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Wednesday, January 7, 2009

Nine Stocks for 2009

Holding true to the optimism that only a New Year can bring, financial analysts across the country are sure to offer their "best picks for 2009" in the coming days. But before we get ahead of ourselves, let's remind everyone of just a few of the recommendations they made for 2008.

Chart for Almost Family Inc

This time last year, a certain TV celebrity was calling for the Dow to hit 16,000 in 2008. Goldman Sachs said oil was on its way to $100, and they were right on - right before they pushed their luck and started calling for it to hit $200. Google (GOOG) was being upgraded by everyone on the Street, and I can even remember a few calls for a $1,000 print for Google's stock before 2008's end. Gold was supposed to go to $2,000. Apple (AAPL) was headed to $300, Potash (POT) was supposed to hit $400, and First Solar (FSLR) was going to be a $50-billion company.

You get the point - so now I'll make mine. It's difficult to know what awaits us in the stock market over the next week, let alone the next year. Sure, there are technical indicators and historical trends we can use as a guide - but if 2008 taught us anything, it was that we couldn't have predicted just how volatile the market would become.

All that being said, let me just caution you to tread lightly with those "Top Stocks for 2009" lists. Do your homework, and stay on top of company performance and company news as the year progresses.

As a financial advisor, I would be remiss if I didn't share some of the positions I have my eye on as we head into the new year. The following ideas are poised to move in 2009 - if the market cooperates. Yes, there's the rub: Remember, you need a market that's trending higher to buy and hold stocks, and we haven't had a market like that for some time now.

We may be getting close, though. If so, here are my 9 ideas for 2009.

Green Mountain Coffee Roasters (GMCR) distributes coffees and teas, single-cup brewers and single-cup portion packs to supermarkets and food stores. As consumers tighten their belts and stop paying $6 for a coffee at Starbucks (SBUX), they're moving toward Green Mountain; the stock is poised to become a household name by the end of 2009.

Greatbatch (GB) develops electrical and power sources for implantable medical devices, such as pacemakers and neurostimulators. Quality Systems (QSII) develops healthcare practice and electronic records management software applications for medical and dental practices. Almost Family (AFAM) provides in-home nursing services and personal custodial care for recuperating and disabled patients. With the Obama administration's attention to healthcare and the push for electronic medical records, all 3 of these companies stand to benefit from the incoming administration.

Oil prices have fallen over $100 a barrel over the last few months, and many have already forgotten about gas at $4 a gallon. Yet I continue to keep my eyes trained on 2 of my favorite alternative energy plays. Fuel Systems Solutions (FSYS) manufactures alternative-fuel components used in engines for the industrial, transportation and power-generation industries. Energy Conversion Devices (ENER) is engaged in the design, manufacturing and sale of photovoltaic products for alternative energy markets - and is my favorite play on alternative energy.

There will always be an asset bubble somewhere. Whether it's the tulip craze centuries ago, or internet stocks and real-estate prices more recently, people will always be in search of the next big idea. The next bandwagon may just be for those who facilitate life-settlement transactions worldwide, and my way of playing this trend will be to invest in Life Partners Holdings (LPHI), the architect of such life settlements.

We'll all die some day, and LPHI is finding a way to capitalize on this foolproof trend. It buys existing life insurance policies from people who are terminally ill or elderly and in need of cash. The price of the policy is negotiated at a discount on the face value, and LPHI is then paid in full under the policy upon that person's death.

ETF's have come a long way in helping the individual investor play certain trends, and a couple I've been watching include Proshares Ultra Financials (UYG) and Ishares Xinhua China (FXI). Our government has made it clear that they don't plan on allowing our financial system to fail, so I'll use UYG as my way to play Citigroup (C), JPMorgan (JPM), Wells Fargo (WFC) and the rest of the financials. FXI is my vehicle of choice to play a potential bottom in China.

The market is an ever-changing beast that gives and takes at will. Based on my experience and all of the technical information available, I believe these 9 ideas will make money as we cross the threshold into 2009.

But remember - it's impossible for me or anyone out there to see into the future. If one of these ideas strikes your fancy, invest - but make sure you have an exit plan in place, especially on the downside. Holding onto a losing position is what ultimately trips up both the professional and novice investor, so consider making managing your loses a New Year's resolution you plan to keep.

Nothing contained in this article is intended as a solicitation for business of any kind or for investment in the firm.