Hey net fools, this begins our look across various stock market sectors, as divided by the Wall Street Journal. Looking at 2008, these are the stocks in each sector that I think will do fantastic, and advise you to put on your watch lists. Starting our approach with the “consumer cyclical” sector, lets cut the sector into four groupings and get to it!
General Retailers – Jimvesting picks Best Buy (NYSE: BBY)
My 2008 cream of the crop here is Best Buy (NYSE: BBY), but I think there are plenty of other places to look! Gamestop (NYSE: GME) for one has given me tremendous growth for the holiday season. I saw it rise up in about a months time from $51 to $63! But I feel like that train has left the station already. Costco (NYSE: COST) you ask? Great, but right now it’s not their game to be won. 
Best Buy however is a strong buy, with a target price of around $64 versus a current share price of $52 and change.
Here are three reasons Best Buy will be on the map in 2008. First, they are the U.S. consumer electronics retailer, an area that is seeing more and more exposure as technology 
improves. It’s like buying a tech company without the risk! Secondly, as the technology improves, prices go down. While this may be bad for tech giants like Cisco (NYSE: CSCO), it is sending sales of things like digital TVs and notebook computers through the roof! Finally, their growth strategy is being executed successfully. Plain and simple, they are getting things done. Geek Squad, their tech support group, was definitely a big hit among consumers, and it is trading at a significant discount when compared to its competitors (forward P/E is 14X!).
Media – Jimvesting picks ValueClick (NYSE: VCLK)
The media sub-industry of consumer cyclical is a bit iffy right now with the recent writers strike among other things. Regardless, there are battles to be won. First off, there are many big players in this market, but that is NOT where I see the value in this particular sub-industry. Walt
Disney (NYSE: DIS), Time Warner (NYSE: TWX) and Comcast (NYSE: CMCSK) are excellent firms, but I wouldn’t expect much return from your investments. Internet media giant News Corp (NYSE: NWS) is a great asset that should be given serious looks with their stake in MySpace and their many advertising campaigns; yet it is ValueClick, Inc. (NYSE: VCLK) that I think will find the most success in 2008, and here’s why:
While they might not be in the greatest position right now, I feel as if ValueClick is most due for a rebound. The S&P gives a hold rating right now, but I think that the stock price will fall due to an over-hyped FTC 
investigation, leaving a perfect buying opportunity for investors. First, investors are seeing ValueClick as a “ValuePick,” I crack myself up. Wall Street picks outperform 10-0 and the general thought is that once the FTC drops their investigation, they are back in the game. Secondly, as I’ve mentioned, online advertising is a niche market that ValueClick has a great control over. They acquired “MeziMedia” in July this year, and have been pulling in resources ever since to form a large conglomerate that can see real gains. Finally, revenue growth is looking up now that projections have breached 20% for the next five years. They seem like the company this can grow capital into the future with a strong hold over a strong niche.
Travel and Leisure – Jimvesting picks McDonalds (NYSE: MCD)
Picking McDonald’s (NYSE: MCD) from the travel and leisure sub-industry was the easiest choice I have made all day. The industry is crowded with large companies that don’t perform (cough, Starbucks – NYSE: SBX), and really has one clear winner. 
Yum Brands (NYSE: YUM) I think is doing well, but picking them over McDonald’s would be analyst suicide at this point in time. All of the large-cap airlines, hotels and entertainment (casino’s etc.) firms have nothing on MCD.
A strong buy after such an uptrend? YES I say! Reasons. First, their “Plan to Win” operating strategy actually works. Sales have been off the charts and they are making competitive moves into Asian markets to accelerate this trend. Second, risks in the business are low. We love the 
low-risk high-reward companies out there, and this is one of them. The only real threats to their profit margins is the price of food and customer satisfaction, which McDonald’s has historically nailed. Finally, sales coming from both under-performing restaurants and high-risk geographical locations should generate the cash flow needed to push over 1,000 estimated stores to the forefront in 2008.
Food & Drug Retailers – Jimvesting picks McKennson (NYSE: MCK)
Can’t say that I see too much coming out of the Food and Drug retailing business in the near future, but I do for McKennson Corp (NYSE: 
MCK). Big names like CVS (NYSE: CVS) and Walgreen (NYSE: WAG) just can’t offer investors the growth that is often sought after. These guys remain threats, but only because of their superior buying power. If I were to go with another in the industry, I would buy into Kroger (NYSE: KR). Kroger is solid fundamentally, should be widening their margins, and is definitely worth a look; however, McKennson remains my pick.
Why McKennson? September quarter drug distribution revenue growth beat expectations, and McKennson was right there with the pack breaking through earnings estimates once again. Our first driver would be its ability to leverage its 
market presence in the drug distribution to demand above-average earnings growth. Our second driver lies in McKennson’s superb fundamentals, ranging from cash position to debt capacity and to healthy cash flow, all of which should command financial security in the future. Finally, I like MKD because they are safe. With a lead position in an industry that typically fares well in up or down markets and an outstanding cash flow position, they should definitely be on your 2008 wish list.
That wraps up this week’s sector look, next week… the Energy sector!
-Jimvesting
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