Stock picks with good insider buying, yields

The stock market ended up strong last week, after some panic selling. There were also selling climaxes in various individual stocks. We think this is a fabulous opportunity for long term and short-term investors to be buying quality Dow stocks and blue chips at fire-sale prices – with good dividend yields, if they hold up.

Our strategy, since we could still get a more panicky sell off, is to buy 50% of your allocation now at these dirt cheap prices, and put in orders 50% below these prices –Good Till Cancelled orders, and just wait. That would mean buying General Electric (and the below stocks) now, and buying again if GE goes to $7, which we don’t believe will happen. We still would only be 50% invested after these purchases. It is prudent to have cash available for future contingencies and opportunities. Cash is king. We have an immediate Sell Rating on Ralcorp Holdings (RAH) 58.50.

The following stock picks are at historically low prices, and some have good insider buying – GE, DPTR; CLP; AMB; JPM and ALY. Our Stock Picks are as of Friday’s closing prices: JP Morgan (JPM) 22.72; General Electric (GE) 14.03; Dupont (DD) 23.03; Pfizer (PFE) 15.67; Forest Oil (FST) 13.08; AMB Property Corp (AMB) 11.23; Whole Foods Markets (WFMI) 8.19; Delta Petroleum (DPTR) 6.00; Allis-Chalmers Energy (ALY) 5.12; Colonial Properties Trust (CLP) 3.92, and Ligand Pharmaceuticals (LGND) 2.00.

Our Option Picks are as follows: Canadian Solar (CSIQ) JAN 5 CALL .GQAAA Closed Friday @ 1.05 ASK … A BUY up to 1.50; Suntech Power (STP) JAN 5 CALL .STPAA Closed Friday @ 2.75 ASK … A BUY up to 3.25. You can easily lose 100% of your investment trading options. Our normal buying strategy for equities is to buy 40% of our allocation for a particular stock now, and 30% more on each decline of 20% from the original buy price.

* Cotton’s “Stock of the Week”

** We hold a position in the stock or option

Go to stockcharts.com to view the above stock picks

ABOUT THE AUTHOR

J.W. Cotton

Cotton's Technically Speaking is an online market letter published weekly by technical analyst Joe Cotton. The market letter features stock and option picks, and is based primarily on the analysis of stock and market trends. You can visit his website at www.cottonstocks.net to get more information or subscribe.

The author, Joe Cotton, in many cases has purchased or purchases the stocks or options featured, at prices equal to or lower than, or higher than the recommended price herein. A double asterick (**) indicates the author either holds an option, or stock position in that company as of publishing date. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THIS MARKET LETTER IS BASED ON THE TECHNICAL ANALYSIS OF STOCK TRENDS BY THE AUTHOR AND IS IN NO WAY TO BE CONSTRUED AS INVESTMENT ADVICE. For Investment Advice, consult an Investment Advisor or Certified Financial Planner. It is imperative that you use stop-loss orders in order to protect yourself against substantial losses in any particular stock-or in the event of a terrorist attack on U.S. soil.

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