Facebook, Apple, Intel: Analyst Says Today's 'Darling' Stocks Will Be Dead Money
Keith Fitz-Gerald of Money Morning shares his favorites and not-so-favorite plays to watch this year, and explains why small innovators are the names to watch in tech and media.
Nancy Zambell: Right now the market, as you know, is floating around 14,000. What do you think is going to be the next big thing?
Keith Fitz-Gerald: Nancy, it's very interesting to see the market run like it is, given the underlying fundamental situation in our economy right now. We still have debt problems. We still have just squeaked by the fiscal cliff. Congress is a wreck.
There is no adult supervision in Washington, so there are plenty of reasons to be concerned. I think that whenever the markets get toppish and long in the tooth like they are today, you want to make a conscious shift as an investor, from what the world wants to what the world needs. The reason to do that is twofold:
- No. 1, I think that you want to build an upside because if the markets continue to run, you want to grab a piece of that.
- But, at the same time, you want to begin very consciously building in defensive positions, on the assumption that something could reverse unexpectedly.
And the market is overdue for a correction. If we get one, changing to what the world needs versus what it wants, gives you a defensible position.
One of my favorites right now, for example, is in the energy sector. That's clearly something the world needs. The world's growth is continuing in every industry. So never mind the headlines, the fact of the matter is oil is in demand.
Nancy Zambell: Especially in the emerging countries, right?
Keith Fitz-Gerald: Absolutely. Not only that, but they have never known cheap energy. So if you look at a country like China, or much of the Pacific Rim, or Africa, those economies have a unique advantage that we haven't had historically, in that they are partially asset-backed and they're backed by oil.
So not only do they have growing demand that is outstripping our conservation efforts here, but they actually have the asset in the ground. And that gives them an advantage and makes them attractive and appealing for investment.
Nancy Zambell: What is your favorite pick in that area?
Keith Fitz-Gerald: Believe it or not, one of my favorite picks in that arena right now is right here in the United States. Because even if we're talking about emerging markets, I think we've got a choice here in Kinder Morgan Partners (NYSE:KMP).
In the interest of full disclosure, I do own it. I don't have any investment banking relationships with them, but they're like a toll road for wealth.
The United States is critically short on pipelines. We have a lot of energy needs, and we need to move a huge amount of this stuff all over the place.
It's a simple business. You cram stuff in one end of the pipeline, you charge money for it, and you unpack it at the other end. They've got a 5.8% dividend, the last time I looked, which is a great compensation for the risk you take being in the marketplace.
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