Stocks on my mind

After a week of tumbling stocks last week, and a huge gain for the market today, I think its a good time to recommend to the world the stocks I've been thinking about.

Typically, my top 3 choices are Apple (APPL), Google (GOOG), and Exxon Mobile (XOM). This week it's no different.

Why do I pick these 3 stocks consistently when I talk to my family and friends? Because these three company continue to amaze me.

And this week especially, I recommend these stocks because two of the three (Google and Exxon) missed earnings expectations, making them especially juicy buys after the initial dip in their stock prices.

Let's start with Apple. With all the hype of iPhone, and the continued success of the iPod, it shouldn't be hard to see the media attention Apple gets. But, with initial reports that the iPhone sales were below analyst expectations, the market was worried, until they heard about the "sweet deal" AT&T gave Apple (story here). AT&T is not only subsidizing the cost of the iPhone, but Apple is picking up monthly residuals on each subscriber, each $9 a month per user. Apple may be an one-product company now, but when that product is so huge, it doesn't really matter.

Speaking of one-product companies, Google is another one of those technological wonders that has succeeded off the back of one good product, their search engine. However, they too felt a huge hit to their stock price when their quarterly reports missed analysts expectations. But the stock has been creeping back slowly. Why? Because a further analysis of the 10 cent miss, and according to their CEO Eric Schmidt (story here), shows that a majority of the miss is attributable to a 10% increase in headcount and a shoring up of their accounting procedures. For a large stable company, such a hiring bonanza is cause for worry, but for a growth company, such an increase is akin to buying a larger factory or any other asset. Sure it costs money now, but eventually, they'll figure out how to turn that expense into profit.

On to Exxon Mobil. I don't need too much of an explanation. With continued high profits and soaring crude oil prices, who wouldn't think a gas company is a great (long-term) buy?

Market Thoughts

Today was an interesting day in the market, as stocks started up, wavered around mid-day, and crashed in the afternoon. Most indicators suggest that people fear stocks have had a long positive run, and is due for a crash, causing people to begin taking profits. The irony of situation is that if enough people believe that, it could be become a self-fulfilling prophecy.

I pondered the situation today, and I think in the next few months, stocks will still be up. Consider that technology and oil companies, such as Microsoft (MSFT), Google (GOOG), and Exxon Mobile (XOM) recently reported record earnings. While the housing market is slumping, I think the worst is almost over, with subprime mortgage issues clearing and the possibility of a Federal rate cut on the horizon.

Again, while I believe in the efficient market hypothesis, EMH works over the long run, and there is plenty of opportunity for both erratic movements up and down before the market settles down. I think a few more days of negative stock returns would signal a great time to buy into companies such as Microsoft and Google, who are down 3.6% and 2.5% respectively from just a few days ago when earnings were announced.