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Ken Fisher for Forbes: Buy Pets, Tractors And Three Tech Stocks
Posted by: guruhl (IP Logged)
Date: April 20, 2012 10:26AM
"Let’s face it, everybody wants a tractor," says Ken Fisher in his latest Forbes column: Most readers know that I am an ardent student of market history and a firm believer that it’s prone to repeating itself. So I’m often asked what the current era echoes. My answer: the early 1990s.
Let me set the scene. It was just a few years after 1987’s Black Monday market crash and 1989’s Friday the 13th minicrash. The S&L crisis was making headlines, and Saddam Hussein had invaded Kuwait. The stock market fell hard in 1990, and investors were nervous—a psychosis similar to 2008’s.
Housing had plummeted. More big U.S. banks failed in this period than any other. The media were spreading “debt crisis” dogma everywhere. Go back and read the clips: It was all debt doom, all the time.
Then, too, the pre-euro nations were struggling under heavy fiscal restraint preparing for the euro convergence. PIIGS as an acronym didn’t exist then, but their problems did. Their net interest payments on sovereign debt as a percent of GDP were fully twice today’s paranoid levels. Greece suspended payments on its long-term debt into mid-1993, and by that year Europe was in minor recession. A global downturn was being predicted. Sound familiar?
Back then there was an unpopular U.S. President, George H.W. Bush. He was seeking reelection against an expanding economy few believed in. Bill Clinton beat him with an “It’s the economy, stupid” campaign. Congress was in opposition hands.
In 1992 world stocks were down after a big 1991. I equate 1992 to 2011’s poor global performance after a strong 2009 and 2010. The next year, 1993, was the beginning of a new era politically and from a markets perspective.
The parallels aren’t perfect, but they are evident and plentiful. Caution! In no way am I predicting another raging bull market like the 1990s’. Don’t mortgage your house to buy stocks. However, remember few saw how optimal the environment really was back then. I think times are similar, and it’s a good time to buy, selectively. Here are several stocks.
Let’s face it, everybody wants a tractor. Even my wife, and she never wants anything. Put yours on one; she’ll be ecstatic. Then let her go shopping with the grandson at a Tractor Supply (TSCO, 98) store.
The Brentwood, Tenn. company is America’s largest retailer for small-time farmers and ranchers (not the industrial or commercial market, which is dominated by companies like John Deere). They sell things like “zero turn” riding mowers, fashionable cowboy boots and horse-grooming supplies. You can visit a store to buy an outfit or drive a small tractor.
I see the earth moving under this stock. It’s at 17 times my estimate of 2012 earnings.
Here’s an incredible fact: The average parent in the U.S. spends more on pets than on their child’s K–12 education. We love our pets, and the undisputed leader in selling us things for them is Phoenix’s PetSmart (PETM, 56). Its 1,232 stores sell everything from cat chow to chicken coops—and services from grooming and boarding to training. At 15 times my estimate of January 2013 earnings and one times revenue it will climb a lot higher before this bull market ends.
Guru Discussed: Ken Fisher: Current Portfolio, Stock Picks
Stocks Discussed: TSCO, PETM,