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But what to put on your watchlist? In the latest entry in our ongoing series, Motley Fool Stock Advisor associate advisor Alex Scherer shares three companies (and an ETF) he kind of likes ... but not enough to buy right now.
One to watch
There's a lot to like about Leucadia National (NYSE: LUK ) , a Berkshire Hathaway-esque conglomerate run by, in Alex's words, "a couple of really smart guys." The highly diverse holding company, which owns positions in manufacturing, real estate, medical product development, and winery operations, among other areas, has a history of successful investments and strong management. Even its stock is reasonably priced. What's not to like?
Well, for one, the company is suing one of the businesses in its portfolio. Awkward. Leucadia holds an 8% stake in Australian ore miner Fortescue Metals as well as the miner's debt, and now finds itself suing the company after Fortescue tried to alter the terms of the deal in a way that would dilute the value of that debt. Alex seems confident that Leucadia is justified in its suit and is optimistic it will prevail, but there are no guarantees in the courtroom. And while some pessimism is baked into the current share price, it's not enough for him to hit the buy button. He's watching for a price pullback or, even better, a beneficial resolution to the suit, before he'll make a purchase.
Two to watch
You might have heard of Netflix (Nasdaq: NFLX ) -- a little company that's kind enough to send you your DVDs by mail and lets you download them for free. The problem is that everyone else has also heard about this company's rule-breaking, world-changing success, leading to a valuation that Alex terms "silly." In fact, he thought it was richly priced around $120 a share. It's since climbed to $165. But despite that lofty price tag, Alex has recently added the company to his personal watchlist.
"If the whole world is growing slowly or not at all, you have to consider a company that is growing sales 25% and earnings 30% year over year, regardless of its price tag," he says. "It's one of the few companies that could withstand a major double-dip recession, and that's got to be worth a premium."
Still, Alex isn't the type of guy who makes purchases for his portfolio when everything is rainbows and lollipops. He'd love to see some seeds of doubt, some dark cloud to help folks fall out of love with Netflix and knock the price down a bit. He's not holding his breath, but he is watching.
Three and four to watch
Netflix isn't the only company that would thrive in spite of an extended economic downturn. While he appreciates bad news for investing purposes, Alex isn't a gloom-and-doom type who is loading up on gold and guns in anticipation of the apocalypse. But more than ever, he's willing to listen to what those folks have to say.
"I'm in the midst of a multiyear internal debate about inflation and deflation and whether gold makes sense as an investment," he says. "I'm not there, but I'm paying more attention to gold stocks than I ever have before."
He is keeping an eye on the SPDR Gold Trust (NYSE: GLD ) ETF as a possible gold play, but he's more intrigued by Taseko Mines (AMEX: TGB ) . The mining company has been hammered as it appears that Canadian regulators may have killed off a potential new mine in British Columbia. But there's reason to believe the company will survive, and even thrive, regardless of the regulatory decision. As a result, Taseko combines the potential upside of an investment in gold with the massive negativity that has pummeled the share price of the company. Alex isn't ready to pull the trigger yet -- he's not sold on gold -- but it might become too cheap for him to pass up.
And that's exactly why it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, new and free from the Fool. Click below to start following one of the stocks mentioned above: