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Happy holidays! We at OptionsZone hope this time of year finds you and your loved ones safe, happy and healthy.
‘Tis the season for giving, and we come bearing gifts! Seven holiday-inspired trades to stuff your portfolio with some tidy profits.
So when you take a break from your holiday revelry, check out these stocks to trade, because we have a strong suspicion they’ll bring you some happy
tidings in the new year.
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#1 iShares Silver Trust (SLV)
By Chris Johnson and Jon Lewis
All that glitters is not necessarily gold, especially during the holidays. Sure, most everyone loves to get something made of gold, but don’t forget
the less-appreciated silver gift.Here’s something you may not know: So far this year, the iShares Silver Trust () has
doubled up on the SPDR Gold Trust () in terms of return. Sounds
surprising given the constant attention gold has received for the past month as it zoomed past $1,100 and then $1,200 an ounce. Silver, on the other
hand, is far from its all-time high, which was set in March 2008. In fact, SLV has about 20% upside room before matching its peak, while GLD has about
8%.The factors that make gold attractive (weaker U.S. dollar, inflation hedge) apply to silver as well. The recent pullback in SLV (similar to GLD)
makes for an excellent entry point. So treat yourself to a little silver in the form of SLV this year.Learn .
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#2 Utilities Select Sector SPDR (XLU)
By Michael Shulman
Hanukah is the ancient festival of lights, a celebration of the miraculous story of one day’s worth of oil burning for eight days.
Want to celebrate light and oil that never ends? In an uncertain year, go with utilities, which are on a tear right now that will last a bit longer.
Interest rate increases typically hurt utility stocks, but the Fed has pledge to keep borrowing costs low for an extended period.The play here is the Utilities Select Sector SPDR (). This ETF
is very liquid, and I’d look at longer-term call options on XLU.Learn .
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#3 Genworth Financial Inc. (GNW)
By Nick Atkeson and Andrew Houghton
Genworth Financial Inc. () is a diversified financial services
company with 15 million customers in 25 countries. We expect the stock to provide an end-of-year bonus bounce.The company held its annual investor conference on Dec. 15, where CEO Michael Frazier gave a cautious outlook, saying that one of the company’s
U.S. home-loan insurance units could return to operating profitability by mid-2011. But he also said its mortgage unit could produce a 20%-plus return
on equity as the markets recover.GNW has pulled back from $14 per share to about $11. Technically, the stock has formed a and appears poised for an upside breakout.
Learn .
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#4 Visa (V)
By Chris Johnson and Jon Lewis
Boy, does Visa () love this time. Not only are cash registers and
online shopping carts ringing up credit card sales, but the company is smack in the middle of the gift card phenomenon.Gift cards are convenient, both for the giver and the recipient. And they’re big for the issuer as well. They collect all sorts of fees on their
cards, and you know that some of the funds are never used. That’s free money for the issuer.As an investment, V has been a monster. The stock is up more than 100% from its January low and is threatening to take out its all-time high near
the $90 level. A decent holiday season, which this year appears to be shaping up to be, could push the stock over the top and into new high territory.
Jump on shares now.
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#5 PowerShares DB US Dollar Index Bullish (UUP) / CurrencyShares Japanese Yen Trust (FXY)
By Michael Shulman
Even if you don’t celebrate Christmas, you can still trade red and green.
What’s green? The greenback, you elf. The U.S. dollar took quite a beating in 2009, but from a , it looks like the dollar has bottomed. Plus, there is growing evidence that the “dollar carry trade” is now becoming, or should
I say, reverting back to the “yen carry trade” as Japan now boasts the highest real interest rates (i.e., interest rate minus inflation, and inflation
in Japan is seriously negative) of any government bonds among developed nations. The play here is the PowerShares DB US Dollar Index Bullish
Fund ().As for trading red, look to the land of the rising sun — Japan. The yen will take a hit as the dollar increases in value, and the Japanese government
(yet again) fails to confront their deficit. So look for puts on the CurrencyShares Japanese Yen Trust (),
the ETF that tracks the yen.The dollar being dead was one on the .
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#6 Dell (DELL)
By Nick Atkeson and Andrew Houghton
Value shopping is in this season, and Dell () is unsustainably
inexpensive. Trading at less than 11 times calendar year 2010 earnings per share, we expect shares to revert back toward the $15-$16 range over the
next month. We see the P/E moving above 11 times to 12 times on calendar year 2010 earnings, similar to Hewlett-Packard ()
and IBM ().Dell has a number of positive catalysts working for it. On Dec. 16, the company hosted a conference call to discuss the Perot Systems ()
acquisition. It said the acquisition is about revenue synergies, and that it expects revenue and cost synergies of $150 million and $100 million,
respectively, for fiscal year 2011. In addition, Taiwan ODM sales could serve as a boost, and the market overall is in a period of accumulation. Finally,
going into 2010, we are in the early phases of a strong corporate PC refresh cycle. With Michael Dell at the helm, DELL should rise in the flooding
tide.
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#7 Health Care Select Sector SPDR (XLV)
By Chris Johnson and Jon Lewis
OK, we may not be recommending Mattel () or another “given” when
it comes to holiday trades, but we think you’ll like this “gift” even better.For the last year, the markets have fretted over the fact that the health care system would start seeing some changes. While “change” may be good
for many people, investors often associate it with uncertainty, which generally isn’t bullish. Despite the uncertainty, health care related stocks
and ETFs have mustered up some impressive gains in 2009, when investors were envisioning sweeping reforms. The reality is that any changes to the
system are not likely to really knock these companies out of their profit “wheelhouses.” These shares are likely to rally even further in 2010 as
the shroud of uncertainty is lifted from the group, something that could come as early as Christmas if Harry Reid has his way.Set aside some gift money and deck your portfolio with the Health Care Select Sector SPDR ().
We believe that the upcoming legislation changes will provide clarity for investors as the New Year approaches, which should provide a boost to the
heath care sector and XLV shares.Related Articles:
The Secret to Money-Doubling Trades They Don’t Want You to Know
Professional traders Nick Atkeson and Andrew Houghton reveal their proven, time-tested strategy to finding money-doubling trades
in a new report. It’s the trading “secret” so effective they were banned from sharing it with you — download your
FREE copy here.
