DAVE HARRIS: Welcome to Dave On Stocks. This is podcast #51 for Monday April 9^th 2007. I'm Dave Harris. I'm a long term investor with a perspective on the stock market along with individual stock advice.

The second quarter is just beginning, and this week we get earnings from companies reflecting performance in the first quarter. Some notable companies include aluminum producer Alcoa (AA) on Tuesday, biotech company Genentech (DNA) on Wednesday and conglomerate General Electric (GE) with earnings before Friday's opening bell. Wednesday brings minutes from the Federal Reserve's March meeting, which may reveal more about the future of interest rates. The March sales from retailers and a report on initial jobless claims are on Thursday. An important reading on inflation comes out Friday, with last month's wholesale price levels (Producer Price Index). The University of Michigan's preliminary April consumer sentiment index will also be released.

The March employment report showed some good strength in the economy. The unemployment rate fell to 4.4% in March from 4.5% in February. Average hourly earnings went up .3%. Non-farm payrolls increased to 180,000, and that's higher than expected. I think the market is watching for growth in corporate earnings and the jobs report here should add to that steady growth. So it looks like we are in fine shape.

The ISM's index on the service sector, or non-manufacturing activity, in March fell to 52.4. That number fell from February. But since it was over 50, that still means expansion. Manufacturing activity was also a bit slower than expected. The index dipped to 50.9 in March from 52.3 in February. This data reflects slow but steady growth.

A rare piece of good housing news was the better than expected pending home sales in February. However, I don't think housing has turned around as it has further to decline this year. I don't think the market should worry about housing and subprime issues greatly hurting the broader economy. We have slow economic growth as expected, because that's what the fed wants. I think the consumer is strong. We just heard personal incomes and consumer spending were both up .6% which doubled expectations. Unemployment is lower with non-farm payrolls up. The economy is looking just right here.

Wine and beer maker Constellation Brands (STZ) reported a 26% increase in profit in the fiscal 4^th quarter. Net sales went up $1.14 billion on earnings of .35 cents per share, excluding costs. The results beat expectations. Constellation is facing some tough competition in Brittan, but they’re strong in the States. I think the acquisition of Vincor International last year was a smart move. U.S. wine sales went up 31%. But I'm disappointed in the beer performance. Sales there fell 56%. The company guided lower with EPS around $1.40 for fiscal 2008 compared to $1.68 they made a year earlier. I would like to see Constellation improve beer sales and show some strength in Brittan before I can recommend the stock. So, Constellation Brands is a sell. STZ finished Thursday up .67 cents to $21.49.

Circuit City (CC) had a loss of 7 cents per share in the fiscal fourth quarter resulting from merchandise discounts. Results were well below expectations with sales just over $3.6 billion. The company is in the process of downsizing and cutting costs. I think there may be some surprises to upside, but until we see it I suggest you sell the stock. The better pick here is Best Buy (BBY). Sales there jumped 21% as the fiscal fourth quarter's profit rose over 18%. Same store sales jumped nearly 6%. Overall the results beat Wall Street expectations on strong demand for flat panel T.V. sets. Revenue for the full year is forecast at around $39 billion and same store sales are roughly 5%. I have a buy rating for Best Buy. BBY closed Thursday up .56 cents to $48.45. Circuit City closed up .26 cents to $18.47 per share.

Johnson & Johnson (JNJ) was the worst DOW performer in the 1^st quarter. When the drug maker reported earnings last January, fourth quarter profit rose 3.5%.  I think JNJ is still a solid healthcare stock selling well below the likes of their competitors. Novartis (NVS) sells at over 18 times earnings. Proctor & Gamble (PG) has an earnings multiple of 22.43. Merck & Co. Inc. (MRK) has a P/E of 22.47. Johnson and Johnson has a P/E of only 16.48. JNJ is a buy. The stock finished Thursday up by .26 cents to $61.55 per share. I think we'll see it well over $70 this year.

Coming in May, the EMI music catalogue from the Apple (AAPL) iTunes store will be available without the copyright protection (the music can be shared and played on any device) with better sound quality. These songs without the the so-called DRM (Digital Rights Management) can be purchased for .30 cents more. Apple Chief Exec Steve Jobs has been pushing for DRM-free music since the beginning of the year. You will still be able to buy songs with the DRM for .99 cents. Best Buy announced last week that around 150 more stores will sell Apple products this year. Many Best Buys will have separate Apple stores inside them - that's a store within a store. Apple's stock is a buy. Shares closed higher by .41 cents at $94.68 per share Thursday.

The market was closed on Good Friday. On Thursday, the DOW finished up 30.15 to 12,560.20. The NASDAQ was 12.65 points higher at 2,471.34. The S&P closed up 4.39 to 1,443.76.

That's all for today's podcast of Dave On Stocks. I'm Dave Harris. I'lll be back again soon with another show. Write me with any comments or questions at the "contact us" link on this page. My website is www.daveonstocks.com. This is Dave On Stocks.