Bargain-Hunting In a Wild Stock Market
Volatile markets can eat a portfolio alive -- but they can also create real bargains for investors, according to senior editor Jeffrey Kosnett of Kiplinger's Personal Finance.
At the top of his list is Apple.
"It's been a great year for Apple's business," Kosnett told CNBC.
"Why should a stock go down 20 percent in three hours, like it did the other day? They just had the misfortune to announce their earnings on the morning of the 'great panic.'"
Then, there's American Capital Strategies.
"The easy rap on that is that we're going to have a recession," Kosnett said. "But if you look at the quality of their positions, and the kind of companies they're in, it's very diversified, and they'd have to have a lot of problems for that dividend to be impaired."
American Expressis another victim of over-reaction, he believes.
"If you saw what happened to American Express after 9/11, it was a great time to buy it, when nobody thought that anyone would want to spend any money, or fly, or go on any vacations, and we have the same overdone negativism about business and consumer spending," he said.
He also likes AT&T: "There was a small part of their declining wireline business where they said they were having slow growth," Kosnett recalled. "Traders picked one negative out of a pile of stories and dumped the stock."
More of Kosnett's Stock Picks
Intel , which has been the worst performer among the 30 Dow Jones Industrials, also makes his list.
"They have so much cash they're going to double their R&D spending in 2008," he noted. "They have a technological lead over the rest of the industry. You have to be patient here."
Kosnett says Goldman Sachs has taken lots of investors on wild rides.
"Somebody should have bought this one when they first went public and went to sleep on it," he said. "I think that any time you can buy it for well below its peak, it's a good deal."
Another stock waiting for investors to get on board is Southwest Airlines.
"Here's an airline that has plenty of cash, free cash flow," he observed. "The stock is down to where it was in 2000...this one just sort of gets forgotten. Buy it and wait. It doubled the last time it was at this level."
Rounding out Kosnett's list are Pfizer and CNBC.com parent General Electric .
"It's part of this whole thing that we see of the ETF-ing and hedge-funding and dumping of large numbers of big stocks, indiscriminately, without any regard to what's really going on with the company," he said.