Mayor’s Picks - May 2008

It seems like the market has finally settled down after a rocky start to the year. The last month we’ve had some decent earnings numbers from everyone except GE. There’s still going to be a lot of fallout from continuing weakness in the housing market. And of course the consumer still isn’t spending money. Don’t expect any crazy growth numbers over the next year but the companies that continue to invest in their future will be the big winners long term.

I’m adding my first solar company to the picks list. Solar is the next big thing in energy no matter what anyone tells you. Wind will be there but ethanol is a joke and so are bio-fuels. Solar is the place to be as an investor.

This was the tenth straight time (ten out of ten) my monthly picks have beaten the market when tracked over a year. I track my picks giving you a monthly update below and the last one on the list were my picks a year ago. So this month my May 2007 picks gained +4.34% vs -5.05% for the S&P. So I beat the market by 9.39%. Not bad. Here’s the update on the last twelve months.

1 Month Return +8.86%, S&P +2.52%

2 Month Return +10.74%

3 Month Return +2.59%

4 Month Return -1.24%

5 Month Return -9.23%

6 Month Return -0.68%

7 Month Return -10.72%

8 Month Return -3.05%

9 Month Return +1.33%

10 Month Return -6.35%

11 Month Return -4.43%

12 Month Return 4.34%, S&P -5.05%

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

WFC (28.95, -4.77%) - Buy - Wells Fargo has navigated the housing slump better than any other bank. There may still be some losses but Wells Fargo is set up better than any other bank to handle the risks. A 4.20% dividend doesn’t hurt either.

MSFT (29.99, -0.03%) - Buy - This one pains be because I hate everything Microsoft stands for. They’re bullies, their products aren’t very good but they are a good value. So as an investor I have to say they’re a buy. Ouch.

MMM (78.66, -5.11%) - Buy - 3M is a value play. They’ve been able to navigate the consumer downturn well even though the optical business is suffering. I’m worried about them playing in the low end of the market more and more but at current prices I can’t pass them up. I expect a stock price around 100 by the end of the year.

LVS (76.09, +12.28%) - Buy - A regular on my list. Las Vegas Sands has yet to perform well in Macau but I expect that to change with more hotels opening and as they figure out how to handle the junket operators. Las Vegas may suffer in the near term but they’re doing the right thing investing now. The Singapore casino could be a game changer.

SHFL (5.10, +3.03%) - Buy - Beaten down forever they are now at an attractive valuation. Their P/E is 14 and forward P/E is 11. I like their long term view of leasing to operators as it’s a higher margin and gives them more predictable earnings. It has also given investors a great buying opportunity as Wall Street doesn’t know what to expect from them right now.

SNDK (32.44, +18.39%) - Buy - Sandisk is still the major player in flash memory. Recent earnings were a little disappointing but they should be able to rebound as consumers move to more and more video offerings.

LDK (37.22) - Buy - The new solar play in my list is LDK Solar which makes wafers for solar cells. They’re based in China and provide wafers to other solar panel manufacturers. I like them because they’re the cheapest player in the field of solar with a forward P/E under 10. LDK has beaten their earnings estimates in 3 of the last 4 quarters which is also a good sign. Expect more info from this Mayor on solar in the future.