Wednesday, December 15, 2004


Two days in a row is a trend but a very short one. For the past two days, consumer staples stocks and health care stocks have out-performed the other S&P sectors. Today's drop in the dollar will probably reverse the trend. Never-the-less, Staples and Health should do well in the months and years ahead.

UNH (United Health Care) continues to be very strong. The company is positioned well under the Presidents program of Heath Savings Plans. UNH continues organic growth and has made several acquisitions in the past 18 months.

The PEP story growth story is similar. Unlike Coke, PEP diversified away from beverages. Snack foods is a fast growing business. PEP has made several internationally acquisitions and is enjoying the most growth in the international area.

Other consumers staple stocks mentioned in prior blogs include Colgate, Proctor and Gamble, Wal-Mart (socks and groceries), and Winn-Dixie. Note that WIN is speculative.

During the past 50 days, internet stocks are up an average of 23%, brokers 17% while gold, oil services and pharmaceuticals are all down about 3%. The merger and acquisition business for the large brokerages such as GS is booming. I expect 2005 will be a year of consolidation in many industries. In this wonderful market, there are too many good things to write about. The conservative player can invest in staples and health care with confidence. The aggressive player can best play the take-over game by buying the big brokers. My favorites are JP Morgan and Goldman Sachs.