Five Stock Picking Ideas

Here are five stock picks from Forbes columnist Lisa Hess, who is a money manager based in New York:

1. Fannie Mae (FNM)- It will be a beneficiary of the current housing situation. It's market volume will expand as other mortgage lenders go out of business. Congress just expanded the loan limits that Fannie Mae can deal with. The guarantee fee that it receives has been increased from 20 to 27 basis points. Finally, it is currently priced below its 1996 low price (35) at which it would be at 1.1 times book value.

2. Sallie Mae (SLM) - It is the largest provider of government guaranteed student loans. The future demand for higher education looks strong. The new CEO has recently restructured SLM, but it is still trading near its 2000 price.

3.Amgen (AMGN) - This one is a bit of a gamble. Hess feels this is the biggest and maybe best company in the biotech sector. She says, "To buy fine stocks at good prices, you typically must wait for them to stumble." Amgen has "stumbled" because its two largest selling drugs (Aranesp and Epogen) account for 40% of sales, but are currently being investigated by the FDA. They are investigating whether the drugs (which fight anemia in cancer patients) may promote tumor growth. But Hess thinks this is already priced into the stock, and the market is "grossly undervaluing" its $3 billion in research and development.

4. Interactive Brokers Group (IBKR) - This is the world's largest market maker in options. It is up 17% since its May IPO, but is still cheaper than other publicly traded exchanges.

5. Target (TGT) - Hess feels the stock is a bargain at its current price. Target appeals to both bargain shoppers and those interested in style.

The risk / reward performance of these stocks can be enhanced if they are managed with the system in my stock trading book.