Investing to Wealth

Filed under: Ford Motor (F), Caterpillar (CAT), Costco Wholesale (COST)

After an unprecedented sell-off of stocks in January, which big cap stock may recover over the next month or two?

Costco (NASDAQ: COST) was down 11% over the last month, but it is on the "edge" of doing well. Its same-store sales are still running better than most companies in the retail industry. It still offers real bargains, and consumers are inclined more now than ever to look for affordable quality. It will only take on month of strong same-store sales for Costco shares to bounce back.

Ford (NYSE: F) is an odd candidate for being a good investment, but its shares are below $2 and it insists it does not need federal money. Three things could double Ford's shares. The first is if its sales outperform most car companies in January or February. The second is if the auto bailout forces the UAW to make job reduction concessions to each of The Big Three. The third is if Ford says that its cost cuts have brought its cash burn below the $5.5 billion it hit in the fourth quarter.

Another stock with a lot of recovery potential is Caterpillar (NYSE: CAT). The Administration plan to build out infrastructure has still not been completed. Building and rebuilding roads and bridges will be a large part of it. If heavy construction projects get more than their share of the new capital, Caterpillar could see a bump in sales. With a workforce reduction of 22,000 people, the firm has set itself up to produce better margins. Purchase of CAT's products could be a by-product of the $825 billion the government intends to spend to get the economy back on track.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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