Hot stocks for 2009: it's a tough time to pick winners. But here are some our panel of pros believe you won't get burned by.

• Author: Maley, Frank
• Position: FEATURE

Plenty of words come to mind to summarize the stock market last year. But which one does it best? "Brutal," says Frank Jolley, president of Jolley Asset Management in Rocky Mount. "Unfortunate," says John Woodard, president of Woodard & Company Asset Management Group in Advance. "Fascinating," says Bobby Edgerton, president of Capital Investment Counsel in Raleigh and possibly a fugitive from the planet Vulcan.

Only Mr. Spock's emotionless kinfolk, it seems, could ignore the pain and find chin-stroking allure during the 12 months that ended in October: The Dow Jones industrial average tumbled 39%, the state's second-largest bank stumbled to the brink of bankruptcy and investors fumbled billions in market value. In December, the National Bureau of Economic Research declared, to no one's surprise, that the U.S. economy had fallen into recession a year earlier.

Here's how bad it was. Though Edgerton won Business North Carolina's annual stock-picking contest, the three Tar Heel companies he picked took a beating, plunging 23.2%. That was enough to best Jolley by less than a percentage point. As for the other three investment pros, they got whipped by professional-wrestling great Ric Flair, whose picks posted an average total loss of 46.1%.

But there was plenty of chagrin to go around. No stock that anyone picked gained value. Edgerton came closest with Charlotte snack maker Lance, which slid just 5.6%. Many stocks were still dropping when the contest mercifully ended. That's bad news for many investors, but the low prices could be an opportunity for those with money to spend and a stomach for risk. It explains the market's appeal to Edgerton. "You've got these wonderful companies that have built incredible franchises that are getting richer every year. And the stocks are going down, probably way below any reasonable valuation." But how do you spot the bargains? "Balance sheet first, always. A lot of money, no debt--you don't go broke and you can get through the tough times."

Our contestants this year were forced to make their choices when it wasn't unusual for the Dow to fall or rise several hundred points--and sometimes both--in a single session. Stocks that looked good in late October would soon lose their luster. Our stock pickers don't have the option, as they do in real life, of changing their minds--and portfolios--during the year. "1 was just trying to pick things I don't think are going to hurt people," Jolley says.

He expects grim corporate earnings through at least three quarters of 2009 but says the picture might brighten for investors much sooner. "The markets tend to discount nine months ahead of time. So my guess is we'll have an inflection point sometime in the first quarter, where the markets start to anticipate better times ahead."

2009 STOCK PICKS

Bobby Edgerton

President

Capital Investment Counsel Inc.

Raleigh

Duke Energy Corp.

The disastrous tenure of Richard Priory, in which the stock and the balance sheet were weakened, is a bad memory. The 6% dividend looks safe. Debt has been cut in half, and businesses continue...