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What Keeps Me Up at Night

September 19, 2012, 9:32 am

Aggressive central bank action in Europe and the U.S. may have rallied the markets last week, but now we’re seeing a slight pullback as investors return their attention to economic data for signs that conditions are improving. I’m bullish on stocks in the final half of the year, and as I’ve talked with you before, I expect mergers and acquisitions (M&A) activity to pick up and data to improve as we close out the year.

That said, there are still areas that concern me (or, as Bloomberg’s Matt Miller put it, that keep me up at night). The biggest area on my radar is unemployment, especially youth unemployment, in America. The national jobless rate still hovers at 8.3%, though some would argue it’s actually much higher. I will be looking to third-quarter earnings as an indicator of growth and hiring, and I will also be watching to see how depressed manufacturing levels in the U.S., Europe and China have impacted businesses. With all eyes on the economy as we head into the fall and the presidential election ramps up, there’s no doubt that earnings season will be a major driver behind confidence in the market in the fourth quarter.  

In the meantime, there are still a few bright spots where I see opportunities for fresh money. In particular, I’m still bullish on dividend-yielding stocks where there is strong asset value growth that could take place. I sat down with Bloomberg’s Matt Miller to discuss the areas where I see solid potential yesterday, and you can watch my full discussion now by clicking on the video below. There, I’ll give you some good names for your money right now, as well as one area to avoid. Then, continue reading for my top three reasons to buy my latest pick, Cal-Maine Foods (CALM), which is exclusively for Kramer Capital Research readers.  

Three Reasons to Buy Cal-Maine Foods (CALM)

You may have never heard of Cal-Maine Foods (CALM), but I bet you’ve been a consumer of their products – literally. Cal-Maine is the largest producer and marketer of shell eggs in the United States. In its 2011 fiscal year, Cal-Maine sold more than 821 million packs of a dozen shell eggs, which is roughly 18% of all U.S. shell egg consumption. But beyond its product line, there are other reasons that stand out to me that make this company a buy. Here are my top three:

  1. Its management team has remained focused on its strategy of being an efficient, low-cost producer
  2. The company has a strong balance sheet, giving it options to pursue strategic initiatives
  3. CALM offers a healthy 3.1% dividend yield

Watch my latest appearance on Bloomberg for more information on where I’m looking right now, or leave me your thoughts and opinions on CALM and where we should be looking in the second half of the year in comments.

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