NEW YORK (CNN/Money) -
Stocks inched higher Thursday after the Commerce Department released its final tabulation of gross domestic product in the fourth quarter, showing it grew more than previously anticipated.
Gross domestic product (GDP), the broadest measure of economic strength, grew at a revised annual rate of 1.7 percent in the period after shrinking 1.3 percent in the third quarter, Commerce said. Its previous estimate of fourth-quarter growth was 1.4 percent, and economists surveyed by Briefing.com expected that to be unchanged.
For those looking to enter the markets on the last day of trading before the holiday weekend, analysts and strategists appeared on CNNfn to suggest some stocks in the manufacturing, computer and financial sectors.
John Birger, senior writer with Money magazine, created a list of five solid investments based on price-to-earnings ratios and growth in market share. Wal-Mart, Lowe's, Southwest Airlines, Morgan Stanley and Dell Computer made the list.
"Wal-Mart is an extremely well-run company. The reason that we like it in particular right now is because of Kmart. Kmart's plans to close stores are likely to have a major benefit for Wal-Mart's bottom line," he said. "Its price his high, but if you look at its price-to-earnings ratio, Wal-Mart is actually slightly below its five-year average. And when you consider that we're just coming out a recession, I think the P/E is actually better than it looks."
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John Birger's picks
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"Lowe's earnings multiple is lower than Home Depot's and its growth rate is higher," Birger continued. "But the whole sector is appealing because with so many mortgage refinancings, people have been putting more money into their homes, and there's this mini-wealth effect that's going on in home improvement right now."
"Southwest is one of the only airlines that's making money these days. And the story is pretty simple: Their cost structure is so much lower than that of the major carriers that they can take on routes that would be unprofitable for theDeltas (DAL: Research, Estimates) and the American Airlines (AMR: Research, Estimates)," he said. "So we think their market share is likely to grow."
"Morgan Stanley probably is the riskiest of the picks," Birger added. "It's growth is going to depend on a strong economy going forward and a strong investment banking climate. With that said, its profit margins are about 70 percent higher than that of Merrill Lynch (MER: Research, Estimates) and Goldman Sachs (GS: Research, Estimates). So when the market turns around, I think it will impact their earnings much more."
"Dell is sort of like Wal-Mart in that they're taking advantage of the problems of some of their competitors. What great companies do in recessions and tough times is they consolidate market share, they steal market share from their rivals. That's exactly what Dell has done with both Compaq (CPQ: Research, Estimates) and Gateway (GTW: Research, Estimates). And we think that when the market for computers and servers rebounds, and there are already some very preliminary signs of that happening, we think Dell is going to be very, very well-positioned."
Shares of Wal-Mart (WMT: down $0.21 to $61.79, Research, Estimates) are in a 52-range of $63.94 to $42.00.
Lowe's (LOW: down $0.32 to $43.38, Research, Estimates) shares have been between $48.88 and $24.99 in the last year.
Southwest Airlines (LUV: up $0.18 to $19.38, Research, Estimates) shares are in a 52-week range of $22.00 to $11.25.
Shares of Morgan Stanley (MWD: up $1.24 to $57.90, Research, Estimates) have been between $75.23 and $35.75 in the last year.
Dell Computer (DELL: up $0.27 to $26.22, Research, Estimates) shares are in a 52-week range of $31.52 to $16.01.
Robin Griffiths, technical analyst with HSBC Securities, recommends "old economy" stocks, such as Phelps Dodge and Caterpillar.
"Caterpillar is typical of a great business franchise, notoriously cyclical," he said. "It got a bit beaten up but the company's now rationalized itself. It can make money in most markets and it's a much better value than some of those so called new economy stocks."
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Robin Griffiths' picks
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"Phelps Dodge is a miner," Griffiths continued. "It's a leader in copper, but it mines many metals. Metals generally are making major lows on their chart for the first time in years. From very cheap levels they're going to start picking up and start looking good. So the companies that mine those assets are going to look very good."
Shares of Phelps Dodge (PD: up $0.34 to $42.00, Research, Estimates) are in a 52-week range of $51.90 to $25.74.
Caterpillar (CAT: down $0.03 to $57.46, Research, Estimates) shares have been between $59.99 and $40.31 in the last year.
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