Friday, June 03, 2005

Yet Another Portfolio Update

Today's job report was not so good. The latest numbers show sluggish job growth. The market responded negatively, as it should.

I mentioned that I would be adding to the portfolio after selling off the EBAY position. Yesterday, I initiated a position in DRYS in the 17.90s. Today, at the weak market open, I initiated a small position in Dow Chemical (DOW) at 45.24. Dow Chemical is the largest chemical company in the US. Based on my own research and the analysis provided by the S&P, its earnings are set to grow well. They are cutting costs while increasing their sales amid an uptick in their industry. Their plastics business (largest component of their sales) looks to have gotten past its slump, and the same goes for their chemicals business. The lesser sales components, including agricultural science products and energy-related products also have not given us any reason to question earnings growth projections.

Given all of this, I established this position despite the recent Merrill downgrades on chemical companies. For what it's worth, Credit Suisse First Boston has an Outperform rating on the stock with a $67 price target. This taken from their research report released on May 8, 2005 after their analyst met with the DOW management at a company visit. Additonally, DOW sports a nice 2.95% dividend yield and commands a very reasonable trailing price-to-earnings ratio under 10.

But, I'll tell you what's killing me... AMAT. In today's very negative market, AMAT simply held its own. That by itself scares me. I'm not too close to my breaking point, so I'm still holding short. But, I just might throw in the towel early on this one. It is simply not behaving like I expected.

In other news... STU is once again smoking. And, new worries concerning the iPod have sent Apple shares down quite a bit. If Apple continues to fall, I will take a closer look, re-evaluate, and then decide whether or not I want to re-establish the position I disposed of recently.

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