Buy the Bushel
Wet weather across the U.S. has caused farmers to fall behind in crop plantings. The U.S. Agriculture Dept. said on June 8 that only 78% of soybean fields had been planted, compared with an average 87% typically in the ground by early June. Corn and wheat plantings also were slightly behind. The delays have bolstered an already strong rally that has driven up grain prices with soybeans at a nine-month high of more than $121 a bushel. But the real strength of the rally comes from growing demand from China and India for soybeans, cotton, and sugar, say commodity analysts at Barclays Capital (BCS). Investors looking for a pure play on the crop rally should consider the PowerShares DB Agriculture Fund (DBA). The exchange-traded fund tracks the returns of futures contracts split equally among corn, wheat, soybeans, and sugar. It's up 19% over the past three months.
Early June has been a heady time for gadget lovers, with Palm (PALM)'s new Pre smartphone hitting stores on June 6 and Apple (AAPL) unveiling its updated iPhone 3GS on June 8. Shares of both companies shot up in anticipation of the sexy devices but sold off slightly once the news arrived. The best bet for investors may be neither stock, however.
Citigroup (C) analyst Jim Suva likes BlackBerry maker Research in Motion (RIMM) as the one to buy. Comparing the Palm and Apple announcements to "shooting the rapids" in a kayak, Suva says: "Rapids are inevitably followed by clear water." He expects that RIM, currently trading around 82, could hit 100 by selling more BlackBerrys than the market expects this year. William Power, an analyst at Robert W. Baird, polled 300 retail wireless phone stores in March, April, and May and thinks RIM will likely beat its target of selling 7.5 million to 8 million for those three months.
Industrial companies may be recovering faster than usual after a slowdown because developing economies like China, India, and Brazil need goods to fuel their growth, says Standard & Poor's analyst Richard Tortoriello. He ran a screen to predict which are poised to outperform their peers. Factors include valuation, profitability, and cash flow. These companies had the highest scores.