Mayor’s Picks - February 2008

Panic has been replaced by a continual confusion on Wall Street in the past month. Recession fears still persist and experts paint a conflicting view of whether the economy will fall into recession. This Mayor is in the recession camp but only for a short time. The real problem I see in the future is a stagnant housing market for the next few years. The run up in housing values have brought homes to a very un-affordable levels for most people. I see housing falling this year and being flat for possibly five years after that. This could be a drag on the economy for a while.

I’ll get off my soap box now but my point for explaining this is my picks this month and in coming months will be affected by this view.

On with the picks. February 2007 picks beat the market by over 10%. Apple and Chipotle really overcame a poor performance by companies like SHLD. But that’s what diversification is all about.

1 Month Return +6.02%, S&P +3.01%%

2 Month Return -10.93%

3 Month Return -7.74%

4 Month Return -12.97%

5 Month Return -7.36%

6 Month Return -2.56%

7 Month Return -8.15%

8 Month Return -6.99%

9 Month Return +2.04%

10 Month Return +6.20%

11 Month Return +11.98%

12 Month Return +3.96%, S&P -7.25%

STOCK SYMBOL (Current Price, Monthly % Change) - Rating - Comments

SNE (44.78, -10.55%) - Buy - My top pick this month is Sony. They’ve returned from obscurity to restore themselves as a top electronics company. Blue Ray has won the next generation DVD battle. PS3 is gaining momentum and will eventually overtake XBox 360 as the gamer’s console of choice because of Blue Ray and quality problems with 360. Sony is also leading the charge into OLED televisions which will be a major shift in TV technology in the next few years. I like Sony all the way.

AAPL (124.63, -19.92%) - Buy - Apple trading at a forward P/E of less than 20? Are you kidding me? Apple has beaten analyst estimates, well, they always do. There’s no new product like the iPhone to get excited about but you bet something is in the works and you want to own this stock when that news comes out.

DIS (32.49, +15.54%) - Buy - Disney has had a great year for movies with Pirates, Ratatoulle, National Treasure and now Jumpers. They’ve avoided the bust movie better than most studios. They’ve also got ESPN to rely on for stability even if their resorts struggle in the upcoming economy. A current P/E under 16 gives them a good value.

MMM (79.95, +6.37%) - Buy - 3M has done a great job keeping the focus on growth and acquisitions. Their growth has not been rewarded by Wall Street up to now but a P/E of 13 and expected growth above 10% this year should bump their P/E up.

LVS (88.92, +11.93%) - Buy - If you want to see a growth strategy go to LVS’s investor relations presentations. They’re practically building a whole city in Macau. Their Singapore casino is in the heart of the city and will be an incredible development. And they’ve got the Venetian and Palazzo in Las Vegas. This is a great opportunity to buy this growth story. Even Wall Street was happy with their performance in Macau, and that’s tough to do.

F (6.45, +8.77%) - Buy - Ford is the long lost little brother to GM who gets all the headlines. But Ford has done a terrific job developing new cars. The Fusion is a success. The Focus is, well, better. The Escape Hybrid gets well over 30 mpg. Throw in a little cost savings and you should see a new ford in 3-4 years. If they can get any sort of consistent margin you could see the stock jump well over double. Just hope the family doesn’t get in the way.

BRK-B (4,795, +4.95%) - Buy - Berkshire Hathaway will be consistent just like always in the next year. Warren Buffet is buying up stock on the cheap right now and you can expect another great year from them. Boring, but profitable.

SHFL (8.87, +9.24%) - Buy - Shuffle Master has been beaten down so much that lowered expectations should be easy to meet. They’re doing all the right things shifting to leases vs. sales and maintaining a near monopoly in proprietary table games. Casino’s continue to grow around the world and Shuffle Master should profit from the growth.

That’s it for this month’s Mayor’s Picks. Remember, it takes guts to buy low but the market is down so now is the time to get in.