Commentary
Area Brokers See Modest Gain in Dow, Offer Stock Picks
By Seattle Business Magazine January 7, 2010
At the Metropolitan Grill’s annual “Guess the Dow” luncheon Thursday, area brokers predicted, on average, that the Dow would climb to 11,676 by the end of 2010, up less than 10 percent from current levels. The Dow closed on December 31, 2009 at 10,428.05 points.The most optimistic broker suggested the Dow could end the year at 13,050; the most pessimistic prediction was 10,995.
The brokers expressed concern over high deficits and rising interest rates but were relatively bullish on many Washington Stocks.
Companies have cut back so sharply on costs that as revenues rise “there will be an explosion in earnings,” said Eric Brewe of RBC Wealth Management, the most optimistic of the group.
Joel Ferrell of Morgan Stanley Smith Barney, who made the most accurate forecast for 2009, predicted the Dow would end 2010 at 11,448.
The most popular stock recommendations for 2010 were Microsoft and Boeing. Many of the brokers predicted a comeback for Microsoft stock, which is still trading at half the level it was selling for ten years ago. The brokers see Microsoft gaining some traction on the back of a wealth of new product releases including its new Windows 7 operating system. Several of the brokers were also bullish on Boeing, predicting that the completion of the 787 would prove a big boost to Boeing earnings.
Another popular pick was Isilon, a company whose server technology does a good job of storing massive video and and data files. The makers of the movie Avatar, for example, used Isilon’s technology to store and access high resolution 3-D content used in the production of the movie.
Last year the group’s recommendations recorded an average return of 57 percent, more than twice the return of the S&P 500 Index. But the Dow performed ended the year far higher than the brokers had predicted.
Other stock recommendations this year included the following:
- Cray
- Fisher Communications
- Boeing
- Esterline
- Expeditors International
- Dendreon
- PACCAR
- Nordstrom
- Costco
- Columbia Bank