by Mike Pino
Wall Street and the media were quick to lump the continued selloff and mild panic on the CPI inflation fears. Well, as a father of four of primary school age chilldren I don't need the government figures to gauge the cost of living. CPI? I don't need no CPI. I don't need no stinking CPI to tell me the large out of pocket, after tax increae in expenditures. Medical premiums, home and auto insurance, co-pays, energy, food and utilities all have gone up well above any government CPI. My wife saw an ear specialist and he charged $240 for a four minute consult! How about blaming the sell off on something new like May 17th's Washington Post poll indicating that two-thirds of Americans would vote Democratic if the elections were held today.
So there is some blood in the Street and it is only fair that some of the economic stress that the bottom half of our citizens have been feeling for quite sometime be felt by out of touch ivory tower dwellers. Others pain can be your gain so while everything is being sold it is time to revisit established fundamental trends and the companies that will continue to expand. In addition, the falling dollar and more economical energy costs will bolster the fortunes of the following stocks.
First, the capital expenditure expansion in the railroad infrastrucutre was reaffirmed by Caterpillar's buy of Progrees Rail Services. Other companies in this space that also are attractive are Portec Rail ( PRPX ), Wabtec ( WAB ) , Greenbrier ( GBX ). All supply the railroads from track maintence to locomotives and rail cars. The railroads are a more efficient mode of transportation and emerging markets are seeing this as a primary mover of commerce.A small company with little Wall Street coverage is Commerical Vehicle Group ( CVGI ). This supplier of interior parts for big rig tractors recently reported earnings growth of 52% yet trades for only a 7 P/E and its stock has yet to make any significant movee
Finally, while researching additional wind farm suppliers back in March a tower construction company caught my eye. Although wind towers are a growing division, most of Valmont's,( VMI ), revunues are derived from irrigation systems. Next time you fly over farms those circles you see is Valmont at work ensuring farmers that their crops won't be blighted from lack of moisture. After a good run up after their blowout April earnings report, the stock has retraced 50% of this recent price appreciation. With all the attention given to Ethanol, here is a alternatve energy supplier that has just gotten noticed.In a sinking market most stocks go down, however the above mentioned stocks should outperform and be supported by energy cost concerns, a falling dollar and the rotation of monies out of the ultra high flyers. Rather than be speculative home run bets, these companies are the picks and ax vendors of the new gold rush. So red rain is falling down and it will be more difficult going forward but fundamentals always win in the end.