This from Taipan Daily:

Key Energy Services (NYSE:KEG) is the largest rig-based well service company in the world.

You could say the main job for a company like Key is to “keep the oil & gas flowing.” Once a well is drilled, that well has to be maintained and serviced throughout its life. This is what Key does.

It’s a great business because you always have clients and you always get paid. The world is not going to give up its oil and gas addiction any time soon… and as long as we need fossil fuels, we’ll need companies like Key.

Being the largest well service company in the world, Key also has one of the most attractive client rosters in the world. The company’s client list is populated with blue-chip names like BP, ExxonMobil, ConocoPhillips, and others.

Key’s operations are primarily in the U.S., but the company is also expanding in energy-rich places like Russia and Mexico. The rising trend of NOCs – nationalized oil and gas companies – is good news for a player like Key.

While oil rich governments are happy to take over the means of production and shut out the oil majors, it’s often the case that the host country is short on technology and expertise. So they invite in savvy outsiders like Key to come service the wells (and to provide other high-margin services on the side while they’re at it, like equipment rental).

An Undisputed Market Leader

It’s also important to note that Key Energy Services is the undisputed market leader in its field. In a challenging oil and gas environment like the one we’re now in, being the market leader carries a number of advantages. For example:

Key has a higher class of customer due to its focus on top-notch service, training and equipment (and its willingness to invest in all three areas). Because Key’s customer base runs more to the “big boys” – supermajors, large independents and so on – Key is less likely than smaller competitors to take a revenue hit from reduced customer spending.

Key is able to charge a premium for its services because of its position as a market leader (and reputation for quality levels above and beyond the competition).

Key’s balance sheet is secure; the company’s long-term debt doesn’t mature until 2012, and cash levels and credit lines are healthy. This is a BIG edge in comparison to Key’s smaller competitors, many of whom are seeing their liquidity dry up.

Key Energy Services has a little bit of leverage on its balance sheet – long-term debt closes in on $600 million – but that’s forgivable because the debt has years to maturity, and as a well service company, Key’s cash flow comes in like clockwork.

Key’s Powerful Growth Rate

One of the truly unbelievable things about Key right now is the valuation. As of this writing, Key trades for 3.73 times earnings.

This is amazing because of the powerful growth rate Key has booked in recent years. The slide below is from a recent Key presentation at the 2008 Bank of America Energy Conference.

As the chart shows, Key has kept up a better than 15% compound annual growth rate (CAGR) for the past four to five years. If that pace continues, revenues will double in the next five years. And even if Key’s growth rate were to fall by half, revenues would still double in a decade. Higher revenues mean fatter profit margins for a well service company like Key, by way of cost efficiencies and greater operating leverage.

And yet, in spite of all that, Key now trades for three to five times earnings due to the panic. Three to five times earnings!

That means somebody with a big enough chunk of cash (or the right financing) could hypothetically buy this healthy, vital, steadily growing, blue-chip-plated business for a song… and have the earnings stream pay for their whole purchase in three to five years!

For a rock-solid business with steady cash flow and blue-chip customers, that kind of value is unheard of.

The only reason we are seeing opportunities like this is because small investors are panicked and the big institutions are tapped out. All the asset managers who would normally be backing up the truck for companies like Key have instead been forced into a defensive crouch.

These types of bargains won’t last forever. When sanity returns to markets and oil resumes its long-term rising uptrend (as it certainly will do), Key could again become a $20 stock. That would be a more than 300% gain from today’s levels.

Action to take: Buy Key Energy Services (NYSE:KEG) up to $6 per share.

PS. This is the first of a five-part free report “Five Stocks To Grow Rich On” from the Taipan Publishing Group. Follow the link below to find out more.

Source: A Deep Well Of Profits

This from Investment U:

It’s not official yet. Apparently the committee of “esteemed” economists at the National Bureau of Economic Research (NBER) doesn’t get paid for timeliness. But the statistics don’t lie… we’re in a recession.

And that’s got me giddier than an Obama supporter scoring an inauguration ticket. That’s right. I’m actually glad the economic data stinks. Because when a recession is here, a small-cap rally isn’t far behind.

Accordingly, I’m loading up on small caps in my own portfolio. I suggest you do the same, instead of joining the lemmings piling into Treasuries.

If you’re reluctant and afraid small caps are too risky, chew on this:

In the year following the six major bear markets of the last century, small cap stocks soared an average of 82%, according to Ibbotson Associates.

If the prospect of an 82% gain doesn’t excite you in these trying markets, check your pulse. If it does, read on…

Any Old Small Cap Just Won’t Do

There’s no denying the strong historical trend, but it doesn’t mean ALL small caps will soar. Nothing in investing is ever that easy. In order to really benefit from the imminent rally, we need to isolate the most compelling and innovative small-cap stocks.

To that end, let me share a disciplined approach that’s always served me well. When it comes to small caps, I focus exclusively on companies with these three characteristics:

• A pioneer on the verge of creating new trends. Companies can create products to compete in existing markets… Or they can create products that are so revolutionary and timely that they launch their own markets and trends. The latter obviously positions the company, and in turn investors, to reap the most profits. If you need help qualifying this factor think Intuitive Surgical (Nasdaq: ISRG), Google (Nasdaq: GOOG), even VMware (NYSE: VMW).

• Within three years of an initial public offering (or major index listing). Smaller and/or newer companies have more room to grow. Plus, Wall Street tends to overlook many of these firms. By focusing on these young and virgin opportunities, we can actually profit ahead of the Wall Street institutions and the trillions in capital they control.
• Increasing earnings by at least 30%. A market panic can only hold back fast growing stocks for so long. Eventually, share prices will follow earnings. By focusing on companies with the strongest growth profiles, we set ourselves up for the most dramatic gains. And yes, even in this market such companies do exist.

Other characteristics worth screening for include: recurring revenue streams, potential applications for products in parallel markets, new products in the pipeline, little or no analyst coverage and management ownership of 10% or more.

Granted, the process of actually finding such companies is tedious and time consuming. But as Abraham Lincoln quipped, “Things [profits] may come to those who wait, but only the things [profits] left by those who hustle.”

In other words, all the hard work we put into indentifying these small-cap stocks will be rewarded. But if we don’t grab the profits while we can, another investor will.

Short on Time? Buy These 2 Small Caps… And Call Me in a Year

I recognize not all of us can scour the markets each day in search of the most compelling opportunities. So let me make it easy for you. Here are two small-cap companies I’m convinced will be 50% higher (or more) a year from now. [Editor's Note: To get all of Lou's small-cap recommendations, you can sign up here.]

• Genoptix, Inc. (Nasdaq: GXDX) The economic cycle doesn’t impact business for this provider of bone marrow and blood-based cancer tests one bit. Sadly, when it comes to diagnosing cancer, people can’t wait for better times. But the company’s focus on community-based oncologists also provides ample growth opportunities. Earnings increased 198% in the last nine months to $26 million. And yet, the company still only controls 4% of the market.
• American Public Education, Inc. (Nasdaq: APEI) This West Virginia-based company provides online, post-secondary education to a very specific market – military personnel. Its niche focus is delivering impressive growth, with revenues and earnings up 56% and 72%, respectively, in the most recent quarter.

Whether you opt for these recommendations or seek out your own, it doesn’t matter. A recession is here, so a small-cap rally isn’t far behind. Before it’s too late, I recommend you position yourself accordingly.

Source: Small Caps: It’s Time to Think Small

This from Money Morning:

Value funds have long been viewed as conservative investments. So why are they down an average of 42% during the past 12 months, and what’s wrong with them?

No question, such numbers are scary, especially for large-cap value fund investors who have experienced that 42% drop. And the fact that some of the biggest names in value investing have taken such big beatings has to be especially disconcerting for investors who already have had their confidence badly shaken and their portfolios eviscerated.

Bill Miller’s once-vaunted Legg Mason Value Trust fund (LMVTX) has dropped 62%. Meanwhile, Marty Whitman’s Third Avenue Value Fund (TAVFX) is down 50%. Even the Dodge & Cox Stock Fund (DODGX) fund has tumbled 49% year to date.

For many investors who viewed value funds as comparatively “safe,” low-risk investments, this has to feel like a betrayal. And that’s understandable, given that history has repeatedly shown the value discipline to be one of the strongest, most stable investment strategies available for navigating a bear market.

What’s different this time?

Some managers – like Legg Mason’s Miller, as well as the Dodge & Cox team, for example – simply underestimated the depth and severity of the challenges facing their investments. Adding insult to injury, they concentrated their investments in a relatively small number of core holdings they thought they “knew.” During good times, this concentration strategy can dramatically boost returns when stellar companies that had been trading at deep discounts subsequently rebound. But now, when times are tough, as is readily apparent, stockpiling money in one or two holdings like Lehman Bros. Holdings Inc. (OTC: LEHMQ) or Freddie Mac (FRE) can be devastating.

Others, like Whitman – a gentleman who is often regarded as the “Dean of Value Investing” – simply don’t sell all that often, preferring to ride out market gyrations, which they view as a mere nuisance. So their performance is likely to suffer in line with the markets. But that’s not necessarily a bad thing. In fact, Whitman, who is notorious for looking beyond what the public markets do, doesn’t care that prices have fallen so low. He believes that undervalued companies will be taken over, liquidated or refinanced which, as he pointed out in an interview with Brian Zen last year, is “where you make your money.”

While such strategies put value players on the losing side of the investment ledger for now, it will be a different ballgame when the markets turn, as they eventually will.

In fact, when we emerge from the other side of the current financial crisis – which we will, and probably sooner than everybody realizes – the deep-value choices available today will be some of the highest-performing investments for decades to come.

And for all the right reasons: Many of the underlying companies are still expecting solid business growth, diversified revenue streams and a clear path to higher earnings.
That means that one of the smartest moves a savvy investor can make today is to stick with the value-investing discipline. The historical record suggests that the best choices continue to be those companies with low or no debt, a high proportion of international revenue, and a history of solid dividend growth that pays us cold, hard cash for the ownership risks we take.

That is why there is nothing “wrong” with making value investing a key component of your investment strategy. Especially now.

As for the notion that “value” investing is broken, we don’t buy into that. Studies show that investing styles come and go. For instance, indexing might hold sway for awhile, until it gives way to a total-return strategy. Then the momentum players hold the majority. And so on.

What’s important to understand, however, is that styles don’t work all the time; they work over time, which is why it is more important than ever to maintain a laser-like focus when the going gets tough. The following five guidelines can help you keep that focus.

Five Keys To Consider Right Now

• Be Patient: Investors have fled the markets in droves lately. According to TrimTabs Investment Research, mutual fund investors have pulled $175 billion out of stock funds so far this year, with $56 billion of that capital exodus taking place in October alone. This is the first year that equity flows have been negative since 2002, which reaffirms something we frequently point out: Investors tend to rush in at market tops and out at market bottoms. And that suggests that we may be approaching a bottom – even if it’s not immediately apparent.

• Rebalance: Tough markets can really skew your financial perspective. And your portfolio balance. “Rebalancing” can help you get back on track to higher returns, as we’ve mentioned in the past. Not only does rebalancing force you to take profits, but it also encourages you to put more money to work in areas that have been hit the hardest (and which are also poised for the biggest-potential rebounds, studies show).

• Look For Consistency: As redemption requests mount and conditions deteriorate, some value funds are shifting managerial styles in an attempt to make up lost ground. Not only does this suggest that these funds never had a strategy to start with, but it also suggests a lack of discipline, which is exactly what we don’t want right now. Studies show that value funds, in particular, tend to rebound more sharply than other investment choices because they’re often chocked full of quality stocks trading at deep – but temporary — discounts.

• Make Sure Value Really Is Valuable: “Value” has many different meanings, so it’s important to make sure you understand what the term means when it comes to picking a suitable investment. For some managers, value means companies that are simply trading at steep discounts to other stocks. For others, it means a concentration on those stocks trading in predetermined ranges, perhaps as measured by such indicators as Price/Earnings (P/E) or Price/Book (P/B) ratios.  Different definitions can lead to vastly different types of stocks.

• When Buying On The Cheap, Understand That Near Term Outlook Often Stinks: During good times, value investing is often about buying companies that, at least in the near-term, have fallen on hard times. Now, however, pretty much everything is “cheap,” so the more important issue is identifying those companies with superior fundamentals and improving outlooks that may simply be caught in this bad-market maelstrom.

After all, Wall Street knows the price of everything. But very few people understand the value of anything.

Source: The Five Keys to Value Investing Profits

This from Smart Profits Report:

Today’s eye-popping financial market statistic is brought to you by John Roque at Natixis Bleichroeder…

Since the U.S. stock market peaked in October 2007, the world’s equity market capitalization has shrunk by 53%. If you’re counting at home, that’s $33 trillion.

So if misery loves company and you’re too depressed to look at your brokerage account statements, maybe you can grab some consolation from knowing that investors all over the world share your pain.

In fact, some poor folks have it even worse. According to Bespoke Investment Group…

• Iceland is down a staggering 90% this year.
• Ukraine is off 76%.
• Bulgaria is lower by 74%.

In fact, 51 countries have experienced worse market declines than the U.S. market’s 44% tumble. So are there any winners at all amid this global mess? Just three…

This Year’s (Very Short) List Of Winners

Only Ecuador, Tunisia and Ghana have posted gains in 2008. Which is why I’m pleased to announce my new investment service – The Ecuador, Tunisia, Ghana Trader (trademark pending).

I’m being facetious, of course. But the point is that there are investors out there who are so desperate to find a performing investment that they’re willing to consider just about everything.

At times like this, you’ll often hear folks confidently booming out the “Yeah, but this time, it’s different” line. I’ve long been an opponent of talk like this. And I’ll tell you why…

“This Time It’s Different”… And Other Soundbyte-Friendly Clichés

During the dot com boom, I was routinely told that I “didn’t understand the new paradigm.”

And when the real estate market took off, I was called names for being so stupid for not borrowing cheap money to buy spec houses and home sites in so-called “can’t miss” places like Port St. Lucie, Florida – a city that now boasts the dubious honor of having more than 11% of the homes in the foreclosure process. Unemployment is also over 10% in the county.

But is it truly different this time?

Investors have endured and overcome a Civil War, two World Wars, and the Great Depression. But now, the government seems to be in the process of bailing out every poorly run business. In addition, we’ve got an incoming president that Wall Street knows little about yet, as well as a rapidly changing financial landscape.

The Game May Have Changed… But The Rules Haven’t

Dr. John P.  Hussman, who runs the Hussman Funds, wrote a letter to shareholders explaining precisely why we’re not in uncharted territory. In fact, if the S&P 500 slides to 780, [...], the market would be in the lowest 20% of all historical market valuations. A drop to 700 on the S&P would represent the lowest 10% of historical valuations.

In other words, things are tough and could get worse, but the market has been here before. To read the whole piece, click here.

In the long run, I believe the way you will make money in the market is the way investors have done it for over 200 years – investing in businesses that grow earnings.

Don’t Pack Your Bags Just Yet… There’s Potential In U.S. Large And Small-Caps Alike

Despite the pervading smell of desperation in the market at the moment, you don’t need to buy shares of Accra Brewery Company, Tunisair, or Diner’s Club del Ecuador to have a prayer of making a profit.

Instead, look for stocks that could rebound in 2009. There are so many that have suffered a beating, the list could be extensive. And when you do, first look at the biggest and best companies in their fields – ones who’ve experienced market downturns before and have stood the test of time.

For example, consider Wells Fargo (NYSE: WFC) in the financial sector.

Take a look at biotech giant Genentech (NYSE: DNA) in the healthcare sector.

Cast your eye over Microsoft (Nasdaq: MSFT) in the technology space.

And as the economy recovers, companies that should fare well include McDonald’s (NYSE: MCD), Caterpillar (NYSE: CAT), Costco (Nasdaq: COST), and ITT Corp. (NYSE: ITT).

Don’t neglect the small-cap market either, though. Small-cap stocks have a history of leading the market out of a downturn. You just need to be careful which ones you pick, as it can still be a volatile sector – particularly in a fragile market.

Companies with revolutionary products include Accuray (Nasdaq: ARAY), a long-term position in the Xcelerated Profits Report portfolio and ViroPharma (Nasdaq: VPHM), which is part of the portfolio in my small-cap healthcare service, Access (for more information on Access, call our VIP Services Team at: 888.570.9830 (within the U.S.) or 410.454.0498 (from overseas).

No Pain, No Gain

Currently, the pain train is barreling down the tracks at full speed and we’re all aboard for the ride.

It’s a bumpy and uncomfortable one, for sure. But it will eventually hit the brakes and pull into station. And when the markets calm down and things return to some sense of normality again, you’ll be glad you invested in stocks that you’re familiar with, rather than exotic investments that are often more trouble than they’re worth.

My colleagues Karim, Jim, Lee and I have all been hammering home this point for a few months now. But it’s crucial that you don’t get wrapped up in the hysteria and make poor decisions now that you’ll pay for later.

Simply put, get ready to buy good stocks on the cheap. I know it’s scary now. But this climate won’t last forever and normal order will be restored. That has been the case for over 200 years.

Source: You Don’t Have To Go To Tunisia To Find Solid Stocks… They’re Right Here In The U.S.

But the lessons of the market from the Great Depression tell us that a 100% gain isn’t impossible. Stocks can muster a convincing bear market rally following a crash. And this last occurred in the 1930s as the Dow almost doubled between 1933 until 1937.

Investors forget that previous secular bear markets – even during the Great Depression – resulted in formidable short-term gains for bottom fishers. Stocks might still break their October 2002 lows before stabilizing or reversing.

At some point; however, the market will rebound, if only for 12-36 months. If you believe this economic recession will be severe – and I do- then it won’t be a straight line down for stocks.

I continue to focus on the 1930s for historical guidance today because it was a full-blown credit crisis accompanied by bank failures, massive deflation and a double-digit decline in GDP output.

In many ways, the situation now is far worse than back in the 1930s simply because the debt super-cycle is colossal. Governments, businesses and individuals hold more net debt than at any other time in history.

Deflation, which has arrived with a vengeance since July, makes debt servicing more expensive because assets they represent become harder to finance in a contracting economy. Those same assets, including real estate and stocks, for example, continue to decline in value further compounding the cost of borrowing or debt servicing.

From its peak in 1929 until 1932, the Dow Jones Industrials crashed a cumulative 86%. But starting in 1933 the Dow raced ahead with a 66.7% gain. From 1933 until 1937, the Dow doubled in value. By 1937, the global economy began deteriorating once more combined with political turmoil in Europe. The Dow plunged 33% in 1937 and began a five-year bear market until 1942.

But if an investor bought stocks in late 1932, he still would have been sitting on a profit by the end of 1937 – despite the big drop that year. It’s a different story if an investor bought equities in 1929; where he would have waited 25 years to break-even.

Guessing the market’s direction is largely a waste of time and I don’t scratch my head every day wondering where stocks are heading. Yet it’s instructive to see what happened in the early 1930s because we’re on the same path. And judging by the last deflation, we’re probably going to see new lows first for stocks followed by a major rally in the context of a secular bear market, similar to the 1933 to 1936 rally.

Source: Revisiting the Dow’s 1933-1936 Rally

More from The Sovereign Society:

In 1955, U.S. manufacturing was approximately 55% of the nation’s GDP. Today, manufacturing is barely 15% of GDP as the United States and other industrialized countries continue to transition to service-based economies. Unfortunately, the backbone of American industry is now coming apart at the seams and desperately hungry for a government bailout.

In 2004, I predicted that one of the Big Three auto companies would fail in a few years. Though not a bold forecast by any measure – the autos were long bleeding before 2004 – my target back then was Ford. At the time, I plugged put options on Ford Motor and made a profit on that trade; now I wish I had purchased long-term LEAP put options. Ford in July 2004 traded north of $13; today, Ford Motor (NYSE:F) fetches just $1.76.

Ford’s stock price chart starts to resemble everything else…

Detroit is home to America’s Big Three auto companies. It’s also home to one of the worst contractions in manufacturing activity accompanied by seemingly never-ending losses.

General Motors (NYSE:GM), Ford and Chrysler are bleeding profusely and need emergency cash funding right away. Of the three, General Motors is headed into bankruptcy first unless the government comes to the rescue.

The world’s second largest car company (Toyota is now #1), GM has just enough cash to last until January at the latest. Chrysler and Ford probably have enough funding for another 6-12 months. Beyond that period, it’s Game Over.

Bailout Bonanza

The scope of Washington’s bailout reach is now extending: mortgages, banking, investment banking, insurance and now auto manufacturing. Pretty soon it might extend to the airlines, real estate companies and who knows, maybe even every industry that comprises the S&P 500 Index. This whole bailout thing is totally out of control.

Should the government let the Big Three fail? Combined, these three goliaths employ more than 300,000 people worldwide with most of that total in the United States. The pressure is on the government to bailout the autos. Paulson isn’t too keen on extending TARP to the auto companies but Obama certainly is. I reckon Detroit’s odds of obtaining a bailout are pretty good.

With the economy showing no signs of bottoming as we shortly conclude a miserable 2008 for investors it would only seem prudent to remain underweighted stocks. The market shows no convincing ability to bottom; every major rally is met by big selling as investors eagerly grab short-term gains to raise cash.

This recession will be a long, drawn out affair, probably lasting throughout 2009, possibly 2010. Housing is at the core of this secular bear market. I don’t see housing bottoming or at least stabilizing until at least mid-2009 with inventories still rising in Q3. Mortgage rates, which declined following the initial Paulson Fannie Mae and Freddie Mac government guarantee in September, have since risen again. Mortgage rates must come down.

It’s now time for America to become thrifty again. The correlation between a rise in the savings rate and corporate earnings growth is negative. Earnings expectations remain too bullish for 2009 and must still be revised lower. Earlier this fall I had expected a rally following the post-October 9 crash; thus far, the Dow is up just 7% off its low for the year or 42% off its October 2007 high. Now I’m beginning to think we might test fresh lows and soon.

Equity Markets in line for another Beating

The Dow will test its October 2002 low of 7,286. In my mind, there’s no way this bear market is not as severe as the 2002 debacle. It’s much worse.

Should stocks decline another 15% from current levels the Dow would sit 57% off its best level in October 2007 but still about 30% above the trough of the 1932 lows. From October 1929 until late 1932, the Dow collapsed a cumulative 86%. I doubt we’ll see that sort of spectacular decline; yet it’s pretty likely that a 42% peak-to-trough loss thus far won’t kill this bear.

If one of the Big Three is allowed to fail, watch out. That would trigger another crash. The market is drunk, expecting another industry bailout. Let’s not disappoint Mr. Market.

Source: The Beginning of the End for U.S. Auto Manufacturing

Stores like Whole Foods (NASDAQ:WFMI) and Trader Joes are watching their customers head to low-cost competitors like Wal-Mart (NYSE:WMT) and Safeway (NYSE:SWY).

It is no surprise to see an ultra-cheap retailer like 99 Cents Only Stores (NYSE:NDN) climb its way to the sole spot on the list of companies reaching 52-week highs today. The global economic crisis has actually been the best thing to happen to the company’s share price in a long time.

The rationale behind the positive run is obvious. When the economy is in the gutter, consumers have less money to spend on the things they need. So they go to the cheapest retailer they can find.

A wino’s delight

When we need a toothbrush, why spend $4.99 on a fancy name-brand brush when you can get one for less than a buck?

Or how about cleaning supplies? Or stationary? 99 Cents Only even sells bottles of wine at its namesake prices.

Of course, 99 Cents Only is not the only ultra-cheap retailer doing well these days. Dollar Tree (NASDAQ:DLTR) and Family Dollar (NYSE:FDO) are both multi-billion dollar companies making their investors money over the past few months.

While these companies may appear as an oasis in a desert of losses, investors need to use caution. All three stocks have gotten a lot of attention lately and are becoming overpriced.

****** Oil at $70 a Barrel — Gold at $500 by Christmas? ******
With stocks as volatile as nitroglycerin, gold should be trading above $2,000 an ounce! But the dollar insurrection has shaken up the commodities markets. Some experts now put gold’s downside at $500… even $400.

What if they’re right?

TFN’s options strategist Andrew Snyder has developed a gold hedge strategy that could make you money on your gold position either way. Find his Special Report on the Members Only Reports section of HotStockConfidential.com. To become an instant member, click here…

—————-

For example, after more than doubling its share price since July, 99 Cents Only has a price-to-forecasted-earnings ratio of over 30. If the next earnings report misses expectations by only a small margin, shareholders could be in for a sizeable drop.

Granted, sales have increased over the past three months and are likely to surge even higher during this quarter, but the competition is catching up. Traditional retailers, which are often slow to react to economic waves, are finally making moves to target consumers during a recession.

Eye-catching sales and incentives are drawing cash-conscious consumers back into retail stores. Beyond that, ultra-discounters do not offer all the products consumers require. They will still head to the more-expensive “big box” stores for their needs.

Consumers are changing their habits, leading savvy investors to follow. Track the trends and invest appropriately and you could be one of the traders celebrating a 52-week high today.

Source: Cheap date: 99 Cents Only Store (NYSE:NDN) hits 52-week high

This from The Rude Awakening:

This financial meltdown is mauling almost every asset class. Stocks are trashed. Corporate bonds are a wreck. Emerging markets are crushed. Energy prices are tumbling. Commodities generally are in the dumps. Safe havens? Get outta here!…Even gold is trending lower. There has been nowhere to hide…except T-bills.

But there is a ray of sunshine; stocks have not been this cheap in more than twenty years…and many stocks are as cheap as anything you could have found at the market lows of 1974. No, we don’t think your should borrow a massive amount of money to invest, hoping for a quick turnaround. But it is time to cautiously look at the opportunities the market presents…

Often, it is the small companies that lead the charge toward market recovery. Just take a look at what some of the market specialists are saying:

“When you look back over the last 10 recessionary environments, what tends to lead back on the upside is small-cap equities.”

— William Greiner, Chief Investment Officer of UMB Asset Management

“Like springtime crocuses, small-cap stocks flourish once the harsh cold of a bear market is over… Because small-caps are undervalued once the market turns around, they benefit disproportionately from an earnings recovery.”

— Larry Light, Wall Street Journal

Now, who knows when the bear market will end, or when the stock market will find a bottom? After the Dow’s 1,000-point rebound on October 13, we all hoped the worst was over. That rebound, however, proved to be nothing but a tease. Over the following weeks, the Dow proceeded to give back every one of those 1,000 points. Then stocks rocketed higher again…and then tumbled again.

Despite these 1,000-point gyrations, the Dow has managed to crawl almost 9% above its bear market low of 8,175. Unfortunately, the beleaguered index would need to gain another 60% to return to its all-time high! So that gives you some idea how far the mighty have fallen. And many of the less-mighty – the small cap stocks – have fallen even farther. But this is where our sad story takes a turn for the better: A lot of very fine stocks are wearing deeply discounted price tags.

Just look at a stock like Neenah Paper (NYSE:NP), a small-cap paper manufacturer that saw its share price slide 80% despite very solid fundamentals. Or look at stocks like chip-maker Silicom Ltd. (NASDAQ:SILC) or chemical manufacturer Buckeye Technologies (NYSE:BKI), both of which have solid fundamentals and P/Es under 7.

Even though the markets have been anything but kind to investors lately, a few courageous (and historically successful) investors are making a good case for buying up some undervalued stocks right now.

Warren Buffett, who has never claimed the ability to predict short-term stock market action, is one of the investors who is beginning to make some purchases. “A simple rule dictates my buying,” the Oracle of Omaha explains, “Be fearful when others are greedy, and be greedy when others are fearful.”

We agree…and we think it’s time to get greedy…at least a little greedy.

Source: Betting on Gambling

This from the Sovereign Society:

Lunacy dominates world stock markets, as a tug of war ensues between fear and greed. For two wildly fluctuating months, stock and real estate markets bounced down the stairway that easy credit built. Then on Tuesday, greed was king for a day. The market exploded into one of its biggest rallies in half a century, with the Dow Jones industrial average closing up 10.9%.

Does the rally signal a bottom in this schizophrenic market? Well, unfortunately there’s no way to know except in hindsight.

Sowing the Wind & Reaping the Whirlwind

We don’t need hindsight to know that the current meltdown was inevitable. It is the consequence of events that began a century ago with the birth of the engine of 20th century boom and bust: the Federal Reserve. Nor were the effects of the new central bank immediately apparent.

The effects of credit expansion didn’t show up the next day or the next month. It took more than a decade for the credit creation to result in the Roaring Twenties and the Crash of 1929. Again, the famous October 29 market selloff didn’t cause an economic catastrophe the next day…or the day after that, or even the year after that.

It took three years for the Great Depression to truly grip the nation, triggering more government action – the abandonment of the gold standard and massive federal bailouts. Again, the results weren’t instantaneous. It took decades to inflate another boom, and reach the monetary crises of the 1970s.

Economic theory can predict the consequences of credit expansion, but only in hindsight can we see the timing as the consequences unfold. Today’s economic storms are the consequences of seeds first planted a century ago. And once again – as the credit bubble collapses – new seeds are being sown.

The official budget deficit for the fiscal year that ended September 30, 2008, was $455 billion, but most private analysts say the current fiscal year will end with a gap of one trillion dollars. How are the presidential contenders planning to deal with rising deficits?

Both John McCain and Barak Obama promise tax cuts and increases in government spending. It won’t show up tomorrow, but vast government deficits ahead guarantee that price inflation will demolish the purchasing power of the dollars that fearful investors are so eager to lend to the U.S. government.

When will the market bottom, and when will price inflation roar? We won’t know that except in hindsight, but both will happen.

Buy When Blood is Running in the Streets

But how deep should the blood be? Only value investing can provide the clue.
As markets are gripped by fear or euphoria – plunging one day and soaring the next – it’s clear that very few are following the advice of the most successful long-term investors of the past century. Money masters like John Templeton, Benjamin Graham, Peter Lynch and Warren Buffett piled up enormous profits throughout one of the most tumultuous centuries in history, and their advice is there for all to follow.

Benjamin Graham, said it clearly in The Intelligent Investor, “Don’t get carried away by enthusiasm. Don’t get carried away by despondency. …Know in advance that you are going to have to live through bear markets.”

Let me re-tell Graham’s parable from his book, The Intelligent Investor.

Imagine owning shares of a small business that cost $1,000, and every day your partner named Mr. Market knocks at your door and announces what he thinks those shares are worth that day. He offers either to buy your shares or sell you more at that price. Even though the business is trudging along without significant change, each day his opinion is wildly different. Frequently Mr. Market’s enthusiasm or his fear seems completely divorced from anything happening in the business and his valuation seems ridiculous. One day he offers to buy or sell you shares for $2,000 each, and a week later he makes the same offer for $500. Should you let Mr. Market’s wild enthusiasm or shaking fear determine your view of the intrinsic value of the business?

That’s obviously irrational. As Graham puts it:

The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored. He would not be far wrong if this motto read more simply: “Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.”

Since we can never know in advance whether shares will be higher or lower tomorrow, the only rule to follow is to accumulate them when they are significantly underpriced by value analysis. Mr. Market is definitely letting his fear override his reason, and is making us offers that become increasingly difficult to refuse. As was the case after 1929, there are great opportunities being born out of the chaos. Don’t let Mr. Market’s trembling hands cause you to lose sight of the outstanding values he’s offering.

A sound and lasting investment strategy requires searching for assets that have true value and will retain it – those include all types of commodities that will rise in price as money falls in value, currencies that are not being debased, and ownership of profit-making companies that have not fallen into the trap of trying to leverage profits through debt.

Source: Blood in the Streets: How to Profit from Stock Market Schizophrenia

More from Penny Sleuth:

Here at Penny Sleuth, we feel a balanced portfolio should include more than just penny stocks. Penny stock investors are more aggressive than most. We like fast-growing groundbreaking stocks with technologies and catalysts that can double their share price. But we also feel that smart investors diversify their portfolios, especially in today’s market.

If you’re sick of the gloom and doom permeating markets right now, you can find solace in one investment… Well, it’s actually a type of investment. I’m not talking about options or shorting or even bonds. We still like to buy low and sell high, but we also like our investments to pay us as we go.

Income investing is a great way to do that. It gives you the chance to take cash out of your investments without selling shares. One way to successfully do this, while staying aggressive, is to reinvest your dividends in penny stocks. That way, you have the best of both worlds: Security and potential money multipliers.

There’s never been a better time to start. With the recent thrashing in the markets, many companies are sporting unbelievably high yields.

More Income Than Ever Before

The S&P 500 is now sporting a yield of 2.65%, up from its low of 1% in 2000. The same goes for the Dow, which is now at 3.74%, up from its 2000 low of 1.5%. These yields may not sound high to you, but they both factor in non-dividend paying companies.

We are seeing enormous yields everywhere we look. Others are too…

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How you could collect huge “Stealth Dividends” that 99% of stocks will never pay…

A veteran analyst proves how you could gain a fast 113% — and as much as 739% over time — on one of the few companies that can fully capitalize on this share-boosting “secret”…

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Warren Buffett, you might have heard, is buying up depressed stocks. But instead of buying just any old ones, he’s investing his hard-earned money in these high yields.

The Oracle of Omaha recently bought up $5 billion worth of Goldman Sachs (NYSE:GS) preferred shares. For his gutsy investment, the company is going to send Buffett a check for $500 million every year. That’s a 10% yield on one of the largest banks in the country.

Yields that high can mean one of two things: Either the company’s payments are too high and a drop is coming, or its shares are depressed and should rise. In this market, most companies fall into the second category.

Sure, companies like Bank of America (NYSE:BAC) and Citigroup (NYSE:C) cut their dividends. But, there are many others riding through this stormy market with consistent dividend payments. Just take a look at JP Morgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC). Those are two banks still paying nice premiums to shareholders.

We aren’t interested in banks though. You don’t want to stand too close to this economic fire. That’s why we are looking for companies with consistent dividend payment and piles of cash in their coffers in other industries. We are finding tons out here.

As Chris Mayer puts it, “According to the WSJ, nearly one in 10 stocks trades below the value of its per share cash holdings, an even greater proportion than Graham found in 1932.” Combine that with a high yield in a safe industry, and you are looking at a monster of a buying opportunity.

We are seeing stocks tied to real resources — like oil, natural gas, and coal — paying enormous dividends. Take BP (NYSE:BP) for instance. It’s one of the largest integrated oil companies in the world and it’s paying 7.6%. That’s absurd. Last year this time, the company only paid 3.5%.

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America’s Stranded Oil Reserve: How up to 70% of Oil in a Well Goes Untapped. . . Until the “Oil Vacuum” Goes to Work…

Millions upon millions of barrels of oil lie stranded beneath existing oil wells in the continental United States. Current drilling technology just can’t reach it, but this revolutionary new method can…

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Royal Dutch Shell (NYSE:RDS:A/RDS.B) is another massive oil and gas company that’s offering a relatively astronomical yield. Shares of Shell fell from $88 in October 2007 to just $55 today. That fall from grace set up a yield rally from just 2.2% to 5.9% in that 12-month period.

Double Your Income Even As Jobs Disappear

Think of it this way: While millions are taking pay cuts or even losing their jobs, both BP and Shell are offering more than double last year’s income to shareholders.

If you are wondering how income investments like these will hold up as this bear market continues, take a look here: From 1970 through 2005, dividend stocks returned twice the gains of non-dividend paying stocks in the S&P 500. In that period, there were at least seven bear markets and economic crises. So maybe now, more than ever, you should be looking into income stocks.

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The Endless “Paycheck Portfolio” That Works for You…

In just three simple steps, you could be eligible for 75 “work-free paychecks.”

Find out how each can be deposited directly into your account, automatically over the next 24 months, here…

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But before you start buying the highest yields out there, remember that it’s only based on previous or planned dividends. No one knows when a company will cut its payments. If a company is paying more than 15%, take a serious look at why. If the business is still producing solid gains at a respectable growth rate, you may be ok. But if it’s starting to take a loss, that yield may not be an attractive opportunity.

Keep a lookout now more than ever. You don’t want to miss the chance to grab shares of solid companies like BP and Shell while they are willing to pay you this well.

Source: The Market’s Unintended Opportunity