DAVE HARRIS: Welcome to Dave On Stocks podcast # 37. This show is for Monday February 5th, 2007. I'm Dave Harris. I'm a long term investor managing a diversified portfolio of stocks.

Internet company Google (GOOG) surprised analysts with a 4^th quarter earnings that almost tripled from last year. Results beat expectations, but I guess the results didn't blow investors away because the stock traded down significantly after the news. Many analysts from the likes of Prudential Equity and UBS raised their price targets. We're talking about $600 per share and higher from some analysts. I think the results were great. Google is the king in internet search and I see it going to $550 per share this year. Google is a buy. Currently it's at $472.21 per share.

Coffee maker Starbucks (SBUX) had record results and said first quarter net revenue was 22% higher from last year. EPS matched expectations at .26 cents. They opened a record 728 new stores in the quarter had a 6% rise in same store sales. That's the most stores ever opened in a quarter for Starbucks. For the holidays, the Starbucks card was very successful. It's not just coffee, but breakfast and lunch items that added to results. The company forecast earnings in line for this year at around .89 cents per share with revenue growing 20%. I think the China market is a very exciting opportunity for Starbucks. Here's a place that's truly expanding with 2,400 new stores targeted for the fiscal year. Currently there's a worldwide count of roughly 13,000. SBUX is a buy here at $33.98 per share. This stock is going to $45.

Chevron (CVX) reported a 9% profit decline in the 4^th quarter because of lower natural gas prices in the states, still results beat expectations. Income for the full year was a record at over 17 billion. Exxon Mobile (XOM) also reported a 4^th quarter decline, but the full year 2006 results were the biggest annual profit in U.S. corporate history. With all the talk about alternative fuel sources and crude prices at $57.60 per barrel (as of February 2), I think the oil companies have seen their best days for a while. I would hold these stocks if you've already got them as an investment. It's not the time to buy yet.

The price of corn and wheat is a drag on Kellogg (K) these days. President Bush's stance on the need for alternative fuel is a result in the ongoing rise of corn prices since last year. Kellogg's 4^th quarter net income fell 5%, as fuel and energy costs added to the mix. Earnings missed expectations slightly, but revenue rose 8% and somewhat above expectations. The company felt they met, and in some cases beat their own expectations for the full year. Guidance was raised for full year 2007. Kellogg now expects to earn roughly $2.68- $2.73 per share. I think K is a buy and like the stock here at $48.99 per share. I see it going to about $55 dollars.

Simon Property Group's (SPG) strong quarterly results beat expectations. In the 4^th quarter, FFO (funds from operations-that's what REITs use instead of earnings to measure cash performance) rose 7.5% to $1.57 per share vs. $1.47 last year. Net income went up 77%. More stores opened and rents went up. Regional mall occupancy rose to 93.2% compared to last year's 93.1% increase. SPG’s overall rent rose 2.6%. The company said full year 2007 should bring in $5.70-$5.80 per share. The shopping mall REIT raised their quarterly dividend by 10.5% to .84 per share. This is one of the largest owners of shopping centers in the U.S. We just had evidence that consumer spending was strong in December and the economy grew 3.5 % in the 4^th quarter (latest GDP). That's more than expected. So I think SPG is a buy in this environment. It's selling at $115.13 per share. I think the stock is going to $120 per share this year.

Amazon.com (AMZN) reported that 4^th quarter results came in lower from slicing prices and smaller shipment fees. Although online spending increased significantly, their net earnings declined by more than a half. For 2007, AMZN forecast sales to increase between 21%-28%. Although that's above some analyst's expectations, I think the shares are overvalued and suggest you sell the stock. Expect further decline in the share price until results prove more favorable.

My stock pick of the week is PepsiCo (PEP), the snack foods and soft drink maker. In the past few quarters, results beat expectations. Although Florida's crop has been smaller and the cost of oranges may be an issue (Pepsi makes the Tropicana orange juice), the company expects the supply chain will be changed. I think that's a short term issue. Long term I expect continued profitability. PEP reports this Thursday. If the earnings report is favorable, I suggest buying PepsiCo.

The latest economic news looks encouraging. I like the stronger than expected December U.S. factory orders which rose 2.4%. Buyers are in a good mood these days. The consumer sentiment reading from the University of Michigan rose to 96.9 in January from the 91.7 reading in December. I think the jobs report was pretty much on target. 111,000 new jobs were added in January, and the unemployment rate was 4.6%- slightly higher than expected.

Look for earnings this week from computer tech company Cisco (CSCO), Emerson Electric (EMR) and auto maker Toyota (TM) on Tuesday. Insurance company Prudential Financial (PRU) and the diversified entertainment company Disney (DIS) report Wednesday. Disposal services company Waste Management (WMI) and beverage and snack maker PepsiCo (PEP) are on Thursday.

That's all for this podcast of Dave On Stocks. I'm Dave Harris. I'll talk to you again soon with another show. Write me with any questions or suggestions about the podcast use the "contact us" link on the web page. My website is www.daveonstocks.com. This is Dave On Stocks.