Today's posting is on some long term capital gain ideas that have some risk involved. But everyone needs some of these for a balanced portfolio. I am personally not recommending any of these, but they do have my interest and stay on my watch list for possible purchase.
BAC..Bank of America is the second largest consumer bank in the country. The federal government decided two years ago that allowing this large bank to fail would be a disaster and moved in and bailed out the company. Stock investors got hit badly and lost most of their investment and the nice dividend. The stock selling for around $6 now has seen a five handle in the last three months. I expect we have seen the lows here as well. Here is my trade. Wait for Europe to blow up again with some bad news which should push BAC down. Then sell a $4 or $5 put for some month up to January 2013 which are attractively priced. That should be some safe cash you can use for one year with little risk.
NSBC..This one has some serious risk, but might be worth some part of your portfolio. North State Bank is a small community bank that has most of it's branches in Raleigh NC. Raleigh escaped most of the housing bubble and despite having some housing issues NSBC has never shown an operating loss during the financial crisis. The stock is selling around $3 to $3.50 and bounces around due to the low float and small daily volume. Selling at lower than book value, which frankly at this level of business is only a talking point, still NSBC looks like a value. Insiders have been slowly and carefully buying shares in the last year. Take a close look and if you like it buy in small blocks and be sure to set your price, do not buy at market. If you could buy at $3 and sell some years down the road at $6 you could do a double.
BBT...This medium sized bank has also done well during the financial crisis. Admittingly it has had some issues with it's commercial lending unit as well as it's residential lending portfolio as well. However this bank has as solid a management as you can find. John Allison, one of the smartest bankers around gave up the chairmanship a few years ago to Kelly King in almost a seamless move and BBT has continued to improve it's prospects since bottoming out during the financial mess. BBT took TARP basically that was forced on it and has paid it back. Dividends were cut, but still pays just under 3%. BBT will never make you rich, but it will evolve into a safe place to find capital gains and safe dividends . Banks will be like utilities going forward and I think BBT is perfectly positioned. Wait patiently for a price nearer $20.
BP...This company still recovering from the oil spill in the Gulf of Mexico has lots of potential upside and also lots of danger. The danger is obvious as the lawsuits and overhang of costs from the oil spill continue to add up against the cash position of $20 billion set aside for the oil spill payouts. There also is the worry that BP will end up selling off so many oil resources that the company will no longer be able to survive without a merger. That being said BP continues to fascinate me with upside potential coming from what could be the end of oil spill losses and the realization that as much as $10 billion of that pot could be coming back to the company. BP actually noted pleasure in a recent week that one of the projects they had up for sale earlier fell through so maybe the worse is over. If it is over the company which has intense pressure in England to move the dividend back up might be doing so sooner than expected. Many retirees in that country receive pension income from BP dividends. Also note that is Iran gets the bomb or Israel attempts military action to stop Iran BP could be one of those companies that sees a big tick up in price due to the increase in oil cost already happening now.
I do not own any of these stocks either as a long or option.
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