(BAC) - (EV) - (MCD) - (MRK) - (PFE) - Kelley Wright, Investment Quality Trends newsletter

Kelley Wright, editor of the Investment Quality Trends newsletter, is not about to play the game of predicting where the market will end up at the end of 2007. However, this featured expert can say, with almost 100% certainty, that there will be opportunities in the market of stocks that are of the highest-quality and trading at their historic area of undervalue. Read Wright's outlook and learn about bonds, the Fed, oil and the new Congressional majority. Afterward, discover some of Wright's Lucky 13 for 2007. Commentary from January 1 You never know what Mr. Market will throw at you over the course of a year and 2006 was no exception. Kelley Wright and his team thought for sure that the markets in 2006 would prove every bit as tough as the ones in 2005 and that they would be lucky to post another 8.0% total return. So much for that prognostication, which is why Wright's team sticks to what they know; picking stocks. As of the closing bell on December 27th the portfolio generated a price gain of 13.67% plus dividend income on invested capital of 3.07% for a total return (capital gains plus dividends) of 16.74%. For the edification of new subscribers the Lucky 13 returned 31.20% in 2000, 15.20% in 2001, 10.90% in 2002, 30.20% in 2003, 13.21% in 2004 and 8.0% in 2005. With this year's return the average annual return for the seven years is 17.92%. So much for 2006; it's time to look toward 2007. Treasury yields are backing up as bond prices retrace a fair chunk of their earlier gains. With myriad data points to choose from in the economy and the apparent diversification away from the dollar overseas, it will be interesting to see how far Treasury yields rise. Wright's thought is that the 10-Year will re-visit the 5% area once again by March. From there, Wright sees yields declining through June of 2008 to approximately the 4% area and that should be the end of the move. Reading the above, one could guess that Wright falls into the Fed will probably need to lower the Fed Funds rate camp. As for that nasty 'R' word, we will simply have to wait and see. Much will depend on the consumer who continues to display mind-boggling resiliency. Wright continues to believe that gold is in a long-term bull market. Whether we see any fireworks this year in the gold complex remains to be seen; the metal is certainly building quite a base, however. Oil had a raucous 2006 and continues to enjoy a broad swath of support from the analytical set. From a technical perspective, though, the only way to describe the price action of crude last year was weird. While Wright doesn't fully subscribe to the 'oil was manipulated' theory, the price action was strange enough that oil might just trade sideways this year between $55 and $65 per barrel. That being said, Wright suspects that 2008 will tell an entirely different story by putting in a new high by mid-2008. In case you were off the planet in November a new Congressional majority will take the reins in January. Having sojourned in the desert so long, one would think that the new powers to be will want to play it safe and shore up their position going into 2008. One would also think that the recently deposed would be desirous of reclaiming their previous perch and to that end would behave entirely different from the manner that was the catalyst for their dismissal in the first place. This breed that makes up the legislative branch, no matter the letter after their name, is different from you and Wright however, and try as they might Wright suspects that they will succumb to the force that is their DNA. While comity may be the watchword for about, oh, let's say five minutes or so, business no doubt will revert to the usual. Moving from the political to the practical Wright believes that the markets will do what the markets always do; fluctuate. Where the indices end up at the end of next December is anybody's guess and a fool's game to try to predict. What Wright can say with almost 100% certainty, however, is that there will be opportunities in the market of stocks that are of the highest-quality and trading at their historic area of undervalue. THE LUCKY 13 2007 include: For The Lucky 13 portfolio, Wright and his team attempt to select stocks that exhibit the highest quality, offer historic value and have attractive dividend yields. Bank of America (BAC): Arguably still the best run bank in America; a holdover from 2006 with absolutely no apologies. Eaton Vance (EV): Designs, markets and manages both open-end and closed-end mutual funds and offers investment management services to high-net-worth investors and institutions. McDonalds (MCD): Another holdover from 2006 and why not? Still trading at Undervalue, MCD is too good to pass up. Merck & Co. (MRK): A global pharmaceutical company that discovers, develops, manufactures and markets products to improve human and animal health. Pfizer (PFE): Another reprise for 2007. While Wright and his team chalked up 15.5% in PFE last year, they like the sector and they love the value. This article highlights the commentary of Kelley Wright for the Zacks.com audience. Kelley Wright provides insightful analysis, market commentary, and favorite recommendations on a timely basis in "Investment Quality Trends" newsletter. Try it free for 30 days and see if you can improve your investment performance. Learn more about "Investment Quality Trends" and 30-Day Free Trial. And get immediate access to current issues and special reports. Click here now. Here's How You Can Profit from the Pros Find out what other leading experts are saying about the market. And what stocks they are recommending. For free. Just sign up for our free email newsletter, Profit from the Pros, where we'll give you the commentary, advice, and insight from those rare few experts who consistently beat the market year in, year out. | Blog Home| VitalStocks Home