DAVE HARRIS: Welcome to another podcast of Dave On Stocks. This show is for Monday March 5^th 2007. Podcast #45. I'm Dave Harris. I'm a long term investor with a diversified portfolio of stocks.

What we have in play is a very volatile stock market, and I expect that to continue for the next few weeks. Last week was the beginning of a correction that was long overdue. After a brief period, I think the market will rally again. I don't believe the market's fundamentals are the problem. Most indicators are pointing toward slow, but steady economic growth. Few expect a recession, and my belief is that inflation will be under control as Fed chairman Bernanke said.

Yes, worries persist about companies in the subprime mortgage business and the February consumer sentiment reading from the University of Michigan came in lower than expected. I would stay away from those stocks in the subprime business anyway. But most of the economic news has been good. Manufacturing was strong last month. The ISM index was 52.3 which means expansion. That was better than expected. Personal income was up 1% in January, the biggest gain in a year. Consumer spending also increased significantly, and that will certainly benefit the economy. I'm also very happy with the latest GDP figures. In the 4^th quarter, the economy grew by 2.2% which was better than many expected. Again, I think this market is simply in correction mode. Sure it's been a rough week. The DOW fell 3.3% for the week. The NAZ dropped 5.9%. The broader S&P fell 4.4%. Still, I'm forecasting that in due time, maybe a few weeks, stocks will gain back what we just lost. Then they'll go above and beyond that. Meanwhile, I have a few stocks I want to highlight.

Viacom Inc. (VIA) reported a 32% increase in revenue for the 4^th quarter, beating expectations. Profit almost tripled mostly due to the movie business which had over $86 million dollars in quarterly revenue vs. about $761 million the year earlier. I think the addition of DreamWorks was a great move for Viacom. Yearly revenue rose 19%. I have a buy rating on the stock. Viacom closed at $39.17 on Friday. It should be trading at $45.

Water utility company Agua America (WTR) reported a positive 4^th quarter on strong customer growth and more favorable weather. For the full year, customers rose 7%. For the quarter, operating revenue went up 11%. Diluted EPS was .19 cents per share compared to .17 cents last year. Net income rose 16%. Rate settlements added to the solid results. I think Agua America has a great future. Here's a company that keeps growing with acquisitions. In February, WTR acquired Sea Cliff's Aquarion Water Company which provides over 13,000 New York residents with drinking water. The company is expanding into the wastewater business with the addition of several septage hauling operations. Overall, the company completed 28 acquisitions. The company services roughly 2.8 million residents mainly in the U.S. I suggest you buy the stock. WTR closed Friday at $21.71. I think it's going to $30 per share.

I'm unhappy with results from computer maker Dell (DELL). The fourth quarter profit fell 33% on poor laptop sales. Dell is under SEC investigation for their accounting. Until I see this company turning around, I suggest you sell the stock. Dell closed Friday up .17 cents at $23.18.

I think American International Group (AIG) is looking good here. The insurer's fourth quarter net income skyrocketed to $3.44 billion, and over $14 billion for the year. The company also plans to buy back $5 billion work in stock this year and will increase the annual dividend by 20%. AIG is a buy. The stock closed Friday at $69.54. I think the stock is headed to $80 this year.

There's some significant economic data to watch later this week. A report in initial jobless claims is Thursday. On Friday it's a report on non-farm payrolls, average hourly earnings and average workweek data for last month. We'll also get a read on unemployment. That'll give you a good idea on labor market conditions. Also on Friday, the Commerce Department will issue a report on international trade.

That's all for today's podcast of Dave On Stocks. Yes, I think it will be a volatile week. I'll talk to you again soon with another show. Remember you can write me with any questions or comments at the "contact us" link on this page. My website is www.daveonstocks.com. This is Dave On Stocks.