Where do you find a company making small, fuel-efficient cars--and trading at three times cash flow? Not in Detroit.

KEN FISHER. Forbes Magazine dated April 27, 2009

Edited by atulbull - 28/May/2009 at 2:17pm

Tata Motors' World Truck launched today. So it will be World Truck on the Golden Quadrilateral and Tata Ace on the interiors of India. Logistic cos (Patel Integrated, for one?) implementing the hub and spoke concept can outfit entire fleet with Tata Motors' offerings!

Anticipate the V

Ken Fisher, 01.22.09, 06:00 PM EST
Forbes Magazine dated February 16, 2009

The stocks that got clobbered most late in a bear market are the most likely to do well in the early stages of the next bull market.

This year has gotten off to a bad start, with the S&P 500 (as of Jan. 20) down 10.7% to 805. This just makes me more determined in my bullishness. I like stocks for 2009 precisely because they did so badly in 2008.

Did we hit absolute bottom Nov. 20? Maybe, but I can't be sure; no one can be sure when a bear market is really over. Those who think they have some formula for precisely calling bottoms are fools. What I am pretty sure of is this: When the market rebounds, a lot of its gains will take place in a very short span (like two months or less), and people who are too cautious will miss most of these gains.

Bear markets have been typically followed by bull markets in a V-shaped pattern. The steeper and bigger the decline, the sharper and bigger the subsequent bull move. The few exceptions to this pattern in the past century have involved the emergence of completely different bad forces than the ones that created and contributed to the bear market.

For example, stocks rallied 324% from July 1932 to March 1937. After a recession-induced big bear market and partial recovery over the next 21 months, stocks encountered an entirely new kind of trouble in 1939. War in Europe sent the market down even lower than the recessionary low of early 1938.

That could happen again, with the economic equivalent of an asteroid coming out of the blue. But, absent such a surprise, we should get the normal V pattern. Its upward swing will swamp any late-stage bear market vicissitudes as they always do.

How were my results last year? In line with the market's--which is to say, not good. Starting with 1996, forbes' statistics department has prepared an annual accounting of each stock-picking columnist's picks versus the S&P 500. Over those 13 years my column has lagged the S&P 500 three times, and 2008 was one of them. The others were 1997 and 2002.

During 2008 I recommended 57 stocks. Equal money in each of my picks when first published less a 1% haircut for transaction costs would have lagged equal amounts in the S&P 500 by 1.1 percentage points (without a commission haircut).

That lag came from the first column (Jan. 28), which had my two worst stocks. AIG collapsed 97% because of losses on credit default swaps at a time when accounting standards demanded quicker recognition of such losses. Brazil's Aracruz Cellulose lost 84% as demand for its pulp shrank in the face of recession.

The Bear Market is Over  

Ken Fisher, 08.05.09, 06:00 PM EDT
Forbes Magazine dated August 24, 2009

Money market cash, in comparison with the value of all stocks, is twice what it was in 1982.

That 9% minicorrection between June 2 and July 13 was nothing to worry about. Pullbacks are normal early in a recovery. I can find only one bull market, in 1935, that didn't have some material indigestion within its first 12 months. But bull markets roll on for years.

This rally has taken stocks up 55% from their Mar. 9 low, as measured by the Morgan Stanley ( MS - news - people ) All World Index. That's far bigger than any global bear market sucker rally. Interestingly, the record rebound has gotten less ink than the corresponding fall in prices during the first quarter. Maybe the bulls should be making a bigger fuss about what's going on.

In my Sept. 29 column last year I wrote about how we're in a reverse bubble. In this mirror image of a buying mania, people can see only the negatives. But the positives are there and will be reflected in stocks before long.

For example, few see that housing affordability is now excellent: The median home price in the U.S. is 2.8 times median family income, down from 3.9 times three years ago. Another positive is that global leading economic indicators in total (such as real money supply and the yield curve's slope) are the highest they've been in a decade. Productivity is up 2% from a year ago, an impressive growth rate within a recession's decline.

The financial crisis is over. Most rate spreads between risky paper like junk bonds to Treasurys have reverted to precrisis levels. U.S. bank cash on hand, at a trillion dollars, is (adjusted for inflation) three times what it was before the crisis. Cash in the form of U.S. money market funds comes to 42% of the stock market's capitalization. That ratio is more than twice what it was in 1982 and 2003, as stocks were about to take off.

I have been saying for a while that stocks are dirt cheap, as measured by the degree to which prospective earnings yields exceed long-term interest rates globally. Stocks are also low in relation to commodity prices. In 2000 the S&P 500 matched the dollar price of 5 ounces of gold; now it costs you only an ounce. The price of the index in baskets of wheat and pounds of copper is down similarly. And what do the bears say? That earnings will be low this year. Old news. So what? I expect S&P earnings (before writeoffs) of $70 next year. The market is trading at 13.6 times that sum.

You should remain heavily committed to stocks like these:

Emerson Electric ( EMR - news - people )(EMR, 36) has $24 billion in annual revenue from motors, valves, switches, test equipment, compressors and much more--all depressed businesses now, but they will have much higher sales as the expansion evolves. The stock will move ahead of the sales gain. It now sells at one times annual sales and ten times what I think it will earn in its September 2010 fiscal year. The dividend yield is 3.6%.

A similarly depressed high-quality industrial is Sweden'sSKF Industries (SKFRY, 13), which makes roller bearings, seals, lubrication systems and complex industrial parts that combine electronics and mechanics. Until this recession it grew steadily--and it will again. Like Emerson, this company will see its stock run up ahead of its sales. It also sells at ten times my estimate of 2010 earnings and 70% of its revenue; yield, 2.1%.

Dow Chemical ( DOW - news - people ) (DOW, 20) is the world's best large chemical maker. It grows slowly but steadily gains on competitors. The stock lagged in the prior bull market and fell fully with the market in the bear, so it's cheap now. When can you buy a market leader at 40% of annual revenue? Dow is just breaking even now, but the stock is at four times my estimate of 2011 earnings. It sports a 3% dividend yield.

On Mar. 30 I recommended France's Lafarge (LFRGY, 17), the world's largest cement and concrete maker, at $9.50. So what if you missed the low; it's still a buy. Despite the recession, we're going to keep using the stuff. Politicians will see to that. Even after the recent rebound this stock sells at only 3.8 times its prerecession earnings. It has a 4% dividend yield and sells at 50% of revenue and 70% of book.

Today's China is more of a neo-feudal fascist state than a communist one--and a prime beneficiary of the governmental control system there is Petrochina (PTR,115), China's largest producer of oil, with 2.3 million barrels per day, and natural gas, with 3 million cubic feet per day. As China latches on to the world's resources, Petrochina will benefit. It sells at 11 times likely 2009 earnings, with a 3.4% dividend yield