Good time to invest in the following stocksfor long term?
Here are my thoughts on your investment considerations and I hope you will find them useful to make a wise choice.
Let's agree that stock price in the short and medium term will not have a correlation with the fundamentals of the company. In the long-run, the foundations/fundamentals of a company is evident in it's survival and resilience through different market cycles. However, short/medium-term wise, stocks are mainly influence by market sentiment and momentum.
I will start off with the banking stocks under your consideration. While there're recent spat of news coming from these companies, no bad news do not necessarily mean it's good news. On the whole, the companies (other than JPM) still carry a lot of risk through their sub-prime and CDO exposures. While C has US$300+ billion guarantee from the government, and it has reported through an internal memo that the first 2 months of the year had been profitable, the fact remains that the US$300 billion is THE exposure, and risk going further down when the market sustains it bearishness. On top of that the 2 months of profitability reflects only operating income, not net income. I believe that with the passing quarter, things will be clearer, especially on the downside, with more risks being exposed. (Meaning to say, I think the worst is not over yet.) The same goes for Ken Lewis of BAC. He just have to come out and say something good about his company because Vikram Pandit of C did. I'll bet he still has limited knowledge of his BAC exposure to the CDO debacle though Merrill Lynch. Clearly, he agreed on buying over ML too early, only to suffer a tarnished reputation as a result.
The only good company here is JPM. Being a protege of Sandy Weill, I believe it's CEO, Jamie Dimon, has the right intellectual rigor and risk management team in place to weather the storm.
That said, I do not think all these companies are a good buy now. Unless you're a long-term investor who do not want to be bothered with the stock after purchase, it's best to hold off buying these companies even though it looks really really "cheap" now. Just remember that "cheap" can get cheaper.
On the note that "directors just purchased alot" of their own company, I would like to add that while they do so to show confidence to others, they might not always get the timing right. Remember when Mr Pandit and management bought shares of C at US$9++? It looked cheap then, but it fell 88%++ to US$1. At US$1.60, C really looks cheap. So unless you don't really care if the price can half or fall to the level of AIG, please go ahead to invest.
On F and GM, needless to say, they might not need the government aid afterall. For this month. Then what? Next month? They really have deep issues they need to work through, one of which is their contract with UAW. It just doesn't make sense for the overall competitiveness of the company. I would steer clear from these companies for now because their survival is so dependent on the health of the economy. As long as the bear market is present, their sales will continued to be badly affected. And what landed them in this mess in the first place, is among other thing, rosy forecast of their sales. Meaning that they will have to do a better job of understanding the severity of the depression.
On FCX, while they are commodity related, I would also wait a while before investing in it. Why? Because this is a general deflationary climate. Meaning that even prices of precious and industrial metals will be affected. The only way hard commodity prices looks to head is lower due to the overall decline in global demand. You've noted correctly that a lot of housing is built, thus creating an over-supply situation where the excess supply have to be absorb first before we see pull in prices of copper. But let's not forget the the world's demand for it is also affected. China for one was growing so fast. Now due to the slowdown in demand in the US, a lot of their factories are being closed, let alone new ones being built. (This being just one of many countries affected.) Thus, on a global scale, demand is down.
On an overall note, with the current rebound, which many term a bear rally (and rightfully so), it is unlikely to last. I see the Dow at 7500 tops before the bear resumes it's course. So please do not feel like you're letting go of such cheap sale. It is likely to see the Dow approach 5000 and S&P500 approach 530 when things start getting really cheap.
I hope this opinion piece serve as a impetus for your further exploration on your investments.
Wishing you the best.