DAVE HARRIS: Welcome to podcast # 34. I'm Dave Harris. This is for Friday Jan 26^th 2007. I'm a long term investor with a diversified portfolio of stocks. There wasn't much this week in the form of economic data. I'll get into that later, but so far I don't think inflation is posing enough of a threat to justify a rate hike from the Federal Reserve at the next meeting. Meanwhile, earnings news is on center stage. I like what I've seen overall from 4^th quarter earnings. The tech sector is getting a boost again from encouraging news from Yahoo and Texas Instruments. Sun Microsystems (SUNW), the computer server and software developer, also pleased investors. The company said revenue went up and earnings beat expectations in the fiscal second quarter. It looks like the company is turning around here. But if you want a better tech stock, I suggest you buy IBM (ticker IBM) or Intel (INTC) instead of Sun Microsystems. I think the future looks good for Yahoo. They beat the street in the 4^th quarter. The revenue guidance for the first quarter of about 1.2 billion and roughly 5.4 billion for the full year was in-line with expectations. More importantly, there's a lot of excitement over the company's new Advertising technology called Project Panama. That should be a strong source of revenue for the company and make them more competitive with Google (GOOG). I like Yahoo (YHOO) here a little over $28 per share, although I don't see it going much higher than $32 per share at this point.

eBay (EBAY) beat expectations in the 4^th quarter. The business is exceptionally strong in the U.K. and Germany .The quarter's revenue went up 29% from last year. The company also raised the full year earnings guidance above the street’s expectations. I also like eBay’s plan to buy back $2 billion in stock in the next 2 years. I think now is a good time to buy eBay. I see the stock going to at least $40.

Johnson and Johnson (JNJ) had a good report. There was a 4^th quarter profit increase of 3 and a half percent. EPS was .81 which beat by 2 cents and the revenue increased over 8%-that was expected. The company had higher sales for overseas products. There was a great showing for the consumer health division and pharmaceuticals. For the full year, EPS was forecast in line around $4.05-$4.10 per share. I suggest buying the stock here at around $66 per share. I think JNJ is on the way to $75 dollars. The results from Abbott labs (ABT) were fair in my opinion. They had a 4Q loss from the KOS pharmaceutical purchase. Excluding items, EPS of .75 cents beat by a penny. They offered a 2007 forecast that was in line with sales growth of about 14%. I have a HOLD on the stock and I would wait to see what they can pull off next quarter.

AT&T (T) beat expectations with their 4^th quarter profit increase of 17%. Even when excluding the costs associated with the Bell South merger, EPS was .61. That was above analyst views. For the year, income rose 54% and Revenue up 44%. The company said it was a strong year and they're looking really good going into 2007, in my opinion. Double digit earnings growth and cash flow is in the works for this year. AT&T is my stock pick of the week and definitely a buy here at around $36-$37 per share. I'm going to raise my price target to $50 per share in the next 12 months.

McDonald's (MCD) I think is a BUY. They said 4^th quarter profit doubled. MCD had record sales overseas and plan to open 800 new stores this year mostly in Japan and China. I'm not at all concerned over the increase in food costs because beef prices are supposed to decline. I think the shares are lower because of basic profit taking. EPS was .61 vs. .47 last year. The results were in-line and based on a raised forecast. I think this profit taking is a great reason to buy the stock now at $43 per share.

There's more trouble on the housing front. Sales of existing homes fell .8% last month. The media wants to blame that for any weakness in the stock market. I don’t agree. Is this really a surprise to anyone? We've known for months that housing is bad. Has it bottomed? I think it has a bit further to go. New home sales for December come out later today from the commerce department. Many people are applying for unemployment benefits. The claims rose to 325,000, which was more than expected. I think it was good news that the index of leading economic indicators rose 0.3 Percent in December. That came in slightly lower than expected. This data means we should expect modest economic growth in the months ahead. I mentioned earlier that inflation poses little to no threat in my view, and I think this news supports that idea. I think the 4^th quarter earnings were generally strong and that tells me a recession is unlikely any time soon. Later today we'll see how manufacturing is from a report on durable goods orders. Also new home sales for December comes out today from the commerce department.

That's all for today's show. I'm Dave Harris. Write me an email with any questions or comments at the "contact us" link on this page. My website is www.daveonstocks.com. Thanks for listing. This is Dave On Stocks.