When you consider a stock in the utilities sector of the market, I’m sure you are thinking about safety and income, not so much about over-sized gains. As a rule of thumb, these big players won’t be outperforming in a bull market… but in today’s uncertainty, why not trust an established utilities contractor with locked-in contracts?

What makes utilities companies so much different from your typical stock is in the way they are regulated. They are essentially allowed to hold monopolies in a free market system, which makes for a big advantage in troubled times. The problem now seems to be with federal interference. The U.S. Energy bill signed back in December of 2007 has really struck a chord with bitter utilities companies, and they sometimes struggle to expand in hard times. Regardless, we like the hedged exposure many have to oil and natural gas markets . Let’s pick up some great utilities stocks!

Electric Utilities – Exelon (NYSE: EXC)
If you are going to own an electrical utility company, I think the one for you is Exelon. Electrical companies like Exelon, despite the recent energy bill, may soon find themselves in the spotlight if legislature restricting carbon emissions progresses further. Most analysts covering the stock will tell you that the firm is undervalued with respects to their potential upside from such a move. I give you a price target of $88.20 versus their current trading under $80, but I think you can grab them closer to $75 .

Other than carbon emission speculation, EXC has a lot more going for them. Commodity prices for coal and gas have improved after increased profitability at nuclear plants. Also, Exelon has seen better than expected capacity prices at its big Chicago plant. These guys really haven’t fallen off the map as their competitors have, down just over 2% on the year (and enjoying a 2.7% dividend yield!).

What exactly does Exelon do? Well for starters, they are known for being the premier provider of nuclear energy in the U.S. People are turning to nuclear technology in order to save themselves from the increasing expenses in gas and coal, and EXC is sitting back with a grin . Bottom line: These guys are too cheap, despite not getting hit this year. Try Exelon for some solid growth in 2008.

Industrial Utilities and Power – PPL Corp. (NYSE: PPL)
Deutsche Bank says PPL is “sitting pretty within the diversified utilites.” Clearly, there is no arguing this case. Catching them around $45 where they are now is a steal on this domestic utilities powerhouse that I set a 12-month target at $60. They have been brought down somewhat unfairly by the broader economy, despite putting out earnings that beat expectations and slightly bumping guidance into the future . I think that people fail to realize that power is generally more resistant to the market than is currently implied.

PPL’s exposure to a tightening power market is definitely a good thing for business. They have systematically generated some risk-adjusted returns for shareholders, and are really taking every expansion, sale and upgrade in the most cautious light as possible.. which has turned out to be a huge advantage. They are working on expanding their nuclear plants (like that in Susquehanna), and have been flying under the radar for too long. You need to keep a keen eye on PPL with constant barrages of political contracts, but its hard to mess with a 2.90% dividend yield, a beta under 0.5, double-digit margin growth and returns above the industry across the board .

Water Utilities – SABESP (NYSE: SBS)
If I had to go one place in 2008 for stock market success, it would be Brazil. So why not take one of the safest plays (utilities stock) in one of the fastest growing markets? Companhia de Saneamento Basico do Estado de Sao Paulo (whew… I’ll just call ‘em SABESP again ) is just the international player we want in a diversified portfolio. SBS is a sewage company. To put it simply, a thriving economy like Brazil is going to leave a lot of sewage behind… and SBS basically has their work cut out for them. It’s really that simple!

These guys are winners. Plain and simple. Down just 0.7% for the year (I consider that a win), they have really been waiting to break back into their classic upswing. SABESP provides water to more than 25 million people in 367 Brazilian cities, and they are DIRT CHEAP compared to their peers. I mean c’mon… a P/E of 0.7 versus an industry 22.66?! Get out of here . If you can bring me a company that is international, undervalued (like nuts), carries a 53.57% gross margin and hasn’t been killed in 2008 as of yet… more power to you. I’m sticking with the utility with the long name, SBS .

Electric and Gas Utilities – MDU Resources Group (NYSE: MDU)
Montana-Dakota Utilities should be a buy on everyones list. They’ve won the hearts of Wall Street investors (10 buys, 1 hold, 0 sells)… now let them win yours! If you are interested in catching some of the Natural Gas & Oil action, MDU has a safe correlation to the commodities. Their operations in Natural Gas & Oil, Electric & Gas, Construction Services and Pipeline & Energy came in higher than expected, with their laggards found in the construction materials & mining segment. I see nat gas & oil alone driving earnings beyond their low-end guidance in 2008, but they could be hurt by residential construction. You should still be buying them, but just with a more cautious eye.

MDU Resources Grp. ended 2007 on a high note, and have taken a hit in 2008. However, they have continued to surpass earnings expectations and I feel that they will recover their losses in the short term and continue to impress in the long term. With a number of key acquisitions that have just been completed, MDU has taken their lumps and is ready to perform. The stock price continues to intrigue me at $25 versus my target set at $33. I think that following the economic stimulus plan, you can expect for lots of money to be thrown at previously unappreciated old-timer public works projects like those found under MDU. They haven’t ignored the strong pull of “green technology,” and really seem ready to break from an unfortunate downtrend. Consider them in your research.

That’s a wrap for the utilities sector. These stocks can add a huge layer of safety to any investment portfolio. While they might not have much in the way of sex-appeal, in a recession… you need some trustworthy under-the-radar successes like EXC, PPL, SBS and MDU. You need to be careful that you don’t catch them in the middle of a legislative disputes (happen somewhat often in the industry), so remember to do your homework.. and invest smart!

-Jimvesting

The stock market investing environment is certainly scary to a lot of investors in the short term. With fears of a recession on the horizon, along with problems like the falling value of the U.S. dollar, rising commodity prices, distressed credit ratings and problems with inflation, the thought of pushing new money into the stock market is definitely not a popular idea.

After testing the January lows somewhat successfully, I feel as though the market’s conditions may finally be seeing improvement. In my honest opinion, we are oversold. While the market may continue a downtrend, an oversold market is no place for shorting… and reaching into the bargain bin in the first half 2008 may be the best move you ever make.

Looking into “safe” areas of the market, our selections are few and far between. Straying away from the popular markets like tobacco and discount foods, I want to highlight some areas of the stock market where high growth remains a potential… and risk remains somewhat in check. Which sub-industries am I talking about? Agriculture and Aerospace & Defense of course!

Agriculture
Out of all of the sectors in the stock market, agriculture is an investing hotbed that hasn’t really slowed down or produced negative numbers for 2008. As we watched all of the pillars fall (banks, retailers, restaurants, etc.), agriculture’s turn never came! The ag. commodities such as wheat, corn and soybeans have showed no signs of stopping their run-up, and the 2008 outlook out of these stellar companies has been nothing but positive. Whats more? Most of these companies come with low risk, despite high upside… something rare in today’s market.

If you want to play this bull, and I suggest that you do, you want to keep a keen eye on Deere (NYSE: DE), Monsanto (NYSE: MON), Potash (NYSE: POT) and Mosaic (NYSE: MOS). Let’s start with Deere. I feel that they are the safest way to play this ag boom because they are an industrials sector company by definition. I recommended this company back on February 11th, and my views really haven’t changed. You aren’t going to get a great valuation as they almost always trade at a premium to the market… but as long as you can catch a dip, I don’t see this train slowing down any time soon.

Moving over to Monsanto, this is a fantastic investment if you can get in at an attractive price now. They recently announced a huge agreement with Becker Underwood and Plant Health Care to provide a new hybrid seed treatment platform. The Dow recently partnered up with Monsanto, and prospects are very good for the future.

Potash and Mosaic are really sitting on cloud nine right now. Even after we have seen a big drive into these companies over the past week, I think there is some space available and people really aren’t being as aggressive as they should be. Mosaic is another stock that I recommended, this one back in late January, and their catalysts haven’t changed. Their PEG is over 3. Ignore it. These ag. companies don’t come cheap, but I see them continuing to stride upward.

Aerospace & Defense
Being an Industrials sector buff, you can’t help but feel confident in the Aerospace & Defense industry. One thing that typically will not slow in recessionary times is the growth behind military contracting, national defense funding and aerospace development. With the ongoing war over in Iraq, there is a constant driver for most of the big five A&D firms, and much of this is guaranteed for 2008 and beyond. I like General Dynamics (NYSE: GD), United Technologies (NYSE: UTX) and Lockheed Martin (NYSE: LMT).

I want to recommend Boeing (NYSE: BA), especially with their currently dirt-cheap valuation versus their historical trading range, but I just can’t see through this cloudy future. Personally, I want to own them now, but with the disputes and such after losing a contract to a combined Northrop-Grumman and Airbus EAS team, their future is somewhat uncertain. Instead, I like General Dynamics. Not to be cliche, but Jim Cramer recently devoted an entire segment to this A&D powerhouse. They are the biggest holding in the industrials sector of the Nittany Lion Fund, LLC that I help manage, and we are very confident in their future success. If McCain is elected, this is a superstar. But even if he’s not, this company is still secure in its fundamentals and is trading at a discount in a bullish industry.

The Aerospace & Defense industry is red hot, safe, and trading at a discount to its historical premiums despite leading the market averages this year. With this in mind, I like United Technologies and Lockheed Martin in addition to GD. UTX recently made a proposal to acquire Diebold, which would position United Tech for some solid growth opportunities overseas. All future implications remain bullish on the stock, and analysts seem to be loving this, the biggest domestic aerospace & defense company, for the future. Lockheed Martin is your typical flawless company that continues to impress. These folks don’t disappoint and have had remarkable fundamentals and cash balance for as long as I can remember. LMT is safe and at an attractive price

As investors, we need to look for safe havens like Agriculture and Aerospace & Defense for predictable growth, stability and recession-proofing measures in order to continue to grow our portfolios. I wanted to touch on commodity-tied stocks like those tied to Gold, Oil and Natural Gas… but we will be touching on those soon, so we will save the best for last. Focus on the ag. and defense companies if you, like me, can sense an oversold market with some bargain prices up for grabs. Its one thing to catch a falling knife, but these industries really haven’t fallen at all… so they are ripe for investment.

-Jimvesting

If you are looking for extraordinary growth coupled with market-risk levels, you want telecommunication stocks in 2008! The industry as a whole has been one of the strongest performers to date, and it is generally somewhat recession proof (people always want to talk!). Catalysts for the long-term include explosive growth in emerging mobile markets, increasing demand for bandwidth (speed), and a large-scale shift from copper wiring to fiber and broadband wireless. The bulls are out, lets grab some value.

Telecom Services – AT&T (NYSE: T)
Wireless momentum continues to power the market in 2008, and AT&T is right there leading the pack with over 65 million subscribers in the United States. They met expectations in their forth-quarter earnings call (that’s the 11th straight quarter of double-digit growth in earnings), but the really important news here is that wireless results were above expectations and guidance for 2008 was reaffirmed. I think AT&T has what it takes to lead the market into the mobile age of technology. Already, we have seen 57.5% year-over-year growth in wireless data revenues, driven by this increasing adoption of smart phones and 3G wireless devices. Essentially, computers are becoming smaller, and I think that these iPhones and Blackberrys are simply early models of the personal computers of the future.

What’s wrong with Verizon (NYSE: VZ)? I really can’t say, as it is a bit of a crap shoot at this point. I’d have to give the edge to AT&T because of their proven ability to grow earnings despite being so large, and their willingness to open networks toward new computing technology. What really pushes T over the edge for me is its steady 4.5% dividend yield, earnings visibility, growing wireless business, favorable balance sheet, long-term strategy and strategic acquisitions (successful acquisition of BellSouth in 2007). You can look toward their IP-services and whatnot… but you want AT&T for their superior wireless dominance in 2008.

Telecom Services – Millicom (NYSE: MICC)
Once again, Millicom blew away expectations by producing an amazing 3.4 million net subscribers and 41% revenue growth in the forth quarter alone. This company is on cloud nine right now, and while margins were slightly below expectations… guess what… they were 40.0%. Essentially, what Millicom is doing is bringing wireless technology to places that are underdeveloped. They charge by the second, rather than minute, to increase their value to thrifty subscribers and are very active in emerging markets. I am confident in their growth, and Millicom is my Telecom stock for 2008.

MICC is going to kick off 1Q08 with a bang due to their 4Q recorded net-add increase. Broken down by region: Central America growth should drive from new 3G technology and higher-quality customers, African markets have seen dramatic margin increases with new subscribers, Columbia has been negatively impacted by connection fees but should rebound nicely and Asian market investments should continue to propel strength in this key market. MICC is impressive across the board, and their huge international exposure should prove beneficial in 2008.

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You’ve heard pitches on Apple (NYSE: AAPL) and Corning (NYSE: GLW), now lets continue on with the information technology sector. There are many places to invest around the sector. I am finding increasingly that the big boys like IBM, Microsoft & Google are providing more risk than reward. As investors, we want as high upside potential as possible when matched with low downside risk. Lets find some companies that match our description.

Solar Semiconductor – Jimvesting picks First Solar (NYSE: FSLR)
After doubting the extreme-growth behind solar technology in January 2008, it seems high time we apologized to powerhouse gainers like First Solar. ThinkEquity Partners gave this great stock a one-word classification, “debottlenecking.” After smashing earnings estimates of 53 cents a share with an astonishing 77 cent gain, they appreciated 30% on the day after increasing 2008 guidance. Don’t let this buy-athon scare you away. We thought the solar industry run-up was finished, and were clearly proven wrong. The year-over-year revenue growth of 280% and strength in EPS suggests stronger future earnings power.

Operating efficiency is one of the primary benefits I see from operation in 2008. Costs per watt ($1.12) averages were down 6% on the year, and a negative currency impact from the Euro was almost entirely overshadowed by economical operations in First Solar’s Malaysia plant. Spots for improvement have been identified, and most analysts feel they can bring home the gold. Most notably, the first and second quarter 2008 should prove to show continued growth on track with 2007 appreciation. Solar companies are all trading at attractive premiums when considering growth. With oil on the move upward, it seems that momentum for green energy will remain strong. Investors should return to the solar arena with strong earnings and demand in mind.

The Malaysian plant’s revamp may have a negative impact on First Solar’s first quarter earnings in 2008. On the other side of the coin, we expect an increase in production and see operating margins supporting at 30%+ levels. I wouldn’t be surprised at all to see more good news in guidance. We expect their PE and PEG ratios to come more in line with the industry, as the current premium they appear to be trading at is a result of explosive growth over the past year. Execution was flawless in 2007, and with nothing but green lights thus far… First Solar makes for a great long-term growth play.

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The industrials sector of the stock market is where I am most involved nowadays. While the big names like General Electric (NYSE: GE) and Caterpillar (NYSE: CAT) may not jump out at you as big gainers, plenty of these rock-solid companies have been hit unfairly, and I see value. As an added bonus, industrials companies often act as a hedge to thriving markets like agriculture. We’ve got some killer stock picks for this week, lets see what we can dig up.

Industrial Machinery – Harsco (NYSE: HSC)
I may be a sucker for fallen stocks, but Harsco’s drop off their highs was especially unwarranted. You want proof? How about beating fourth-quarter earnings estimates of $0.70 with $0.74 and increasing 2008 guidance. How about topping revenue expectations by $75 million. Harsco manufactures in mill services and gas technologies.. they are the top dogs in a boring market, and I’m loving it. A whopping 70% of their sales are international, and even in a slowing world economy, an unusually high rate of recurring service revenues gives me confidence in Harsco’s ability to maintain earnings momentum.

Don’t be concerned with rising costs and problems in home construction, Harsco’s end markets such as global steel production and non-residential construction are expected to remain firm in 2008. Despite slight challenges in Mill Services in the most recent quarter, Harsco outperformed with strong gains in Rail & Mineral Technologies. I see nothing but upside in growth for 2008, and with a key acquisition possibility, Harsco could completely out-do themselves. Access Services has a nice hedge against a possible falling non-residential construction since about 25% of their industrial maintenance business is recurring. Very protected from a slow-down, and undervalued at $55 versus a target of $75… I put a purchase price at under $54 for Harsco.

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