Wed Feb 18th, 2009 dailystocktracking

Obamas' Home Rescue Plan.
President Obama unveiled a $75 billion multi-pronged plan Wednesday that seeks to help up to 9 million borrowers suffering from falling home prices and unaffordable monthly payments. Focusing on homeowners who are still current in their payments but at risk of default, and he puts billions of federal funds into enticing servicers to modify the loans of those who've already stopped paying. It askes Congress to amend bankruptcy laws to allow judges to modify mortgages, a step community advocates say is badly needed but that the financial industry abhors. The plan would help borrowers who owe more than 80% of their home's value to refinance and reduce their monthly payments. Lenders generally won't refinance people who have less than 20% equity in their homes, But only those who are current on their payments and whose loans are held or guaranteed by Fannie Mae and Freddie Mac are eligible. Also, the new mortgage, including refinancing costs, can't exceed 105% of the current market value of the property, excluding many of the hardest hit. It allows borrowers to refinance into 15-year or 30-year fixed-rate mortgages at the current market rate, which hovers around 5%. The plan, however, will not reduce the loan balance. The administration is also creating a $75 billion initiative to reduce monthly payments for at-risk borrowers by subsidizing interest rates. The goal would be to bring payments to no more than 31% of a borrower's income. "I also want to be very clear about what this plan will not do: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans." The effort would help borrowers -- both those current and delinquent -- who live in their homes lower their monthly payments for five years. The servicer would reduce interest rates so that the monthly obligation is no more than 38% of a borrower's income and then the government would kick in money to bring payments down to 31% of the homeowner's income. In addition to providing incentives to servicers and investors, the administration will also reduce borrowers' loan balances by up to $1,000 a year for five years if they keep up with payments.
Street - Top 5 large-caps, (MCD), (GILD), Medco Health solution(MHS), (ABT), Baxter(BAX). Fast Money, like Energy Conversion Devices(ENER), and First Solar(FSLR) for the economic stimulus plan, PowerShares Water Resources(PHO), URS(URS), SPDR Gold Trust(GLD), Market Vectors Gold Miners(GDX), Medtronic(MDT), for the lift in stem cell funding look at Celgene(CELG), Geron(GERN), and Teva(TEVA). 4 companies growing in a weak economy, Green Mountain coffee Roasters(GMCR) is benefiting from the decline of Starbucks, offering coffee at a lower cost, Ralcorp(RAH) is the largest U.S. producer of store-brand or generic food, The Buckle(BKE) this denim retalier is a steal at $25, and Marvel Entertainment(MVL) has increased its net sales and income with big movies coming out soon. Upgrades - Barrick Gold(ABX), American States Water(AWR), Centern(CNC)health care company, HLTH(HLTH)health information services provider, Synovis Energy(SYNO), Celgene(CELG) $73, Torchmark(TMK) $37, Medtronic(MDT) $49. Energy Secretary Stimulus Comments - speed up processing energy project loan guarantees earmarked for support to the nuclear industry. He spent most of his remarks discussing the need to build more power transmission lines to move energy from isolated wind farms to urban centers and the need for a "smart" grid to improve transmission efficiency. Obama's Stimulus: 10 Ways to Play It - The recently signed stimulus bill is certainly a hot topic of conversation these days. However, vast assumptions vary among the media, the general public and even elected officials as to the size, scope and duration of its potential affect on the economy. There are two points to make about the stimulus package in its current form: 1. Spending in actually dollars equates to $650 billion. 2. Tax cuts equate to $150 billion. How is the spending broken down? And what equities might benefit? Here are some of the ways the stimulus money is being spent, and some ways investors might be able to capitalize on it. Agriculture, Nutrition and Rural Development: $26.9 billion, which includes $20 billion for government food stamps, $2.8 billion to expand broadband in rural areas and $4.1 billion for rural development. Trade: Family Dollar Stores (FDO). As of September 2008, an estimated 14 million households relied on food stamps, an increase of approximately 17% from September 2007. More than 3,000 Family Dollar stores accept foods stamps nationwide. FDO just reported a 14% rise in quarterly profit and raised its fiscal-year forecast. For the quarter that ended Nov. 29, 2008, profit rose to $59.3 million, or 42 cents per share, from $51.9 million, or 37 cents per share, a year earlier. Family Dollar was recently trading down a penny at $26.50. Commerce, Justice and Science: $13.9 billion, which includes $2.8 billion to extend broadband, $3 billion for state and local law enforcement assistance and $3 billion in technology and research grants. Trade: Axsys Technologies (AXYS), a global leader in the design and development of high-performance surveillance cameras. From 2004 to 2007, net sales rose from $78.2 million to $171.6 million, while operating income went from just $6.8 million t $23.3 million in that time period. Overall, the firm’s backlog, which is a measure of existing orders vs. current production levels, grew from $75.6 million to $140.2 million from 2004 to 2007. Axsys was recently trading down 8.7% at $37.79. Defense: $4.8 billion, which includes $4.8 billion for facility repair and energy projects. Trade: General Dynamics (GD) and Raytheon (RTN), on recent positive new from the defense sector, particularly from these two stocks. For example, Raytheon expects earnings from continuing operations to grow as much as 10% to $4.45 to $4.60 per share in 2009. Raytheon was recently trading up 1.4% at $46.24, while General Dynamics was down slightly at $52.78. Energy and Water: $48.9 billion, which includes $18.5 billion for energy efficiency and renewable energy programs, $8 billion for federal loan guarantees for renewable-energy systems and electricity transmission, $17.4 billion for modernizing the nation’s electricity grid and $4.5 billion for the Army Corps of Engineers. Trade: MasTec (MTZ). As of 2008, 60% of MasTec’s revenue came from the communication sector; this involves contracts with such companies as AT&T (T) and Charter Communications (CHTR). Utilities represented 34% of revenue; contacts included deals with such companies as XTO Energy (XTO). For the full year 2008, MasTec is on track to report revenue of $1.21 billion to $1.23 billion, a nearly 18% increase from its 2007 earnings. MasTec has a backlog, an important figurer when analyzing construction companies, of around 18 months deep, with a total value of $1.5 billion. Mastec was recently trading up 0.4% at $10.27. Environment and Interior: $14.3 billion, which includes $8.1 billion in state grants for water infrastructure projects and $6.2 billion for capital improvements toward national parks. Trade: Calgon Carbon (CCC), a pure play in the water-purification sector. Calgon's products are used to remove organic compounds from air, water and other liquids. The company is ramping up its profitability, with analysts expecting the company to go from losing money last year to EPS of 16 cents this year and 30 cents the year after. For a more diversified water play, the PowerShares Water Resources (PHO) ETF offers a way to play water infrastructure. Calgon was recently trading down 3.3% at $14, and the PowerShares Water Resources ETF was down 1.1% at $11.78. Health and Education: $91.3 billion, including $20.2 billion for the department of health and human services, $14.4 billion for employment training programs, $20 billion for elementary and secondary school renovations, $17 billion for grants and other student financial aid and $29 billion for education programs. Trade: An interesting idea here is to short such education stocks as Corinthian Colleges (COCO), Strayer Education (STRA) and Apollo Group (APOL), based on the $29 billion the government will be giving away for education programs. Valuation for the sector is completely stretched, as seen in the market’s reaction toward Strayer Education on Thursday when the company forecasted a penny below expectations. At one point, Strayer was down more than $40 dollars. Strayer was recently trading up 2.4% at $193.40, Apollo was up 1.5% at $82.20, and Corinthian Colleges was down 1.2% at $20.65. Housing and Transportation: $62.3 billion, which includes $30 billion in highway construction, $16.1 billion in other transportation programs, $11.1 billion for housing assistance programs and $5.1 billion for community development grants to states and cities. Trade: Astec Industries (ASTE), the single best way to play Obama's stimulus package, particularly with regards to the $30 billion or so that will be allocated toward road and highway pair. This under-the-radar name trades for just five times cash flows and sported 40% growth last year. Astec was recently trading up 1.7% at $23.46. Cramer - bull on Agnico-Eagle Mines(AEM), buy IBM(IBM) under $90.
TheStockAdvisors - 3 small-cap stocks, HMS Holdings Corp(HMSY) coordinates government provided healthcare benefits, benefits from rising unemployment, Medicaid is biggest client. Neutral Tandem(TNDM) is a telecommunication company that connects calls between different companies. Green Mountain Coffee(GMCR) single-cup brewing systen sold under the name Keurig. Some Blue-chip buys, Union Pacific(UNP), Abbott Labs(ABT), Atmos Energy(ATO), McCormick(MKC). Favorite Coal buy is Peabody Energy(BTU), insider buying recently, under $29 after reaching 52wk high of $88, selling at 10x earnings.