"Portfolio Doctor" Segment 10 September 2009
William G. Batcheller
Chief Investment Officer
Tower Wealth Management LLC
wbatcheller@towerwealth.us
United States Steel: X ($45.28) HOLD
-Largest US-base integrated steel producer, with additional operations in Europe
-Levered to economic recovery, which should improve both pricing and production volume
-Stock has had a powerful move off its March 2009 lows, and appears to be discounting a relatively strong economic recovery in coming quarters
-Weaker than expected economic recovery could encourage investors to look elsewhere, hurting stock performance
Alcoa: AA ($12.70) HOLD
-Largest US-based integrated producer of aluminum and aluminum products
-Also levered to economic recovery
-Global demand weakness, particularly in the important automotive and construction segments, has hurt pricing, and produced 3 consecutive quarters of losses
-Weaker than expected economic recovery could encourage investors to look elsewhere, hurting stock performance
Peabody Energy: BTU ($35.72) HOLD
-Leading producer of steam and metallurgical coal for the utility and steel industries, respectively
-Stock has benefitted from investors bullishness on commodities, driven particularly by demand from China, outperforming the S&P 500 Index by more than 40% year-to-date
-Utility demand in US remains subdued due to low levels of industrial activity
-Looking ahead, domestic utility demand could be pressured by low natural gas prices, which could lead to substitution
-Weaker than expected economic recovery could encourage investors to look elsewhere hurting stock performance
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