Please ensure Javascript is enabled for purposes of website accessibility

4 Predictions for 2009

By Rick Munarriz – Updated Apr 5, 2017 at 7:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's never too early to start looking ahead.

2008 is so yesterday. It's time to start looking ahead, so let's dust off this crystal ball to see what the future may hold for some of your investments.

Naturally, going out on a limb can be a risky pastime. However, it's really the only way to invest since the best stock pickers are the ones who train themselves to see what others don't. 

So, in no particular order, let me go over a few of the financial news events that I see going down next year.

1. Yahoo! will trade higher in 2009
The answer you're looking for is 2005. That is the last year that found shares of Yahoo! (NASDAQ:YHOO) trading higher. The stock tanked 35% in 2006, slipped 9% in 2007, and is being hammered with a 48% drop so far this year.

The streak will end in 2009, as there are too many catalysts working in the company's favor:

  • Microsoft (NASDAQ:MSFT) can always come back. The bid will be substantially lower than the original $31 offer, but enough of a premium to put shareowners out of their misery.
  • A new CEO may prove to be the visionary that can spark market share growth and margin expansion.
  • Yahoo!'s Asian investments, including chunky stakes in Yahoo! Japan and China's Alibaba may become market darlings again, even if Yahoo! itself does not.

Even if none of this happens, Yahoo! is still a huge traffic magnet in cyberspace. Once ad rates stabilize, the Internet should bounce back stronger than more traditional advertising platforms.

2. Sirius XM won't file for bankruptcy
Wall Street is braced for the worst with Sirius XM Radio (NASDAQ:SIRI). The stock has shed 95% of its value this year, trading for pocket change as if a Chapter 11 bankruptcy filing is around the corner.

It's easy to be fearful. The company has a third of its $3.4 billion in total debt due next year. Refinancing isn't easy when credit markets are tight, and a $0.15 share price makes a dilutive recapitalization unattractive.

CEO Mel Karmazin doesn't really have much of a choice, though. As a consumer-facing company, filing for bankruptcy reorganization could be fatal. Subscribers will back off from prepaying for long-term subscriptions, and automakers will want sweeter customer acquisition royalties. Either way, cash flow will take a colossal hit that is not offset by emerging out of bankruptcy with a cleaner balance sheet and wiped-out common stockholders. It won't be easy, but Sirius XM will do everything possible to avoid getting that far.

3. Tech will lead the market recovery
Some of this year's biggest laggards, like homebuilders, investment bankers, and banks are starting to bounce back. I don't buy it. It may be years before real estate developers have a reason to break ground on new homes or for investment bankers to underwrite deals. The one sector that will lead the country out of recession is technology.

It will be companies like Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG), which were smoking hot leading into the meltdown, that will regain their sizzle. They have been gaining market share during the lull, even as analysts talk down their near-term earnings prospects.

4. Chinese stocks will outperform stateside equities
I took a look at the one stock in China that I believe investors should own next year, but they should fare well with just about any of them. China's economy is showing signs of cracking, but the government is taking a proactive approach in beefing things up to nip the malaise in the bud, unlike the reactive approach elsewhere .

There are bargains to be found everywhere you look. Online gaming leader NetEase.com (NASDAQ:NTES) -- growing nicely and with insane profit margins -- is fetching just 11 times next year's projected profitability. Leading real estate agency E-House (NYSE:EJ) is trading at just 13 times next year's bottom-line targets, and this is actually a fast-growing industry in China.

I am optimistic when it comes to the chances for the United States to bounce back next year. However, I am even more confident that the sturdier Chinese equities will lead the way higher.

Other stories to read before the ball drops:

Microsoft is a Motley Fool Inside Value recommendation. NetEase.com and Google are Motley Fool Rule Breakers picks. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz doesn't mind taking out the crystal ball from time to time, if only to dust it for fingerprints. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sirius XM Holdings Inc. Stock Quote
Sirius XM Holdings Inc.
SIRI
$5.95 (2.23%) $0.13
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$241.07 (1.97%) $4.66
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$100.05 (2.62%) $2.55
Apple Inc. Stock Quote
Apple Inc.
AAPL
$149.84 (-1.26%) $-1.92
NetEase, Inc. Stock Quote
NetEase, Inc.
NTES
$78.05 (0.10%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.