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Investorplace.com Editor Jeff Reeves argues there are great opportunities in materials stocks for investors with a long-term outlook.
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He's an economist across the globe -- all watching.
We are continuing to see signs of a slowdown material stocks have taken the biggest beating.
Look at these names AK steel -- 61%.
ArcelorMittal.
US steel Alcoa.
All of them down more than 45%.
In the last year -- despite those drops.
Jeff Reeves thinks it's time to buy these names Barack -- is joining us now for the contrarian call good to see -- up.
-- -- -- -- to step in for materials here because there's this belief that there's a global slowdown and nobody will be building skyscrapers.
Why is that an incorrect thesis.
Well the short term I mean you're completely right your entire broadcast -- talks about all the fear that's out there right now the uncertainty.
I'm -- in the short term but.
You know I feel like some of these materials like how to get a bad name I mean the bottom line is that.
Aluminum steel these -- battles they they are the global economy I mean whether it's aluminum cans and -- steel wire girders and skyscrapers.
It's not like it's gonna stop being used tomorrow so you have to believe that eventually things are gonna come around if you believe in a recovery and I mean frankly I'm I'm talking about people who -- A little bit longer in the horizon if you're capital preservation mode because during your seventies certainly don't want to dabble in the -- -- believe.
In the apocalypse and you -- to trading canned goods and ammunition economy shouldn't play the stock market anyway.
So look at the Internet out of aluminum subsequently -- actually -- aluminum but.
But the point is if you're looking for any -- personally I can I put so much money and one point 5% treasurys ending cash in on 1% CD's you gotta take your shops and I think that you know now.
They say that sometimes blood in the street is when you -- your opportunity I mean you to show the returns these these stocks taking a beating.
What is the smartest the smartest guys like say for example the Buffett's of the world those investors in the Wilbur Ross's are the ones who go in at times like this and -- the distressed properties.
Let's pick a couple of names for our investor viewers here what are the two names -- -- -- the most and why.
Well -- stocks -- watch right now number one is ArcelorMittal Jude mentioned is a steel stock.
I what I really like about this company is right now traits for a forward PE of less than five.
-- back -- valuations back in 2004 levels.
-- and if -- is a four and a half percent dividend.
So I mean right there there's plenty of reasons to kind of believe in the stock in the short term I mean yes there's going to be trouble in Europe you got your trouble and demand in China but.
There's fundamentals of this company that means is doing all right and by the way it's profitable and an obvious material stocks they really cut back.
And the crisis of 2000 in 2009.
You know ArcelorMittal really shut down a bunch of plants -- believe that shut down seven in 2009 alone right so they've done the best they can't do it took quote unquote right size the business for this new economy.
So you gotta believe that they are positioned for tough times are tough times persist in a drop a little bit more from here about -- come on there -- -- -- And -- and by the way that dividend yield is better than what Procter & Gamble gives out so you get paid to wait for the recovery.
Let me just say that Jeff that there are people -- we're looking for that point on the planet that will indicate that it's time for these stocks to move higher is it China starting to ramp up.
Yeah once again and besides do you do not even want to wait for that you wanna get in before that happens right.
Well I mean the fact of the matter is that you know the people who have a very short term horizon these are just not gonna sock that you should should -- play with and frankly did you have a short term -- I think about short term plan is nothing.
I mean.
You just talked about audience certainty in the market right now so if you're the type -- person looks for.
Tax efficient gains you're in it for the long haul I do believe that there's something to be said for kind of taking your shots -- you had the opportunity whether or not this is the exact bottom or not.
I mean.
You gotta believe I believe personally that eighteen months 14 months 36 months from now they're going to be significantly higher whether it's thirty or 35% higher I suppose you could wait for a dollar a share more of a drop but again if your horizon is three years.
You know I think you're better served to just kind of jumped in on a day where -- some softness and and trying to hang on for the ride and again these are aggressive investments right.
Four and a half percent yield the.
Has seen definitely so bias sealed envelope -- look at three years -- great to see -- thank you so much maybe cancer are right I mean that you just don't know but.
Jeffs with investor place dot com --
