stock ideas 1/6/2011

Goldman, Intel Are on My Top 10 List for 2011: John Dorfman
Scorned, Now Cheap

In the financial sphere, my choice is New York-based Goldman Sachs Group Inc. The investment bank has been vilified for betting against a mortgage security it created, for high- speed trading and for paying its executives handsomely. These criticisms have helped to whittle Goldman’s stock price down to about $168, which is less than nine times earnings. That’s a low valuation for a talent-rich company.

I like several of the big drug companies, notably Johnson & Johnson. The New Brunswick, New Jersey, company has increased its dividend five times in the past five years. Its stock, which has sold for a median of 18 times earnings the past decade, currently fetches only 13 times earnings.

I think owning some Chinese stocks is desirable for U.S. investors. China’s economy is currently one of the fastest- growing in the world. Its budget is in better shape than ours in the U.S., and its population is younger.

Concrete Advice

One Chinese company I like is China Advanced Construction Materials Group Inc., which produces concrete and provides technical advice for large development and infrastructure projects such as high-speed railroad beds. The company has headquarters in Beijing, but its stock trades on the Nasdaq market in the U.S. It sells for only four times earnings.

Mantech International Corp., located in Fairfax, Virginia, provides information-technology services for the government, especially the military and intelligence agencies. In a world of terrorist threats, this seems a promising niche. The stock has lagged behind the market this year, falling about 14 percent. At about $42, down from a high of more than $61 in 2008, I think it is a good rebound candidate.

stock prices on 1/6/20111
GS $172.55
JNJ $63.23
CADC $5.28
MANT $39.61