel more pain from low prices in 2009 than they did in 2008, thanks to reduced hedging in 2009 compared with 2008. Longer term, I continue to like Ultra. The company is one of the lowest-cost producers of natural gas in the United States, and its leases in promising natural-gas shale formations in the Rocky Mountain region put years of earnings growth ahead of the company. Once we get past the earnings pain of 2009. I'm selling Ultra out of Jubak's Picks with a 43% loss since I added it to the portfolio on Sept. 21, 2007. (Full disclosure: I will sell the shares of Ultra I hold in my personal portfolio three days after this column is posted.)
Itron Inc	ITRI	12/22/08	$58.48000	$65.73	12.40%
When a bear market gives you a rally, you sell into the rally. Since it hit a bottom (not the final bottom, I'm afraid) Nov. 20, the Standard & Poor's 500 Index had climbed 20% as of the Dec. 17 close. Shares of Itron have roared past that, scoring a 74% gain for the same period. I still like -- no, make that I still love -- Itron's (ITRI) long-term fundamental story. The market for high-tech utility meters that make it possible for utilities to operate more efficiently and profitably is just taking off. This stock is one of the 50 I picked in my new book, 'The Jubak Picks,' due for publication Dec. 30, as a way to profit from one of the 10 big trends remaking the global economy. But as I've said before, fundamentals don't count for much in a bear market. I believe I can sell now, reaping a loss for tax purposes, and then pick up the shares again at a lower price six to nine months from now, when the stock market is closer to a real bottom that will end the bear. As of Dec. 18, I'm selling Itron out of my 12- to 18-month Jubak's Picks portfolio with a loss of 38% since I added the shares Dec. 21, 2007. (Full disclosure: I will sell my personal position in Itron three days after this column is posted.)
Freeport McMoRan Copper & Gold Inc	FCX	12/09/08	$19.74000	$28.22	42.96%
I had decided that I would hold Freeport McMoRan Copper & Gold (FCX) for the late 2009 recovery in the global economy and in copper consumption. But the company's decision to suspend its dividend has changed my thinking. When the shares were paying a dividend yield of better than 5%, I was getting paid fairly well to wait. But now I'm getting paid bupkis, so I'm going to sell into the current rally with the idea that that move increases my flexibility and decreases my risk. (I can buy Freeport McMoRan shares back later or go with some other mining or industrial stock.) I think we're a good three to six months away from the bottom in copper prices. As of Dec. 9, I'm selling these shares with an 80% loss since I added the shares to my portfolio on Feb. 26, 2008. (Full disclosure: I will sell my personal position in Freeport McMoRan Copper & Gold three days after this column is posted.)
Gilead Sciences Inc	GILD	12/09/08	$44.83000	$51.00	13.76%
Shares of Gilead (GILD) had launched a small rally while the market tanked in the week after Thanksgiving. But on days when the stock market has itself rallied, such as Dec. 8, the shares have retreated. I see this as a sign that investors are using Gilead's shares as a haven from the current market turmoil. That means the stock will hold up well when the bear shows its claws again but is likely to lag in any end-of-the-bear rally. I'm going to use the recent move up in Gilead's shares as a selling opportunity. As of Dec. 9, I'm selling Gilead out of Jubak's Picks with a 17% gain since I added it to the portfolio Sept. 25, 2007. (Full disclosure: I will sell my personal position in Gilead Sciences three days after this column is posted.)
Apple Inc	AAPL	11/11/08	$94.77000	$94.58	-0.20%
The economy is getting worse faster than I anticipated when, on Oct. 24, I lowered my target price for Apple (AAPL) to $125 by December 2009. Though that may still be a reasonable price to anticipate for the stock 13 months from now, the news from consumers and the retail sector is turning so grim so fast that I think Apple's shares could be in for a further decline before the shares begin any recovery to $125. For that reason, and in order to keep the cash position in Jubak's Picks at 40% or slightly more after the buy of Energy Transfer Partners, I'm selling Apple out of Jubak's Picks with a 48% loss since I added the shares June 6. This buy-and-sell pair bring my cash position in Jubak's Picks to 44% as of Nov. 11. (Full disclosure: I will sell my personal position in Apple three days after this column is posted.)
Nokia ADR	NOK	11/04/08	$16.74000	$15.92	-4.90%
The market has finally delivered the bear market rally I'd been expecting for weeks, but it's not a particularly robust one. Though stocks have moved up sharply, it's been on light to moderate volume. That's not what you'd like to see from a rally. Rising volumes would indicate that more investors are buying as prices go up in anticipation that the rally will go on for a while. So far, I'm not seeing much of that kind of behavior. We may get the rush of enthusiasm yet, but I'm going to cautiously take some cash off the table here. Nokia has moved up just 7% in the recent rally -- not exactly a strong move. But I think that reflects investors' skeptical attitudes toward a consumer stock as the economy heads into a recession.In its third quarter, Nokia (NOK) saw its market share drop as it declined to get into a price war with competitors in the high-end smart-phone market. That didn't help the company's average selling price, which fell about $2.60 in the quarter as less-expensive phones sold into emerging markets made up a bigger share of company sales. I continue to think that Nokia's new high-end smart-phone hardware and its new music, games and navigation software will be long-term winners in the market. But I think 2009 is going to see sales flat or even down slightly across the wireless phone industry, and that will make it hard for Nokia to gain share in the face of heavy discounting from competitors. I think that makes Nokia dead money or worse for at least the first half of 2009. As of Nov. 4, I'm going to sell Nokia out of Jubak's Picks with a loss of 39% since I added it July 11. (Full disclosure: I will sell the shares of Nokia I own in my personal portfolio three days after this column is posted.)
Exelon Corp	EXC	10/28/08	$54.60000	$57.34	5.02%
The third-quarter earnings announced by Exelon (EXC) weren't anything to write home about. The company missed Wall Street's earnings estimates of $1.13 a share by 6 cents and reported revenue of $5.27 billion versus the expected $5.46 billion. The biggest ding in earnings was caused by high fuel costs, in part because refueling took longer than expected at some of the company's nuclear power plants, and by a large increase in uncollectible accounts as utility customers fell behind on their bills. But I'd call those problems business as usual in the utility sector during this economy, and they're not the reason I'm selling Exelon out of Jubak's Picks. I bought these shares because of Exelon's big position in nuclear-generated electricity. Its 17 nuclear plants generate 18% of all U.S. nuclear power. Right now, existing nuclear plants beat coal and natural gas on the cost of generating electricity, and I expect to see that cost advantage increase as the country fights global climate change by imposing extra costs on power plants that use carbon-based fuels. From that perspective, I find Exelon's bid to buy NRG Energy extremely disappointing. NRG generates only 5% of its power from nuclear plants and 46% from natural gas, 33% from coal and 10% from oil. This acquisition would seriously dilute the nuclear exposure that I'd hoped to gain by buying Exelon. I'm also concerned that an all-stock deal would saddle Exelon with NRG's $8 billion in debt. At a time when financing debt is both more difficult and more expensive, I think this adds significant risk to what is supposed to be a low-risk investment. Standard & Poor's has already downgraded Exelon's debt to BBB from BBB+ on news of the deal. As much as I hate to sell anything into a bear market, I think these changes in the company remove much of my original reason for buying its stock. As of Oct. 28, I'm selling Exelon out of Jubak's Picks with a 41% loss since I added it Jan. 15 at $84.61 a share.
Tejon Ranch Corp	TRC	10/07/08	$30.16000	$24.57	-18.53%
It doesn't pay me to wait for the recovery in the real-estate market. With the likely duration of the current economic downturn getting longer every day, I'm going to take my loss, sell Tejon Ranch (TRC). The, and put the money to work in something that pays a dividend (in this case, Oneok Partners). I'm selling these shares out of Jubak's Picks with a loss, as of Oct. 7, of 41% since I added the shares to Jubak's Picks on Dec. 12, 2006. (Full disclosure: I will sell my shares of Tejon Ranch three days after this column is posted.)
SiRF Technology Hldgs Inc	SIRF	10/07/08	$1.18000	$1.49	26.27%
There's no reason to fear that these shares are going to fall a whole lot further -- they're down 96% from my buy of Jan. 12, 2007 -- but the chance of the company's being bought out at a significantly higher price continues to recede with the stock market and the economy. And even if the cash that results from this sale is insignificant, taking SiRF Technology Holdings (SIRF) off my regular research list frees up time that I can use more usefully -- and I hope more profitably -- on researching other stocks. As of Oct. 7, I'm selling these shares out of Jubak's Picks. (Full disclosure: I will sell my shares of SiRF Technology Holdings three days after this column is posted.)
Edison International	EIX	10/07/08	$35.71000	$33.43	-6.38%
I think there are good reasons to sell a utility on a capital spending spree right now. Utilities are seeing their cost of capital zoom in this financial crisis. That's a big issue for Edison International (EIX), which has $20 billion in capital spending budgeted by 2012. That capital-spending plan was one thing that attracted me to the stock back in July, and I think over the long term it will be a reason to own these shares. But in the short run, as construction costs and capital costs rise, they will put pressure on Edison International's earnings growth, since regulated utilities have to wait for state utility regulators to act before they can recoup these costs through rate increases. As of Oct. 7, I'm selling these shares out of Jubak's Picks with a 27% loss since I added the shares to Jubak's Picks on July 15, 2008. (Full disclosure: I will sell my personal position in Edison International three days after this column is posted.)
Joy Global Inc	JOYG	6/24/08	$80.17000	$25.65	-68.01%
I'm going to sell Joy Global (JOYG) out of Jubak's Picks with this column and buy Gorman-Rupp as a way to cut the risk in my portfolio at a time when stock's are looking vulnerable to another move downward while retaining my exposure to the boom in global infrastructure. The price-to-earnings ratio on Joy Global has climbed to 31.2 times trailing 12-month earnings. That's high at a time when the S&P 500 is trading at 19.5 times earnings. A price-to-earnings ratio like that makes a stock vulnerable, especially in a nervous market, to a big dip on any miss in quarterly earnings. And Joy Global isn't exactly a paragon of earnings predictability: the company has missed Wall Street consensus estimates in three of the last five quarters. As of June 24, I'm selling these shares out of Jubak's Picks with a 46% gain since I added them to the portfolio on October 30, 2007. (Full disclosure: I will sell Joy Global out of my personal portfolio three days after this column is posted.)
Jacobs Engineering Group Inc	JEC	3/18/08	$73.49000	$51.07	-30.51%
The financial markets and the economy continue to deteriorate, and shares of Jacobs Engineering (JEC) have dropped below technical supports. I'm simply not willing to hold them with their downward momentum in the current market, so I'm selling them out of Jubak's Picks with my March 18 column. I think I'll have a chance to repurchase these shares at a lower price later in the year. A relatively minor part of the company's business has big exposure to a slowing U.S. economy. Government spending on such projects as water and wastewater systems will slow because of budget gaps created by falling tax revenues. This segment accounts for just 8% of Jacobs' revenue, but with the company facing tough year-to-year growth comparisons, I think a shortfall in this segment will be enough to send the stock's price down from even current levels. As of March 18, I'm selling these shares with a 22% loss since I added them to Jubak's Picks on Oct. 30. This sell moves my cash position in Jubak's Picks to 47% of the portfolio. (Full disclosure: I will sell Jacobs out of my personal portfolio three days after this column is posted.)
Dynamic Materials Corp	BOOM	3/4/08	$53.31000	$19.98	-62.52%
This is a market call. As of March 4, I'm selling Dynamic Materials (BOOM) out of Jubak's Picks because the shares climbed 30.4% in the rally from Jan. 17 to Feb. 29 and because I think that rally is about to fail. The market, in my opinion, is likely to fail its testing of February's lows and then head about 10% lower to test the summer 2006 lows around 2,000 for the Nasdaq Composite Index and around 1,220 for the S&P 500. I'm selling these shares out of Jubak's Picks with a 12% loss since I added them to the portfolio on Dec. 7, 2007.
Weatherford International Ltd	WFT	3/4/08	$33.96500	$12.57	-62.99%
This sell of Weatherford International (WFT) is also a market call, on what I think is a developing bubble in oil prices. An influx of hot money looking for some alternative to stocks, bonds and mortgage-backed securities has driven commodity prices up at historic rates. The Reuters/Jefferies spot commodities index was up 15.3% in January and February. That's the biggest increase in the index since it was started in 1956. I think oil is due for a pullback when the Organization of Petroleum Exporting Countries decides (my prediction) at its March meeting that the political cost of cutting production when oil is over $100 a barrel is just too high and when rising production in non-OPEC countries meets up with falling demand from a global economic slowdown. The resulting correction will wring some of the speculative excess of out oil prices and certainly won't mark an end to the long-term rise in oil, but I'd like to cut my exposure to oil before the correction so I can buy at lower prices. As of March 4, I'm selling Weatherford out of Jubak's Picks with a gain of 6% since I added it to the portfolio on Jan. 8, 2008.
Lan Airlines ADR Rep 1 Ord Shs	LFL	2/26/08	$14.18000	$8.75	-38.29%
If growth in Chile and neighboring countries is about to slow because of energy shortages, I don't especially want to hold shares of Chile's Lan Airlines B (LFL) in the economically sensitive airline industry. I'm going to take advantage of the rally that took the stock to $14.62 on Feb. 26 from $11.08 on Jan. 26 -- a gain of 32% -- to sell this stock out of Jubak's Picks. I continue to like Lan Airlines for the long haul as a play on the developing economies of South America, but I don't care for short-term risk from the regional economy. I'm selling these shares as of Feb. 26 with an 11% loss since I added them to Jubak's Picks on May 8, 2007. (Full disclosure: I will sell my personal position in Lan Airlines three days after this column is posted.)
Brown-Forman Corp	BF.B	2/12/08	$53.02400	$52.95	-0.14%
I'm going to take advantage of the current rally in this bear market to sell Brown Forman B (BF.B) and raise more cash. I bought this stock thinking I'd get protection in a market correction, but I haven't found much shelter here. I'm selling these shares with an 8% loss since I added them to Jubak's Picks on Dec. 14, 2007.

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