Jim's
rating on
this stock

STOCK
SYMBOL

Closing
price that
day

Full Company Name & Jim's Comments:

CVD

45.91

Mad Mail question:

Covance Inc. (CVD)

Q:    You recommended CVD back in September as a great recession stock.  I listened to your interview with the CEO and liked their business model and went ahead and bought some shares.  After they matched the Street's earnings estimates last week, why are they now plunging so precipitously?  What did I miss?  Is it already time to get out of this stock?

Jim:    This is right at the crux of what I'm talking about, which is, once the market got bad, every stock that could be...  where someone could sell it to raise money... even the recession-resistant ones...  have been sold.  That's why the only ones that are really holding up right now are the dividend stocks, and the companies that are trading through cash.    I think the recession-resistant stocks - because the recession's going to be a long one - can be bought on weakness, and you should be buying, not selling.

GT

7.82

Mad Mail question:

Goodyear Tire & Rubber Co. (GT)

Q:    I know you have answers for all Wall Street questions.  One thing I cannot figure out is GT.  GT went from $37 to $10 with no significant news, other than $300 million being stuck in the Reserve Fund (which I think they will get back) and them tapping into their credit line for a $600 million loan.  How can stock go down this much?  Fundamentals see to be safe, earnings forecasts in 2009 may be a bit light, but how can stock suffer this much?

Jim:    Okay, here's the answer...  GT, in the end, is a cyclical stock that is related to autos.  The automobile build has been reduced from 16 to 15 to 14 to 13 to 12 to 11 million cars...  far fewer tires will be used.  It doesn't matter if the raw costs have come down.  Nobody's spending... and GT, while a good company, is still dependent on autos.  It's never going to change because they are tires...  In other words, stay away.

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