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Dear Mr. Berko:

Dear B.R.:

Yep, there is some stuff I’d nibble on right now. I like the auto parts industry for all the obvious reasons, not the least of which is that we will be keeping our cars a lot longer. One of the largest in this group is Genuine Parts Co. (GPC-$33.28), which doesn’t butter my bagel. It’s a gut thing. I can’t tell you why, just that this issue does not feel good.

But I do have good vibes for AutoZone Inc. (AZO-$105.50), which expects to post $6.6 billion in revenues from its 4,400 shops. Net profit margins continue to grow, and revenues may increase at a better than normal rate over the next two years, thanks to our economic slump. Even in this difficult market, I think shares of AZO can climb above $200 in the next couple of years, providing its board does not split the stock.

Advance Auto Parts Inc. (AAP-$27.28) also should post solid results this year and next. This $5.2 billion revenue company only has $500 million in debt and new CEO Darren Jackson is on a roll. Though AAP’s margins lag those of AZO by a moon mile — 5.2 percent vs. 9.7 percent — I think Jackson will narrow the gap in a couple of years, and I believe AAP shares could be a $60 number in three years or so.

Now I like some of the generic pharmaceutical stocks, but I’m not fond of the big-time old-line manufacturers such as Eli Lilly & Co. (LLY-$33.04) or Pfizer Inc. (PFE-$16.69). LLY has been selling medications since the Great Flood but has been bumping its head against a wall for the past few years. Forthcoming patent expirations are likely to deter future investors, and its pipeline is about as exciting as watching a cow chew its cud. Pfizer pays a swell 7.7 percent dividend, but I’m concerned that management seems to be gorging itself with debt that has increased by 50 percent in the past few years. I’m also concerned that half of its U.S. drug sales faces patent expiration by 2011, and that its research and development successes are almost nonexistent.

However, I think $2.1 billion revenue Perrigo Co. (PRGO-$32.90) could be a $60 stock in the coming few years. PRGO’s three business segments: — consumer health care, private-label over-the-counter drugs and nutritional products — seem immune to a slumping economy. PRGO has a strong pipeline and has positioned itself to capitalize on the wave of patent expirations Pfizer, Lilly and others face over the next few years.

I also believe that Teva Pharmaceutical Industries Inc. (TEVA-$40.05), which develops and manufactures generic and proprietary branded drugs, is attractive and could be a $90 stock by 2012. This $11.5 billion company should continue to provide good revenue and income growth over the foreseeable future, and its expansion into Latin America and Eastern Europe should ensure continued growth.

You might also look at some of the educational services companies. Many out-of-work Americans will seek to make themselves a better commodity in the work force by learning new skills or improving the ones they have. Strayer Education Inc. (STRA-$178.29), with an enrollment of more than 40,000 students, could be the best of the group.

If you suspect the market will continue its downward trend, you might consider Rydex Inverse S&P 500 (RYURX-$52.72), a no-load mutual fund that takes short positions in the market. Its $238 million portfolio yields 3.5 percent and is plus 21 percent so far this year.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © 2008 Creators Syndicate, Inc.