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Tickers in this Article: C, YHOO, GOOG, JCP, XOM
Its earnings season, and perhaps not surprisingly, I find myself being asked more what I think about certain quarterly announcements. To that end, rather than reply piecemeal, I think it makes sense to address some of these questions in a public forum. (For related reading, check out Strategies For Quarterly Earnings Season.)

Citigroup (NYSE:C)
Q: Why are Citigroup's earnings so bad, and do you think the stock will come back?

A: The well-known bank recently reported a 57% drop in its Q3 net income. The reason? Large mortgage-backed securities and fixed income losses.

However, despite the bad news, I don't think that investors should relegate Citi to the doghouse. The company still has many things going for it. For example, it still has a huge global presence, and it remains heavily diversified in terms of its operations and revenue. In addition, management has been working to trim costs and Citigroup's chief executive officer, Chuck Prince, has said that he thinks that profits will be more normalized in the near future.

The bottom line is that, Citi, like many of the big banks, is suffering due to the lingering credit crunch. But over the long run, I think that they remain well-positioned and that 2008 could actually be a pretty decent year. As an additional positive, the stock carries a dividend and the current yield is about 4.8%. (For more on the credit crunch and the subprime meltdown, check out the Subprime Mortgages Feature.)

JC Penney (NYSE:JCP)
Q: Is JC Penney a good tax-loss selling candidate?

A: I do think there is there money to be had by purchasing JC Penney near-year end, possibly profiting from the "January effect".

To be perfectly clear, I am not crazy about JC Penney as a longer-term investment. To me there seems to be a growing fondness among the general public for discount stores - stores that offer many of the same products that JC Penney, but at a lower price. I think the company needs a big overhaul at the store level in order to remain competitive over the long run.

That said, the stock has taken a beating over the last several months, and I believe it could be a fairly decent bargain near year end. The stock could pop on solid holiday sales reports. Ideally though, I think if you are intending to profit from this stock over a shorter-term trend such as the January effect and the holiday sales seasons, this will require a lot of patience as you will probably have to wait to pull the trigger at a lowball price below current levels. (For more on tax-loss selling, check out Selling Losing Securities For A Tax Advantage.)


Exxon-Mobil
(NYSE:XOM)
Q: With oil prices over $80 per barrel, is this the time to be buying stocks like Exxon-Mobil?

A: Don't get me wrong. Sometimes it makes sense to jump on the wave and ride it for all its worth. However, in this instance I don't think it makes sense. There is an overabundance of negative news in the marketplace (the potential for war in Iran, word that Turkish troops may cross Iraq's boarders, hurricane concerns, etc.) that is temporarily boosting the price, and I would argue that once the dust settles and people realize their initial worries were probably overblown, I think that the price per barrel will once again drop.

Also, there are few other factors that make me want to shy away from the group right now:

• Winter is right around the corner. This means that fewer drivers will be on the road.
• There is growing talk about the need to find alternative sources of energy.
• Insiders, arguably the people that know the company and the industry the best, have been net sellers of the stock for a number of months now.

In short, I'd stay away from Exxon-Mobil and its oily brethren.

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