Kenneth Fisher Recommends: TAM S.A., Net Servicos de Comunicacao SA, Hasbro Inc.

(GuruFocus, October 7, 2009) These days Investment Guru Kenneth Fisher is pitching his new book " How to Smell a Rat: The Five Signs of Financial Fraud ". In the video clip below, he gave away two tips out of five.

1. Good fences make good neighbors: Do not give up the physical custody of the asset so it cannot be taken out from the back door.

2. Be careful with people who only show you good and smooth returns year after year. All great investors, including Warren Buffett have good years and bad years. If someone shows only good and smooth return, maybe he/she is not really investing.

For the rest of the tips, I guess one have to read his new book.



While we understand Ken Fisher for holding back some secrets in the new book, we appreciate the stocks he gave in the interview. Fisher reiterated his claim that the on-going market rally is part of a global-wide V-Shaped recovery. Three stocks were recommended by him:

1. TAM S.A. (TAM)

TAM S.A.provides scheduled air transportation in Latin American, both the domestic market and the international market through its operating subsidiaries TAM Linhas Aereas and TAM Mercosur. The Company also directly serves ten international destinations and provides connections to other destinations through commercial agreements with American Airlines Air France and certain other airlines. Tam S.A. has a market cap of $1.38 billion; its shares were traded at around $13.77 and P/S ratio of 0.2.

Fisher bought 10,500 shares in the quarter that ended on 06/30/2009, which is less than 0.01% of the $24.67 billion portfolio of Fisher Asset Management, LLC.

Fisher likes airline stock because it serves a growing market. About 2/3 of the revenue comes from Brazil, Fisher’s favorite emerging market. Fisher thinks the company can grow 15% a year for the foreseeable future and it is selling about about 8 times earning. In his best scenario, if one buys a stock at half of grow multiple and sells at twice the grow multiple, and in the meantime the company grows twice, one makes 8 times the money.

2. Net Servicos de Comunicacao SA (NETC)

Net Servicos de Comunicacao SA is the largest Pay-TV multi-service operator in Latin America. Net Servicos De Comunicacao S.a. - American Deposi has a market cap of $4.92 billion; its shares were traded at around $12.43 with a P/E ratio of 54 and P/S ratio of 2.4.

As of 2Q09, Fisher did not have ownership in the stock, but that does not stop him from buying some since then. He likes the stock again because it services the growing middle class in Brazil. It is not just cable television, it offers internet and landline services as well, so one get to buy into a telecommunication player in a fast growing market.

3. Hasbro Inc. (HAS)

Hasbro Inc. is a worldwide leader of toy maker. Hasbro owns brand such as PLAYSKOOL, KENNER, TONKA, Hasbro Inc. has a market cap of $3.87 billion; its shares were traded at around $27.65 with a P/E ratio of 14.4 and P/S ratio of 0.9. The dividend yield of Hasbro Inc. stocks is 2.9%. Hasbro Inc. had an annual average earning growth of 4.4% over the past 10 years

Again, GuruFocus does not found any ownership in the company by Fisher as of 2Q09, but that might be temporary. Grandfather Fisher thinks the company is in a good position as last year the Grandparents held back in midst of the financial uncertainty, this year is different: economy stabilized and stock market is back, Grandparents are going to spoil their Grandchildren again.

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