Mayor’s Picks - April 2008

The market has finally settled down for the first time this year with decent earnings flooding the market last week. More earnings will be coming out this week and hopefully the good news will continue. If the market can settle down people will not feel so uptight about the economy leading to more lending and we can get out of this rut we’ve been in for six months. Of course who knows if that will happen.

Some changes on the list this month. After a long run I don’t know that Apple is a great value so I’ve taken them off the list. We’ll know Wednesday if that was a good move or not. After a few months staying away from banks I think it’s time to step back into a safe one. So enough with the foreshadowing, here’s my stock picks this month and a recap of the last year. This was the ninth straight month my picks outperformed the market over a year.

1 Month Return +4.64%, S&P +4.57%

2 Month Return -7.06%

3 Month Return -9.26%

4 Month Return -15.98%

5 Month Return -3.54%

6 Month Return -14.42%

7 Month Return -9.52%

8 Month Return -2.50%

9 Month Return -8.80%

10 Month Return -7.30%

11 Month Return +4.34%

12 Month Return +10.44%, S&P -4.30%

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

WFC (30.40, -6.61%) - Buy - Bank stocks may be bottoming out with some good news coming out in recent earnings. Wells Fargo’s earnings per share were down 9% but if you consider that Citi lost $5.1 billion and other banks are having huge write-offs the fact that Wells is still highly profitable says a lot about their management.

SNE (34.58, -17.47%) - Buy - Sony has been falling recently even though PS3 should get a boost with GTA4 coming out in recent weeks, Blue-Ray winning the next generation DVD battle and better TV and electronic products coming out. The potential squeeze of consumer dollars is pushing the stock down but I think this will be short lived.

MMM (82.90, +6.31%) - Buy - If you look at a comparable company like GE you can see that the consumer side of conglomerates has actually held up fairly well. GE’s shortfall was in financial and let’s be honest they are a big ticket item company with locomotives, wind turbines, desalination plants and turbines. 3M should hold up well as long as the optical business is OK. 3M has beat estimates in four straight quarters and if they do it for a fifth Wall Street should give them a little more credibility and raise their P/E above 14.

LVS (67.77, -11.94%) - Buy - I’ve written at length about Las Vegas Sands and their growth potential. All I have to say is watch their earnings this month.

BRK-B (4288.00, -1.38%) - Buy - Warren Buffet has sat on his hands long enough. I expect him to buy something big in the next few months. There’s too many good deals waiting to happen. Maybe a railroad, maybe an energy company. Whatever they do Berkshire is a solid stock to own.

SHFL (4.95, -7.99%) - Buy - Shuffle Master can only be beaten down so far. A bad earnings last quarter hurt the stock but management is confident earnings will be the same or higher than last year. That would give a P/E in the low double digits for a company growing around 20% every year in revenue. I’ll take that, but you may have to be patient.

SNDK (27.40) - Buy - Sandisk makes flash memory for electronics players and soon computers. The stock was highly over valued before the market went bad so they’ve been socked really hard this year. But this market isn’t going anywhere and as soon as some of these new products needing memory for videos come out their products will be in even higher demand. Projected earnings growth this year is 100%!