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CNBC ON DIGG

The Week in Review: Looking Up In a Down Market

Topics:Earnings | Nasdaq | NYSE | Stock Picks | Stock Market

By: Andrew Fisher | 21 Jun 2008 | 08:41 AM ET

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Almost everywhere they looked during the week, investors saw red ink flowing. The bad environment for the financials got worse. Economic data was largely discouraging. The price of oil stayed high, with little sign of an end to its climb. But CNBC guests worked hard to find bright spots in the murk.

Monday:

This month's reading of the New York Federal Reserve Bank's Empire State manufacturing index came in much lower than expected, and Lehman Brothers [LEH Loading... () ] posted its first quarterly loss since going public in 1994.

Looking away from Lehman, Ryan Lentell of Morningstar echoed support for Goldman Sachs [GS Loading... () ], but said Morgan Stanley [MS Loading... () ] and Merrill Lynch [MER Loading... () ] look even better.

Ted Parrish of the Henssler Equity Fund even endorsed a bank—Bank of America [BAC Loading... () ], as well as the navigational-device maker, Garmin [GRMN Loading... () ].

Goodyear Tire & Rubber [GT Loading... () ] may be heavily levered to oil, but Jonathan Vyorst of the Paradigm Value Fund said that when oil prices come down, Goodyear will be taking off. He also liked Innospec [IOSP Loading... () ], the maker of a Diesel-fuel additive, and software producer Sybase [SY Loading... () ].

Standard Life Investments' Steve Weeple saw great opportunities in energy-related stocks like electricity-generators Dynegy [DYN Loading... () ] and Reliant Resources [RRI Loading... () ], and Itron [ITRI Loading... () ] and Comverse [COMV Loading... () ], which make devices that measure energy use more precisely.

Tuesday:

More disappointing May numbers: The producer-price index went up in line with expectations. Building permits declined, as housing starts fell to a 17-year low. Industrial production slipped. The current-account deficit grew. But Goldman Sachs posted strong quarterly numbers despite the difficult financial environment.

BlackRock's Bob Doll said that what look like bargains among the financials may not be bargains at all, because the Fed's opening of the discount window will bring more regulation and less leverage.

Gerald Jordan of the Jordan Opportunity Fund went with traditional-energy names like Schlumberger [SLB Loading... () ] and Weatherford International [WFI Loading... () ], and in the alternative-energy space, he preferred Chinese solar-energy companies JA Solar Holdings [JASO Loading... () ] and Yingli Green [YGE Loading... () ] to wind-energy names.

Craig Hodges of the Hodges Fund said the way to get into financials is through asset managers like US Global Investors [GROW Loading... () ]. He also endorsed Bristow Group [BRS Loading... () ], which operates helicopters that carry oil-rig crews to offshore platforms.

Wednesday:

Crude-oil and gasoline supplies continued to shrink, although demand for gasoline also declined. Morgan Stanley posted a 60 percent drop in second-quarter earnings, and FedEx reported a fourth-quarter loss.

Pipeline companies Enterprise Products Partners [EPD Loading... () ] and Enbridge Energy Partners [EEP Loading... () ] got thumbs-up from Joseph Keating of RBC Bank.

RDM Financial Group's Ron Weiner found Monsanto [MON Loading... () ] positioned to grow because of worldwide demand for more efficiency in food production, and Michael Judd of Greenwich Consultants added Mosaic [MOS Loading... () ], Potash [POT Loading... () ] and Agrium [AGU Loading... () ] to that list.

Schwab's Paul Alan Davis picked pharmacy-benefits manager Express Scripts [ESRX Loading... () ] and drugmaker Baxter International [BAX Loading... () ], despite Baxter's recent heparin recall.

Thursday:

Two former Bear Stearns executives were arrested on charges stemming from the collapse of the subprime mortgage market. First-time claims for unemployment benefits dipped but remained high. The Philadelphia Fed's factory index showed a June decline, although the Conference Board's Index of Leading Economic Indicators showed a May gain.

Andrew Burkly of Brown Brothers Harriman liked the power of food producers Kellogg [K Loading... () ], General Mills [GIS Loading... () ], and HJ Heinz [HNZ Loading... () ] to pass along increased costs.

Telecom drew the attention of Christopher Larsen of Credit Suisse; he advised investors to stay away from traditional wire-line service providers and to go with wireless companies Sprint Nextel [S Loading... () ] and Leap Wireless International [LEAP Loading... () ].

Friday:

Oil rallied on a report hinting at a showdown between Israel and Iran. Moody's cut the ratings of MBIA and Ambac, the two-largest bond insurers. Ford announced it would slash production of small trucks, which have been the backbone of its sales.

Dan Veru of Palisade Capital Management picked Raymond James Financial [RJF Loading... () ], regional railway operator Genesee & Wyoming [GWR Loading... () ], and promising electric-motor maker Baldor Electric [BEZ Loading... () ].

Large-cap companies with significant international exposure attracted Gregory Church of Church Capital Management: Procter & Gamble [PG Loading... () ] and Cisco [CSCO Loading... () ]. Church also said he liked nuclear-power plant operator Progress Energy [PGN Loading... () ].

Scott Billeadeau of Fifth Third Asset Management selected technology developers Nuance Communications [NUAN Loading... () ] and Pros Holding [PRO Loading... () ].

And Stuart Frankel's Jeffrey Frankel took a page from the legendary fund manager Peter Lynch, who once famously said, "Never invest in any idea you can't illustrate with a crayon."

After watching The Incredible Hulk, Frankel told CNBC, his children suggested that Marvel Entertainment [MVL Loading... () ] and Disney [DIS Loading... () ] would be better investments than financials.