If you have cash to invest this month, I highly recommend these five below. Here they are, in no particular order:
Taiwan-based
Silicon Motion Technology (NASDAQ:SIMO) has its hand in lots of hot
markets and is a big player in flash memory storage — flash memory
cards, USB flash drives, card readers and solid-state hard drives. In
fact, most of the NAND flash and next-generation flash products on the
market — whether produced by Samsung (PINK:SSNLF), SanDisk
(NASDAQ:SNDK), Toshiba, Micron (NASDAQ:MU) or Intel (NASDAQ:INTC) — are
supported by Silicon Motion controllers. Silicon Motion also produces
multimedia chips including embedded graphics processors, image
processors and TV tuners. Lastly, it has been increasingly focused on
controllers for smartphones, tablets and notebook PCs, as well as
wireless transceivers for 4G LTE smartphones and tablets.
In the
third quarter, Silicon Motion’s sales rose 25% to $63.2 million compared
with $50.5 million in the second quarter. Looking forward, the analyst
community is expecting annual fourth-quarter sales growth of 51% and
88.9% earnings growth. In the past three months, the analyst community
has revised their consensus earnings estimate 32% higher — a phenomenon
that typically precedes blowout earnings surprises.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Questor Pharmaceuticals (NASDAQ:QCOR)
likes a challenge. As a specialist of difficult-to-treat central
nervous system disorders, the company has been particularly successful
with its multiple sclerosis treatment, H.P. Acthar Gel. The company also
makes Doral, which is used for the treatment of insomnia. In the
massive biotechnology industry, Questcor is top-notch in terms of
earnings per share growth and return on equity.
For the fourth
quarter, the analyst community is expecting 127.4% annual sales growth
and 265.7% earnings growth of 38 cents per share. In the past three
months, the analyst community has revised their consensus earnings
estimate 32.6% higher. Typically, such positive analyst earnings
revisions precede future earnings surprises.
Top 5 Emerging Growth Stocks to Buy for January in 2012 -Hansen Natural (NASDAQ:HANS) is
the mastermind behind Monster, a dominant energy drink in the U.S.
Looking at a can of Monster Energy drink, the flashy staple of
sleep-deprived college students, one wouldn’t think that the company’s
humble beginnings stem back to just one father and three sons working
with a juicer in Southern California. In fact, although Hansen sells
supercharged drinks like Monster and Java Monster, most of its drink
roster is actually very wholesome. For example, it has 30 real fruit and
spice soda flavors, a number of immune system-boosting drinks, vitamin
waters and an array of teas and lemonades.
In recent quarters,
Hansen Natural has reported “monster” sales and profit growth.
Third-quarter sales jumped 24% from $381.5 million last year to $474.7
million this quarter. Over the same period, net income also rose 24% to
$82.4 million, or 88 cents per share. Plus, speculation is heating up
that Monster might be an acquisition target by Red Bull or one of the
major soft drink companies. With Red Bull’s recent decision to pull out
of NASCAR as a sponsor, a “monster” acquisition might be just what the
energy drink maker needs to capture additional U.S. market share.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Spectrum Pharmaceuticals Inc. (NASDAQ:SPPI)
is familiar pharmaceutical company I once discussed in the Top 5
Emerging Growth Stocks for December. Spectrum specializes in oncology —
the treatment of cancer — and currently has two cancer treatments on the
market: Fusilev, a treatment for advanced colon cancer, and Zevalin, a
treatment for a type of lymphoma.
But what really excites me about
this company is what it has in its pipeline: Spectrum has more than 10
drugs in either late-stage development or development! This includes
Apaziquone, a treatment for bladder cancer, Belinostat, another lymphoma
treatment and Ozarelix, a treatment of prostate cancer. This is a
midsize biotechnology company already at the top of the industry — in
terms of return on equity — and is about to experience blowout growth.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Jazz Pharmaceuticals Inc. (NASDAQ:JAZZ) has
two flagship drugs — Xyrem, the only narcolepsy treatment approved by
the World Anti-Doping Agency, and Luvox CR, its obsessive compulsive
disorder treatment. But there are a number of exciting developments on
the near horizon, including Jazz’s massive buyout of Dublin-based Azur
Pharma Ltd., which should close within the next couple of weeks, and the
company’s subsequent moving of its headquarters to Dublin. After the
move, Jazz will be able to take advantage of Ireland’s competitive tax
rate.
The company’s sales climbed 63.3% and earnings surged 115.6%
in the third quarter, and for the fourth quarter, the analyst community
is expecting 54% annual sales growth and 70.5% earnings growth. Jazz
Pharmaceuticals is flush with cash and recently prepaid $33 million in
long-term debt, and I’m excited to see how developments play out in the
company’s next earnings release. Also, despite those who might think
that Jazz Pharma’s bullish run looks tapped out, I remain optimistic.
Showing posts with label Best Stocks to Buy 2012. Show all posts
Showing posts with label Best Stocks to Buy 2012. Show all posts
Best Stocks To Buy In 2012
Best Stocks To Buy In 2012#1: Diamond Foods (DMND)
“Diamond Foods (NASDAQ: DMND), a player in nuts and pop corn, is our top pick for 2012,” says Sy Harding. In his The Long & Short Stock Advisor, he explains, “The company seems to have had no problems with the recession or slow economy.
“The firm processes and markets culinary, snack, and in-shell walnuts, pine nuts, pecans, peanuts, macadamia nuts, hazel nuts, cashews, Brazil nuts, and almonds. It sells snack packages under its Diamond, Emerald, and Pop Secret brand names.
“The company seems to have had no problems with the recession or slow economy. Its sales and earnings remain on a fast growth track.
Permalink: [640] Top Stocks To Buy – Best Stocks To Buy In 2012
“In fact, it may well be that the slow economy and high unemployment are a plus for this company, with more people eating at home, watching home movies – and eating snacks.
“The company’s growth is also supported by the growing interest in healthy eating, which includes recommendations from the healthcare industry to include nuts in our daily menus, and to snack on nuts rather than unhealthy fatty-food items.
“In any event, the trend of Diamond’s top and bottom lines are impressive, with gains each of the last four years, in spite of the recession. Value Line estimates earnings in 2012 will be rise another 24% over 2010’s earnings.
“Always positioning for continued growth, the company is working on expanding its distribution network of grocery stores, food processing companies, restaurants, bakeries, and food service companies in over 100 countries. Foreign sales currently account for only 20% of total sales.
“Diamond also continues to introduce add new products to its snack lines, like Cocoa Roasted Almonds, and Sea Salt Cashews, which were added recently.
“At the current price the shares are selling at 18 times estimated 2012 earnings, a relatively low P/E ratio for what appears to be a solid, if small, growth company. Our upside target is $41. We suggest a ‘mental’ protective stop at $25.80.”
Best Stocks To Buy In 2012#2: Dollar Tree (DLTR)
“Discount retailers are in high fashion right now, and 2012 could be a good time to capitalize on the macro-level trend toward value-driven consumption as consumers battle too much debt and a weak labor market,” says Michael Vodicka.
To benefit from this trend, the momentum stock strategist for Zacks.com looks to Dollar Tree(NASDAQ: DLTR) as his top pick for the coming year.
“2010 was a year of surprises. Stocks ended up logging a monumental rally that kicked o? in March, most of the major domestic banks have freed themselves from TARP restrictions and the housing market has shown signs of stability.
“But in spite of all these incredible gains, consumers are still struggling with too much debt and high unemployment. This is the ideal consumer environment for an extreme discounter like Dollar Tree.
“Dollar Tree isn’t a new name, the company’s been around since 1986, has a market cap of $4.26 billion and operates more than 3,600 stores in 48 states.
“It carries a wide range of consumer and household products like paper towels, cleaning goods and beauty supplies, all for less than $1.
“The company’s strategic advantage was on full display in 2010, beating the consensus estimate in each quarter by an average of 11%. Its Q4 results from late November, heading into the holiday season included sales growth of 12% from last year.
“The top line growth goes well with gross and operational margin expansion, both on the upswing due to lower commodity costs and process evaluation.
“Dollar Tree bought back 3.5 million shares in 2010, with $300 million remaining from a $500 million Board approval. The company has been committed to taking advantage of the value-driven consumer environment, opening 94 new stores this year and expanding or relocating another 74.
“But in spite of these moves, Dollar Tree balance sheet still looks strong, with cash and equivalents totaling $342 million against a debt load of $267.5 million, with just $17.6 million current.
“Looking forward, analysts are optimistic about the company’s prospects in 2012, targeting full-year earnings of $3.84 per share. With shares trading at $48, this stock has a forward P/E of just 12.5, a nice discount to the overall market.”
Best Stocks To Buy In 2012#3: Affymetrix
by Nate Pile, editor Nate’s Notes
For a number of reasons, my top stock pick for 2012 is Affymetrix (AFFX). This small company based in Santa Clara, CA, develops, manufactures, sells, and services equipment and consumables used in the life sciences industry to do what is know as “high throughput genetic screening.”
Customers range from academic and research facilities to clinical laboratories to other biotech and pharmaceutical companies doing work that requires them to analyze and manage large amounts of genomic and genetic information. Though A”ymetrix was one of the first companies to get into this business back in 1991, the industry has attracted a number of competitors along the way.
And, while A”ymetrix was once a leader in the industry, it has unfortunately found itself playing catch up to others in the sector for the past several years now. In response to the increased competition, A”ymetrix has seen its stock tumble from $60 back in 2005 (and $160 at the peak of the dot-com bubble in 2000) to its current price of roughly $5 today.
Naturally, this has been frustrating for shareholders and management alike, but the good news is that management seems to be getting the train back on the track. management is making changes that will allow the company to more e”ectively compete in what has become a much tougher operating environment.
Also working in favor of investors buying the stock today is the fact that the company’ s current market cap is $400 million; this compares to $9 billion-plus for Illumina, one of A “ymetrix’s most direct competitors. This suggests that just about all the bad news that can be anticipated for the company has already been factored into the share price.
In fact, from current levels, I believe if the company is merely able to “tread water” for the next twelve months, the stock could still trade back up to the $8-range by the end of the year.
And, if even just a few pieces of the puzzle fall back into place for the company, it would not surprise me at all to see the share price trade up into the low- to mid-teens over the course of 2012. Yes, there is still work to be done before the company will once again be considered a ”best of breed” stock.
Nevertheless on a valuation basis, I consider A”ymetrix to be one of the most attractive opportunities available to investors in the the life sciences arena as we head into the new year. AFFX is a strong buy under $4 and a buy under $6.
Best Stocks To Buy In 2012#4: Aflac
by Richard Moroney, editor Dow Theory Forecasts
Aflac (AFL) represents a top year-ahead pick based on its solid operating momentum and modest valuation. In our proprietary ranking system (known as Quadrix), the stock earns an Overall score of 99. At 10 times trailing earnings, the shares trade 33% below the five-year average P/E ratio of 15.
The insurer’s sales rose 13% in the first nine months of this year, while free cash how rose 12%. At 10 times trailing earnings, shares trade 32% below the three-year average P/E ratio. Arac continues to grow in Japan (about 75% of sales), but growth in the U.S. (roughly 25%) has been tougher to find.
Management remains cautious about its U.S. outlook, but it should benefit as small companies, which make up a large portion of the domestic business, begin to hire again. A?ac — yielding 2.2% — is a Focus List Buy and a holding on our Long-Term Buy list.
Best Stocks To Buy In 2012#5: Computer Sciences
by Sy Harding, editor Street Smart Report
Computer Sciences (CSC) — our top pick for 2012 — is a global leader in providing information technology and related services to commercial accounts and government agencies.
In our view, the wind is likely to be at the company’s back as the economic recovery continues to strengthen over the next two years.
The company specializes in complex IT applications, and its services include operating all or portions of a customer’s technology infrastructure, including systems analysis, applications development, network operations, and data center management. The company weathered the 2007-2009 recession with ease, but experienced sluggish growth in 2010.
However, the future looks brighter again as the company’s ‘qualified new-business folder’ has grown 20% from a year ago, with potential for new government contracts particularly promising.
For example, CSC announced a number of deals in December, including a seven-year agreement with a major insurance company for the use of Computer Sciences’ Wealth Management Accelerator software.
The company also announced a $33 million contract with the Department of Veteran A “airs, and four application management contracts with the Environmental Protection Agency.
Computers Sciences was also honored in December as ’2010 Enterprise Cloud Leader’ at the 2010 Cloud Expo in California for its leadership in guiding customers in the implementation of ‘cloud-computing’. The shares are selling at just 8.6 times estimated 2012 earnings, and at about one times book value. We have a 12-month upside target of 60.
Best Stocks To Buy In 2012#6: CPFL Energia
by Neil George, editor The Pay Me Strategy
To find strong dividend paying stocks, we apply two primary tests. One stock that passes both of these tests — and ranks our as top investment idea for the coming year — is CPFL Energia (CPL), one of Brazil’s major power utilities. I focus on stocks that will grow your retirement wealth during good times and bad. And one of the crucial means of making this happen is to adhere to a few major tenets when it comes to picking stocks for your own retirement portfolio.
This includes focusing on stocks oering solid, high-paying dividends. And if they can be found in rising markets with rising currencies – so much the better for the long haul. I look to find stocks that are in sustainable industries and then put them through our stress tests. Stress test number one is to focus on a company’s income statement and look at what happens when the worst hits its market. If the cash keeps coming to service its dividends – then it’s passed the first test.
Second, we focus on the balance sheet. This is where you look at the debt and what needs to happen to keep that debt serviced and rolled over.
The interesting thing about many stocks in emerging markets is that they tend to have less debt than their peers in the so-called major markets.
CPFL Energia, which is based in the financial capital city of San Paulo, keeps pumping out the cash..
The stock pays a dividend of over 8 percent – which has been climbing by over 27 percent over the past five years alone. And for those same past five years – just as markets in the US, Europe and Japan have imploded – CPFL Energia has delivered returns each and every year averaging over 27 percent.
Best Stocks To Buy In 2012#7: Keegan Resources (KGN): Brien Lundin
“Gold will be the primary beneficiary of the massive bailout and stimulus plans enacted by not only the United States, but every industrialized nation across the globe,” forecasts Brien Lundin.
The mining stock specialist and editor of The Gold Newsletter looks to a small gold exploration and development company as his top pick for 2012: Keegan Resources (ASE: KGN).
“Because of the deflationary influences of higher productivity, moribund economic growth and cheap labor in developing nations, we won’t see the kind of price inflation that characterized the 1970s.
“But we will see galloping monetary inflation — or much more currency in circulation — and the result will be higher prices for assets such as commodities and equities.
“So if gold is going to lead the pack, what’s the best gold investment? In my opinion, smaller gold exploration and development companies will o?er valuable leverage to gold, and one of the best is Keegan Resources.
“Keegan controls the Esaase gold project, a major mine-in-the-making located in the investor-friendly nation of Ghana, in west Africa.
“The company has made quick work of the project, going from field exploration to drilling to resource definition and pre-feasibility studies in a span of just three years.
“Now, Keegan finds itself sitting on top of a near-surface, open-pittable deposit that contains 3.47 million ounces of gold according to the most recent resource estimate.
“As impressive as that total is, it has the potential to grow significantly larger. The outlined resource remains open both along trend and at depth, and it lies within a country that hosts some of the world’s largest gold deposits.
“Whether Keegan can unearth a resource of similar size at Esaase remains to be seen, but most analysts feel the next resource estimate will show the total gold holdings to have increased to at least five million ounces.
“And with the company tying up new ground along trend, there’s literally no telling how large this find could grow.
“Frankly, I don’t expect Keegan to develop Esaase into a mine — that job will likely devolve to the major mining company that buys Esaase, or Keegan itself.
“The company’s management team knows this as well, and they are guaranteeing the best price by advancing steadily toward production.
“Keegan was among the highest of the high flyers during gold’s fall rally. Although the share price has therefore come back fairly hard during the subsequent correction, the closing of a recent financing essentially opened a door to potential take-out o?ers for the company.
“While I know of no indications that any o?ers are forthcoming, there is the possibility that a bid, or a bidding war, could emerge at any time. In light of this, and considering the dip in its share price, Keegan is one of my top gold stock recommendations.”
Best Stocks To Buy In 2012#8: Kinder Morgan (KMP): Daily Paycheck
For her top pick for 2012, income specialist Amy Calistri looks to Kinder Morgan Energy Partners L.P. (NYSE: KMP).
The editor of The Daily Paycheck explains, “I always look for the gift that keeps on giving; that’s how I view this master limited partnership, which produces a steady stream of income each and every quarter.
“Kinder Morgan Energy Partners is one of the largest owners and operators of energy- product pipelines and storage facilities in the United States.
“Formed in 1992, KMP is structured as a publicly-traded master limited partnership (MLP). MLPs are an important asset class for income investors because they are legally required to distribute most of their taxable income and cash flow to shareholders (known as ‘unitholders’).
“KMP’s extensive pipeline systems carry products such as gasoline and heating oil from the Gulf Coast to the East and West Coasts.
“KMP also owns and operates a network of carbon-dioxide (CO2) pipelines, which are used in a process known as enhanced oil recovery. These pipes carry CO2 to old oil fields where it is injected into the fields to increase productivity. These enhanced recovery techniques become more popular as oil prices rise.
“And KMP is continuing to grow its pipeline revenues through expansion. This past November , the Rockies Express Pipeline became fully operational.
“KMP owns a 50% stake in the 1,679-mile project, which carries natural gas from the Rocky Mountains to the Pennsylvania/Ohio border.
“Although KMP is an energy-related company, its revenues are relatively insensitive to energy prices. The partnership earns fees based on the amount — not the price — of gas, oil or refined products it processes and transports.
“Many of its interstate pipelines charge rates that are regulated by the Federal Energy Regulatory Commission. These regulated rates are set to allow Kinder Morgan a steady, reliable return on invested capital.
“Further, the partnership has already locked in guaranteed capacity from a few shippers on its pipes. KMP appears to be on track to not only deliver, but also continue to grow, its distributions.
“And when it comes to distributions, KMP has a stellar track record, having made quarterly payments like clockwork since October 1992.
“KMP also has a very consistent record of dividend growth, boosting distributions nearly every year since its inception. The partnership has increased its distributions at an annualized rate of +7.5% in the last five years alone.
“KMP currently pays a quarterly dividend of $1.05 per unit, equivalent to $4.20 per year for a yield of approximately 7% at current prices. It should be noted that MLPs are best held in taxable accounts as most of their distributions are classified as ‘return of capital’.”
Best Stocks To Buy In 2012#9: Flagstar Bancorp
by Mark Skousen, editor The Hedge Fund Trader
My favorite speculative stock idea for 2012 is Flagstar Bancorp (FBC), the Troy, Michigan-based bank with 165 branches in Michigan, Indiana, and Georgia.
The stock was trading for over $140 a share before the financial crisis; the stock fell to $5 a share last May, and it is now under $1.50.
Earnings are way down, and the stock has su”ered from heavy tax loss selling in November and December. In fact, it’s selling for a fraction of its book value ($5.30). But there is some good news coming out. Quarterly revenues tripled to $459 million, and the bank is expected to be marginally profitable next year. They are growing rapidly again by using a little-known but powerful technique called ”EVA momentum.”
Economic Value Added (EVA) — a powerful new metric in finance — was co-invented by Joel Stern and Bennett Stewart as a performance measure in excess of the opportunity cost of capital.
Joel Stern is a genius who teaches finance at six graduate schools, including Chicago, Carnegie-Mellon, and Cape Town, and speaks each year at FreedomFest.) Flagstar broke positive this year with an EVA momentum of 11.5%, one of the highest rankings of all thrift and mortgage finance companies.
In short, Flagstar is creating value for its shareholders at a rapid pace, and that fact will re?ect itself in a higher stock price.
Currently it has nearly $3 billion in cash to deal with its $3.65 billion in debt. It might be a good takeover candidate by one of the regional banks.
The tax selling is probably over by now, and FBR Capital just upgraded its rating of the stock to “outperform.”
Moreover, company o#cers and directors are buying stock, 2.2 million shares worth since November 1 at between $1 and $1.35. In every way, this small bank stock is a super bargain. It could double in value and still sell below book.
Best Stocks To Buy In 2012#10: Goldcorp
by Curtis Hesler, editor Professional Timing Service
Gold was the hot topic in 2010. Since the underlying factors that pushed prices to new highs have not changed, I expect my long held target of $1,600 gold will be realized in 2012.
In fact, I expect that upside target of $1,600 will be woefully short of the mark. And my favorite gold stock for 2012 is Goldcorp (GG).
Gold belongs in everyone’s portfolio, and there are many ways to invest in precious metals. You can buy bullion in several forms, you can buy ETFs, or you can invest in mining companies.
Despite my long-term bullishness on gold, I would advise that spates of profit-taking set in from time to time. I caution against chasing strength.
Gold is going to have a di#cult time getting through $1,420 April 2012 basis without some further consolidation. There should be some support at $1,330, but there is still a good possibility that we might see gold correct to $1,250.
Nevertheless, that would be an excellent time to climb on and add to positions. The forces that put gold at $1,400 will still be in force, and the next leg should take gold to our long-held target of $1,600.
Meanwhile, mining shares o”er you the best leverage, but not all miners are created equal. At this point in the gold bull market with gold already having appreciated by 450%, it would be wise to stick with the best of the best.
Goldcorp, in my estimation, is the very best gold mining operation on the planet. Their revenues are expanding, they are the best managed and are among the most ecient of the major producers, and they just doubled their dividend. Goldcorp belongs at the core of your precious metals portfolio.
Best Stocks To Buy In 2012#11: Google
by Timothy Lutts’, editor Cabot Stock of the Month
As publisher of the Cabot advisories, I see the inner workings of a variety of successful investing systems, from pure momentum-driven systems to pure value-driven systems. And it’s interesting when they overlap For example, Google (GOOG) is currently recommended by both Cabot Market Letter and Cabot Benjamin Graham Value Letter. Google’s growth attraction is clear. Even with $28 billion in annual revenues, it’s still growing at a 23% rate.
Profit margins are a plump 33.8%. And the firm’s very bright employees are working diligently to expand outside its core advertising search business into businesses as di”erent as computer-guided cars and o”shore electric grids to connect wind farms.
As to value, GOOG has been treading water for the past three years, even while earnings ratcheted higher every month.
In fact, the stock is now 21% below its old 2007 high, even though revenues at the company are roughly 72% higher now and earnings are roughly 95% higher. Still, some people will argue the stock—currently trading near $600—is too expensive. To which we say, “It’s not how many shares you buy that counts; it’s how much money you invest.”
Best Stocks To Buy In 2012#12: Medifast (MED)
“My number one stock pick to start 2012 is Medifast Inc. (NYSE: MED), a weight and disease management company,” says Mike Turner.
The editor of Mastering the Markets explains, “The stock has skyrocketed from the $5 area to over $30 in just the last nine months.” Despite the gains, the advisor remains bullish on the stock’s prospects.
“My proprietary analysis software rates this stock as a fundamental ‘Strong Buy,’ with an overall score of 145 out of 200 — one of the highest rated stocks in my database.
“With regard to Medifast’s fundamentals, I like the following:
1 * The quarter-over-year-ago-quarter revenue growth rate of 45%. This is nearly twice the peer group average for MED.
2 * Quarter-over-year-ago-Quarter Earnings Growth Rate of 14%, which is above the average of its peer group.
3 * Its 5-year average annual sales growth is nearly 33%, almost 3 times the average of its peer group.
4 * Its 5-year average annual net income is over 18%, compared with 14.41% for its peer group.
5 * I consider any return on equity (ROE) of more than 15% as excellent. MED’s ROE is over 23%, more than twice its peer-group average.
“From a technical analysis perspective, my program gives Medifast a score of 75 out of a maximum of 100. This places MED in the top 10% of the stocks I watch, and very near the top of that group. Specifically, I like the following:
1 * The price trend for shares of MED has been moving higher for better than nine months. This trend is well above my system’s trend-line and well above MED’s 200-day moving average. This is indicative of a strong technical trend that shows no signs of abatement.
2 * Institutional ownership is at 30% — a large-enough chunk to convince me that the big traders believe this stock is heading higher.
3 * The average share price of all the stocks in Medifast’s Industry (Medical Equipment and Supplies) and sector (Healthcare) is moving higher. This is an indication that more money is likely moving in than moving out, helping to put upward pressure on MED.
“Disclosure: Mike Turner owns shares of MED either personally or via his managed account portfolio.”
Best Stocks To Buy In 2012#13: Mindray (MR): Alan Newman
“Mindray Medical International Limited (NYSE: MR), a China-based medical devices firm, is our top investment idea for the coming year,” says Alan Newman.
In his CrossCurrents newsletter, he notes, “The company is headquartered in Shenzhen, China and is one of many Chinese companies now specializing in the development, manufacture and marketing of medical devices worldwide.
“Its products range from patient monitoring units to in vitro diagnostics for bodily fluids, analyzers for same, ultrasound systems and digital radiography systems.
“The company has been around less than 20 years. It has operations in North America, Europe, China, and other Asian countries. Growth has been excellent. Revenues increased 57.5% in 2007 and 79% in 2008.In the same span, net income rose 74.9% and 34% respectively.
“The forward P/E is estimated to be 23.8. An $0.18 dividend was paid in March 2008 and a $0.20 dividend was paid in March 2010.
“Like most companies, the shares were crushed in the autumn swoon of 2008 that gripped world markets, but bottomed in late November 2008 and remained on a steady incline until mid-August 2010, rising roughly two-and-a-half fold.
“The shares have since consolidated quite well, trading in a narrow range while our charts suggest accumulation by smart money.
“We believe the stock is a buy at current levels and would not at all be surprised to see the October 2007 peak of $45.19 challenged and exceeded in 2012.”
Best Stocks To Buy In 2012#14: MDU Resources
by Roger Conrad, editor The Utility Forecaster
Even among great companies, one year’s leader is often the next’s laggard and vice versa; MDU Resources (MDU) is one under-performer that looks increasingly likely to get it’s legs back in 2012.
The company is best thought of as a financially conservative resource company, whose cash ?ows are anchored by solid regulated energy assets.
Management has systematically grown both sides of its business year after year, even while holding debt to 40 percent or less of capital and increasing its dividend 20 consecutive years.
The latest–a 3.2 percent boost e”ective with the quarterly payment in January–is remarkable for two reasons.
First, it comes at the end of a tough year for several operations and at the same time management has continued aggressive spending in several areas. Second, despite earnings that are likely to prove a nadir for the company, dividend coverage was still nearly 2-to-1.
That suggests immense staying power, even if the US economy remains sluggish. And the more growth picks up, the greater the potential for MDU’s profits to rise. As an oil and gas producer, the company has an increasingly lucrative position in the Bakken trend producing light oil.
Utility construction is in good shape to benefit from the buildout of transmission infrastructure to bring renewable energy from the upper Midwest to Chicago and other major cities.
And the company’s position as a top 10 producer of construction materials and aggregates is well placed to profit from government-sponsored infrastructure projects, such as road building and maintenance.
Finally, the company’s Montana, Dakotas and Pacific Northwest gas and electric utilities and pipeline unit enjoy some of the most supportive regulation in the country, ensuring planned investment will ?ow to rate base and earnings. That adds up to double-digit earnings growth in coming years, though a”ected by economic ups and downs.
Over the past 20 years, MDU has thrown o” a nearly 1,000 percent return–rising a combination of rising dividends and capital growth to annual returns approaching 13 percent. Buy up to 24.
Best Stocks To Buy In 2012#15: Medtronic
by Jim Stack, editor InvesTech Market Analyst
For over 50 years, Medtronic (MDT) has been the premier medical device manufacturer in the marketplace.
With the invention of the battery-powered pacemaker in the mid 1950s, Medtronic began a long string of technological innovations. Over time, that one breakthrough was transformed into a company that now holds over 21,000 filed patents and employs over 9,000 scientists and engineers.
Success has allowed Medtronic to develop a very healthy financial position. Without jumping into too many details, the company’s Free Cash Flow Margin – the percentage of sales that end up as actual “free cash” – has averaged a remarkably consistent 22% over the past 10 years.
Not only is this an impressive amount of cash generation, but the consistency with which the firm generates cash is even more amazing – it hardly deviates more than a percent or two from the mean.
There are very few businesses that have such a strong track record. To put this cash back in shareholder’s hands, management pays out a healthy 2.5% dividend. Even better, they have been aggressively increasing the dividend an average 20% per year for the past 5 years.
Today, Medtronic is bringing its knowledge of treating chronic ailments to a rapidly expanding worldwide middle-class.
Currently, international sales account for 41% of total revenue. In the most recent quarter, sales in China increased 24% year-over-year, while Latin America sales and Middle East & Africa sales each grew 19%.
Market share potential in emerging markets has many analysts forecasting double-digit earnings growth well into the future. For investors, Medtronic is being o”ered at valuation levels rarely seen and, in our opinion, levels that won’t last long.
This “discount” valuation is being driven by concerns over long-term growth potential in key areas – including the core cardiac rhythm segment. For reasons noted above, we think these concerns are overdone. Instead, we feel the current market gives us an opportunity to buy shares of a world class company at 11X earnings.
Compare the current valuation to Medtronic’s 10 year median P/E ratio of 27.8X and you get a sense of the value we see in this company.
As an added bonus, shares have come under pressure in recent weeks from year-end tax loss sellers. For new buyers, this provides a terrific entry point. Bottom line, Medtronic certainly fits our mold of finding good companies at attractive prices. It has the technical expertise, financial strength, growth potential, and valuation of a great investment.
Best Stocks To Buy In 2012#16: PepsiCo (PEP)
“PepsiCo (NYSE: PEP), my top pick for 2012, remains underrated by the market,” says Jim Stack.
The money manager and editor of InvesTech Market Analyst suggests, ”All too often, it’s viewed as a stodgy soft drink company, fully reliant on its namesake soda line. That’s a misconception.” Here, the sets the record straight.
“In reality, PepsiCo owns some of the most sought after brands in the world, including Gatorade, Tropicana, Frito-Lay, and Doritos. It does business in more than 200 countries worldwide, including key emerging market economies like China and India.
“Perhaps most important of all, it’s a growth company with analysts expecting long-term future earnings growth of 10-12% per year.
“In recent months, PepsiCo has taken another major step forward with the pending acquisition of its two primary bottlers – Pepsi Bottling Group and PepsiAmericas.
“The acquisition provides the potential to eliminate an estimated $500 million to $1 billion in redundant costs. If those cost savings are transferred directly to the bottom line, shareholders could see a significant increase in net income of 10% to 20%.
“Of perhaps even greater benefit, the purchase brings 80% of North American beverage distribution ‘in-house.’ This move will bring management one step closer to its final customers – injecting a level of flexibility into operations not often seen with a company of PepsiCo’s size.
“The acquisition further ties together the Pepsi story – a well run company with market leading growth positions and an attractive valuation.
“The executive suite neatly combines the beverage ‘megabrands’ such as Pepsi, Gatorade, Tropicana, and Mountain Dew with the world’s largest snack food company, Frito-Lay.
“Management then leverages these brands into international growth markets such as Latin America and Asia where sales volume increased more than 20% in 2008, and despite the most challenging world economy in decades, has seen high single-digit growth so far in 2010.
” On top of all this, Pepsi is currently trading at valuation levels not seen in 15 years. And although it’s a growth company, Pepsi still o?ers the dividend yield (3.0%) of a stalwart.
“Bottom line, Pepsi remains underrated by the market in general, and the bottler acquisition only enhances the company’s outlook.”
Best Stocks To Buy In 2012#17: Perfect World (PWRD)
“Perfect World Company Ltd. (NASDAQ: PWRD), an online game developer and operator, is my top investment idea for 2012,” says Alex Kolb.
The growth & income analyst for Zacks.com explains, “Chinese stocks have been on fire lately and Perfect World Co., Ltd. is no exception. And the company’s fundamentals point to even stronger momentum in 2012.
“The company develops online games based on its game engines and game development platforms. Perfect World’s games include massively multiplayer online role playing games (‘MMORPGs’) such asPerfect World, Legend of Martial Arts, Perfect World II, Battle of the Immortals and Fantasy Zhu Xian to name a few.
“Perfect World says that a substantial portion of the revenues are generated in China. However, its games have been licensed to leading game operators in a number of countries and regions in Asia, Europe and South America.
“The company also generates revenues from game operation in North America and plans to continue to explore new and innovative business models.
“Competitors like Shanda are also performing extremely well, an indicator that online role playing games are very popular and should continue attracting more players in 2012.
“PWRD shares have soared by more than 120% so far in 2010, surpassing the major averages by more than 100%. Despite the significant surge, the stock is attractively price with a forward P/E of 14.
“Perfect World’s fundamentals point to even stronger momentum in 2012. Analysts polled by Zacks currently have 2012 earnings pegged at $3.66 per share. The forecast is up from $3.45 over the past 2 months and compares favorably to the current 2010 Zacks Consensus estimate of $2.90.
“If history is any indication, earnings will exceed forecasts. Since 2007, Perfect World has consistently topped earnings expectations. Earnings surpassed estimates by an average of 31% over the past 4 consecutive quarters.
“The company is expected to see 33% earnings growth over the next 3 – 5 years, well above the industry’s expectation of 18% growth. Other strong industry comparisons include Perfect World’s return on equity (ROE) of 55.5%, versus the industry average of 2.5%.
“The company boasts a net profit margin of 47%, while the industry average is in the negative. It is also worth noting that Perfect World sports a solid balance sheet, showing no debt.
“The company saw robust results in the third quarter. Earnings per share of 81 cents came in 8% ahead of the Zacks Consensus Estimate. Total revenues jumped 13% year-over-year.
“Management mentioned that third-quarter results exceeded the company’s expectations, adding that Perfect World continues to strengthen its competitive advantages in the industry by strategically crafting a highly diversified portfolio of truly di?erentiated games.
“Recently, the company introduced a new 3D fantasy MMORPG, Forsaken World. Management explained that this game breaks new ground in terms of overall planning, programming and graphical designs.”
Best Stocks To Buy In 2012#18: PMC Sierra
by Paul McWilliams, editor Next Inning
PMC Sierra (PMCS) is a top speculative investment for the coming year. The company is a leader in the field of integration. By integrating more functions into a single chip, the company has doubled its market share in the SAS storage market as the industry moved from 3Gbs to 6Gbs.”
The company is also building significant traction with its single-chip “RAID on a Chip” solution and has leveraged its integration talent to become one of the dominant suppliers in the FTTx space serving both GPON and EPON requirements.
Most recently, PMCS announced its acquisition of Israeli based Wintegra — a private company and the world leader in network processors for access networks. ”
The market for network processors in access applications, which includes broadband wireless backhaul, is just now building traction, and Wintegra will likely dominate the market for at least the next few years.”" As I see it, the acquisition makes a ton of sense from many perspectives.” First, as I noted, Wintegra is the leader in a market that is set to expand rapidly during the next few years. ”
Second, once we factor in the Wintegra balance sheet and PMCS minority ownership (yes, PMCS was a venture” investor in Wintegra), PMCS paid only about $205M net for the company. ”
Third, PMCS and Wintegra” have worked together for years and in many of the design wins you’ll find a PMCS and a Wintegra chip sitting side-by-side. ”
This means there is a very good integration opportunity for PMCS to put the functions of both chips into a single chip, and by doing so extend competitive advantages and lower costs.
The short story is that in spite of the fact that the company has topped the earnings consensus for six out of the last seven quarters, and equaled it for the” seventh, Wall Street still insists on slapping the stock with a huge risk discount. ”
I believe as PMCS maintains this practice of topping Wall Street projections the risk discount will be removed, and with that, the forward price to earnings (valuation multiple) will rise considerably.
Best Stocks To Buy In 2012#19: PowerShares DB Agriculture ETF
by Gene Inger, editor The Inger Letter
One of the easiest ways to participate in the long-term demand for corn, wheat, cotton etc. is with a soft commodity-based exchange traded fund.
We recommend the PowerShares DB Agriculture ETF (DBA), our top pick for 2012. We believe the economy is entering a period of ‘hyper-stag?ation’, where prices for life’s necessities — such as gasoline, food and utility rates — will rise persistently over time.
The owerShares DB Agriculture ETF — soft commodity-oriented exchange traded fund — is one of the easiest ways to participate in the long-term demand for corn, wheat, cotton etc. is
This ETF has shown fairly steady progression over time. Given steady in?ation in food costs, soft commodities are likely to rise, with periodic bouts of selling and volatility. We think an investment retained over time in ‘soft commodities’, is relatively low risk contrasted to volatility in markets such as Oil, or the extended Gold market for now. Why? With Asian demand bound to increase over time, soft-commodity demand will too.
Nevertheless we caution investors against chasing strength; rather, one strategy to avoid timing is to scale into one’s position over time. If you scale-in, you get benefits of ensuing pullbacks while holding an initial stake.
Best Stocks To Buy In 2012#20: Verenium (VRNM): Andy Obermueller
“The Energy Security Act of 2007 has received little investor attention; however, it contains provisions that are likely to lead to significant returns for investors,” suggests Andy Obermueller.
In his Government-Driven Investing, he notes, “The law codifies the federal production targets for biofuel, which we believe presents a real opportunity for Vernenium (NASDAQ: VRNM).
“‘Biofuel’ has, for decades, been code for ‘corn-based ethanol.’ But this law also contains provisions for a new, advanced biofuel derived from cellulose, an organic compound found in all plant matter.
“Instead of using corn — which uses valuable farmland and can drive up the price of a staple food — cellulose can be derived from any plant, wheat or rice straw, corn stalks, scrap wood or even grass.
“The law calls for hundreds of millions of gallons of cellulose ethanol. There’s just one problem: Very little of cellulosic ethanol is being produced. By 2022, however, the nation will need, by virtue of federal law, 16 billion gallons.
“All problems, of course, are really opportunities in disguise. Especially for one company: Verenium. This is a biotech company that has mastered the enzymes required to unlock the energy in cellulose.
“It has built two demonstration-scale plants, one in Jennings, La., and another in Japan, and has announced it will build the nation’s first commercial-scale ethanol plant.
“It has two partners in this endeavor: Petroleum giant BP and the U.S. federal government, which has begun its due diligence on a federal loan guarantee for the project.
“The demand for cellulosic ethanol will rise many-fold in coming years, and Verenium, the leader in this field, will likely see similar gains as it puts this ground-breaking technology to work in the new plant and licenses the technology to hundreds of others.
“The loan guarantee for the plant will likely be a significant catalyst for these shares, and the continued demand for cellulosic ethanol will fill its co?ers — and reward shareholders — for years to come.”
Best Stocks To Buy In 2012#21: Virginia Mines (VGQ)
“Virginia Mines (Toronto: VGQ) remains my favorite gold exploration company,” says resource expert Adrian Day.
In choosing the stock as his top pick for 2012, the editor of The Global Analyst explains, “The company has a successful track record, top management and a super-strong balance.
“Virginia Mines has a successful track record, having discovered and subsequently sold to Goldcorp, the rich Eleonore deposit in northern Quebec. This discovery saw the stock go from the $2 range to the mid-teens. Following the sale (which saw a spin out to shareholders), the stock is in the low $5s, ready to try again.
“Exploration by its nature is very high risk, with very long odds of discovery. Most companies finance their exploration by continual equity o?erings, which mean dilution for shareholders even if they are successful.
“Virginia has a di?erent way: it is a prospect generating, looking for prospects, often by staking the ground, doing some exploration, and then looking for a joint venture partner.
“The partner spends the high-risk exploration dollars in return for a majority ownership in the property. This results in a low-risk business model.
“Even though the company gives up most of the property, it holds on to its balance sheet and by doing this over and over, can build a portfolio of properties in which it owns minority interests with someone else spending the money.
“As Virginia has grown and built a strong bank account (it has has $44 million on its balance sheet), it is now in a position to do a little more exploration than in the past. This enables it to sift through its projects, and by advancing them more, obtain better deal terms.
“Virginia has build a broad portfolio of projects, all in mining-friendly Quebec, in a range of metals and minerals, but emphasizing gold.
“Right now, it has six properties ready to drill over the winter season, all in the prospective but under-explored James Bay area. Some of these are very close to the Eleonore discovery, on ground not included in the sale to Goldcorp.
“Virginia is spending the money on four of these properties, with two being funded by partners. Some have brand new targets being drilled, others following up on previous drilling.
“While exploration remains long odds, Virginia has as good a shot as any, and at minimum, we expect the next six months or so to generate a lot of news on these properties that should see the stock buoyant.
“Any positive exploration results will see it move much higher. In the meantime, you can buy a fine company at less than NAV. Just the value of the royalty it retained on Eleonore and its cash in the bank are worth more than the entire market cap. All the exploration comes free.
“So you can buy a great company at below NAV. Despite the move up in the stock price in recent months, this is an excellent time to buy, ahead of this aggressive drilling campaign. We expect 2012 to be very good for Virginia and its shareholders.”
Best Stocks To Buy In 2012#22: Siga Technologies
by Dennis Slothower, editor Stealth Stocks
Last year for my favorite stock pick, I recommended IMAX which more than doubled. This year I would like to recommend Siga Technologies Inc. (SIGA), a bio-defense company that o”ers the same kind of upside potential for 2012.
In 2004, the US started an initiative called Project BioShield, which gave the government the right to purchase and stockpile vaccines and drugs to fight anthrax, smallpox and other potential agents of bio-terror.
SIGA is a leader in the development of pharmaceutical agents to fight potential bio-warfare pathogens and their ST-246 drug is considered to be the only known cure for smallpox, which the government is keenly interested in.
Recently, BARDA has stated their intent to award SIGA a $500 million contract, with options that potentially could be as high as $2.8 billion in orders. However, SIGA is being challenged in court by a competitor as being too big as a company to qualify for the government contract.
In fairness, BARDA has announced plans for a market survey to determine, whether there are any qualified small businesses with the capacity to produce an adequate supply of smallpox antiviral medication for the National Strategic Stockpile. It is unlikely that a small company will be able to meet the government’s needs as the drugs expire and need to be constantly replaced.
It is expected that SIGA will win this contract and if so investors could be rewarded with a double or triple in appreciation.
“Diamond Foods (NASDAQ: DMND), a player in nuts and pop corn, is our top pick for 2012,” says Sy Harding. In his The Long & Short Stock Advisor, he explains, “The company seems to have had no problems with the recession or slow economy.
“The firm processes and markets culinary, snack, and in-shell walnuts, pine nuts, pecans, peanuts, macadamia nuts, hazel nuts, cashews, Brazil nuts, and almonds. It sells snack packages under its Diamond, Emerald, and Pop Secret brand names.
“The company seems to have had no problems with the recession or slow economy. Its sales and earnings remain on a fast growth track.
Permalink: [640] Top Stocks To Buy – Best Stocks To Buy In 2012
“In fact, it may well be that the slow economy and high unemployment are a plus for this company, with more people eating at home, watching home movies – and eating snacks.
“The company’s growth is also supported by the growing interest in healthy eating, which includes recommendations from the healthcare industry to include nuts in our daily menus, and to snack on nuts rather than unhealthy fatty-food items.
“In any event, the trend of Diamond’s top and bottom lines are impressive, with gains each of the last four years, in spite of the recession. Value Line estimates earnings in 2012 will be rise another 24% over 2010’s earnings.
“Always positioning for continued growth, the company is working on expanding its distribution network of grocery stores, food processing companies, restaurants, bakeries, and food service companies in over 100 countries. Foreign sales currently account for only 20% of total sales.
“Diamond also continues to introduce add new products to its snack lines, like Cocoa Roasted Almonds, and Sea Salt Cashews, which were added recently.
“At the current price the shares are selling at 18 times estimated 2012 earnings, a relatively low P/E ratio for what appears to be a solid, if small, growth company. Our upside target is $41. We suggest a ‘mental’ protective stop at $25.80.”
Best Stocks To Buy In 2012#2: Dollar Tree (DLTR)
“Discount retailers are in high fashion right now, and 2012 could be a good time to capitalize on the macro-level trend toward value-driven consumption as consumers battle too much debt and a weak labor market,” says Michael Vodicka.
To benefit from this trend, the momentum stock strategist for Zacks.com looks to Dollar Tree(NASDAQ: DLTR) as his top pick for the coming year.
“2010 was a year of surprises. Stocks ended up logging a monumental rally that kicked o? in March, most of the major domestic banks have freed themselves from TARP restrictions and the housing market has shown signs of stability.
“But in spite of all these incredible gains, consumers are still struggling with too much debt and high unemployment. This is the ideal consumer environment for an extreme discounter like Dollar Tree.
“Dollar Tree isn’t a new name, the company’s been around since 1986, has a market cap of $4.26 billion and operates more than 3,600 stores in 48 states.
“It carries a wide range of consumer and household products like paper towels, cleaning goods and beauty supplies, all for less than $1.
“The company’s strategic advantage was on full display in 2010, beating the consensus estimate in each quarter by an average of 11%. Its Q4 results from late November, heading into the holiday season included sales growth of 12% from last year.
“The top line growth goes well with gross and operational margin expansion, both on the upswing due to lower commodity costs and process evaluation.
“Dollar Tree bought back 3.5 million shares in 2010, with $300 million remaining from a $500 million Board approval. The company has been committed to taking advantage of the value-driven consumer environment, opening 94 new stores this year and expanding or relocating another 74.
“But in spite of these moves, Dollar Tree balance sheet still looks strong, with cash and equivalents totaling $342 million against a debt load of $267.5 million, with just $17.6 million current.
“Looking forward, analysts are optimistic about the company’s prospects in 2012, targeting full-year earnings of $3.84 per share. With shares trading at $48, this stock has a forward P/E of just 12.5, a nice discount to the overall market.”
Best Stocks To Buy In 2012#3: Affymetrix
by Nate Pile, editor Nate’s Notes
For a number of reasons, my top stock pick for 2012 is Affymetrix (AFFX). This small company based in Santa Clara, CA, develops, manufactures, sells, and services equipment and consumables used in the life sciences industry to do what is know as “high throughput genetic screening.”
Customers range from academic and research facilities to clinical laboratories to other biotech and pharmaceutical companies doing work that requires them to analyze and manage large amounts of genomic and genetic information. Though A”ymetrix was one of the first companies to get into this business back in 1991, the industry has attracted a number of competitors along the way.
And, while A”ymetrix was once a leader in the industry, it has unfortunately found itself playing catch up to others in the sector for the past several years now. In response to the increased competition, A”ymetrix has seen its stock tumble from $60 back in 2005 (and $160 at the peak of the dot-com bubble in 2000) to its current price of roughly $5 today.
Naturally, this has been frustrating for shareholders and management alike, but the good news is that management seems to be getting the train back on the track. management is making changes that will allow the company to more e”ectively compete in what has become a much tougher operating environment.
Also working in favor of investors buying the stock today is the fact that the company’ s current market cap is $400 million; this compares to $9 billion-plus for Illumina, one of A “ymetrix’s most direct competitors. This suggests that just about all the bad news that can be anticipated for the company has already been factored into the share price.
In fact, from current levels, I believe if the company is merely able to “tread water” for the next twelve months, the stock could still trade back up to the $8-range by the end of the year.
And, if even just a few pieces of the puzzle fall back into place for the company, it would not surprise me at all to see the share price trade up into the low- to mid-teens over the course of 2012. Yes, there is still work to be done before the company will once again be considered a ”best of breed” stock.
Nevertheless on a valuation basis, I consider A”ymetrix to be one of the most attractive opportunities available to investors in the the life sciences arena as we head into the new year. AFFX is a strong buy under $4 and a buy under $6.
Best Stocks To Buy In 2012#4: Aflac
by Richard Moroney, editor Dow Theory Forecasts
Aflac (AFL) represents a top year-ahead pick based on its solid operating momentum and modest valuation. In our proprietary ranking system (known as Quadrix), the stock earns an Overall score of 99. At 10 times trailing earnings, the shares trade 33% below the five-year average P/E ratio of 15.
The insurer’s sales rose 13% in the first nine months of this year, while free cash how rose 12%. At 10 times trailing earnings, shares trade 32% below the three-year average P/E ratio. Arac continues to grow in Japan (about 75% of sales), but growth in the U.S. (roughly 25%) has been tougher to find.
Management remains cautious about its U.S. outlook, but it should benefit as small companies, which make up a large portion of the domestic business, begin to hire again. A?ac — yielding 2.2% — is a Focus List Buy and a holding on our Long-Term Buy list.
Best Stocks To Buy In 2012#5: Computer Sciences
by Sy Harding, editor Street Smart Report
Computer Sciences (CSC) — our top pick for 2012 — is a global leader in providing information technology and related services to commercial accounts and government agencies.
In our view, the wind is likely to be at the company’s back as the economic recovery continues to strengthen over the next two years.
The company specializes in complex IT applications, and its services include operating all or portions of a customer’s technology infrastructure, including systems analysis, applications development, network operations, and data center management. The company weathered the 2007-2009 recession with ease, but experienced sluggish growth in 2010.
However, the future looks brighter again as the company’s ‘qualified new-business folder’ has grown 20% from a year ago, with potential for new government contracts particularly promising.
For example, CSC announced a number of deals in December, including a seven-year agreement with a major insurance company for the use of Computer Sciences’ Wealth Management Accelerator software.
The company also announced a $33 million contract with the Department of Veteran A “airs, and four application management contracts with the Environmental Protection Agency.
Computers Sciences was also honored in December as ’2010 Enterprise Cloud Leader’ at the 2010 Cloud Expo in California for its leadership in guiding customers in the implementation of ‘cloud-computing’. The shares are selling at just 8.6 times estimated 2012 earnings, and at about one times book value. We have a 12-month upside target of 60.
Best Stocks To Buy In 2012#6: CPFL Energia
by Neil George, editor The Pay Me Strategy
To find strong dividend paying stocks, we apply two primary tests. One stock that passes both of these tests — and ranks our as top investment idea for the coming year — is CPFL Energia (CPL), one of Brazil’s major power utilities. I focus on stocks that will grow your retirement wealth during good times and bad. And one of the crucial means of making this happen is to adhere to a few major tenets when it comes to picking stocks for your own retirement portfolio.
This includes focusing on stocks oering solid, high-paying dividends. And if they can be found in rising markets with rising currencies – so much the better for the long haul. I look to find stocks that are in sustainable industries and then put them through our stress tests. Stress test number one is to focus on a company’s income statement and look at what happens when the worst hits its market. If the cash keeps coming to service its dividends – then it’s passed the first test.
Second, we focus on the balance sheet. This is where you look at the debt and what needs to happen to keep that debt serviced and rolled over.
The interesting thing about many stocks in emerging markets is that they tend to have less debt than their peers in the so-called major markets.
CPFL Energia, which is based in the financial capital city of San Paulo, keeps pumping out the cash..
The stock pays a dividend of over 8 percent – which has been climbing by over 27 percent over the past five years alone. And for those same past five years – just as markets in the US, Europe and Japan have imploded – CPFL Energia has delivered returns each and every year averaging over 27 percent.
Best Stocks To Buy In 2012#7: Keegan Resources (KGN): Brien Lundin
“Gold will be the primary beneficiary of the massive bailout and stimulus plans enacted by not only the United States, but every industrialized nation across the globe,” forecasts Brien Lundin.
The mining stock specialist and editor of The Gold Newsletter looks to a small gold exploration and development company as his top pick for 2012: Keegan Resources (ASE: KGN).
“Because of the deflationary influences of higher productivity, moribund economic growth and cheap labor in developing nations, we won’t see the kind of price inflation that characterized the 1970s.
“But we will see galloping monetary inflation — or much more currency in circulation — and the result will be higher prices for assets such as commodities and equities.
“So if gold is going to lead the pack, what’s the best gold investment? In my opinion, smaller gold exploration and development companies will o?er valuable leverage to gold, and one of the best is Keegan Resources.
“Keegan controls the Esaase gold project, a major mine-in-the-making located in the investor-friendly nation of Ghana, in west Africa.
“The company has made quick work of the project, going from field exploration to drilling to resource definition and pre-feasibility studies in a span of just three years.
“Now, Keegan finds itself sitting on top of a near-surface, open-pittable deposit that contains 3.47 million ounces of gold according to the most recent resource estimate.
“As impressive as that total is, it has the potential to grow significantly larger. The outlined resource remains open both along trend and at depth, and it lies within a country that hosts some of the world’s largest gold deposits.
“Whether Keegan can unearth a resource of similar size at Esaase remains to be seen, but most analysts feel the next resource estimate will show the total gold holdings to have increased to at least five million ounces.
“And with the company tying up new ground along trend, there’s literally no telling how large this find could grow.
“Frankly, I don’t expect Keegan to develop Esaase into a mine — that job will likely devolve to the major mining company that buys Esaase, or Keegan itself.
“The company’s management team knows this as well, and they are guaranteeing the best price by advancing steadily toward production.
“Keegan was among the highest of the high flyers during gold’s fall rally. Although the share price has therefore come back fairly hard during the subsequent correction, the closing of a recent financing essentially opened a door to potential take-out o?ers for the company.
“While I know of no indications that any o?ers are forthcoming, there is the possibility that a bid, or a bidding war, could emerge at any time. In light of this, and considering the dip in its share price, Keegan is one of my top gold stock recommendations.”
Best Stocks To Buy In 2012#8: Kinder Morgan (KMP): Daily Paycheck
For her top pick for 2012, income specialist Amy Calistri looks to Kinder Morgan Energy Partners L.P. (NYSE: KMP).
The editor of The Daily Paycheck explains, “I always look for the gift that keeps on giving; that’s how I view this master limited partnership, which produces a steady stream of income each and every quarter.
“Kinder Morgan Energy Partners is one of the largest owners and operators of energy- product pipelines and storage facilities in the United States.
“Formed in 1992, KMP is structured as a publicly-traded master limited partnership (MLP). MLPs are an important asset class for income investors because they are legally required to distribute most of their taxable income and cash flow to shareholders (known as ‘unitholders’).
“KMP’s extensive pipeline systems carry products such as gasoline and heating oil from the Gulf Coast to the East and West Coasts.
“KMP also owns and operates a network of carbon-dioxide (CO2) pipelines, which are used in a process known as enhanced oil recovery. These pipes carry CO2 to old oil fields where it is injected into the fields to increase productivity. These enhanced recovery techniques become more popular as oil prices rise.
“And KMP is continuing to grow its pipeline revenues through expansion. This past November , the Rockies Express Pipeline became fully operational.
“KMP owns a 50% stake in the 1,679-mile project, which carries natural gas from the Rocky Mountains to the Pennsylvania/Ohio border.
“Although KMP is an energy-related company, its revenues are relatively insensitive to energy prices. The partnership earns fees based on the amount — not the price — of gas, oil or refined products it processes and transports.
“Many of its interstate pipelines charge rates that are regulated by the Federal Energy Regulatory Commission. These regulated rates are set to allow Kinder Morgan a steady, reliable return on invested capital.
“Further, the partnership has already locked in guaranteed capacity from a few shippers on its pipes. KMP appears to be on track to not only deliver, but also continue to grow, its distributions.
“And when it comes to distributions, KMP has a stellar track record, having made quarterly payments like clockwork since October 1992.
“KMP also has a very consistent record of dividend growth, boosting distributions nearly every year since its inception. The partnership has increased its distributions at an annualized rate of +7.5% in the last five years alone.
“KMP currently pays a quarterly dividend of $1.05 per unit, equivalent to $4.20 per year for a yield of approximately 7% at current prices. It should be noted that MLPs are best held in taxable accounts as most of their distributions are classified as ‘return of capital’.”
Best Stocks To Buy In 2012#9: Flagstar Bancorp
by Mark Skousen, editor The Hedge Fund Trader
My favorite speculative stock idea for 2012 is Flagstar Bancorp (FBC), the Troy, Michigan-based bank with 165 branches in Michigan, Indiana, and Georgia.
The stock was trading for over $140 a share before the financial crisis; the stock fell to $5 a share last May, and it is now under $1.50.
Earnings are way down, and the stock has su”ered from heavy tax loss selling in November and December. In fact, it’s selling for a fraction of its book value ($5.30). But there is some good news coming out. Quarterly revenues tripled to $459 million, and the bank is expected to be marginally profitable next year. They are growing rapidly again by using a little-known but powerful technique called ”EVA momentum.”
Economic Value Added (EVA) — a powerful new metric in finance — was co-invented by Joel Stern and Bennett Stewart as a performance measure in excess of the opportunity cost of capital.
Joel Stern is a genius who teaches finance at six graduate schools, including Chicago, Carnegie-Mellon, and Cape Town, and speaks each year at FreedomFest.) Flagstar broke positive this year with an EVA momentum of 11.5%, one of the highest rankings of all thrift and mortgage finance companies.
In short, Flagstar is creating value for its shareholders at a rapid pace, and that fact will re?ect itself in a higher stock price.
Currently it has nearly $3 billion in cash to deal with its $3.65 billion in debt. It might be a good takeover candidate by one of the regional banks.
The tax selling is probably over by now, and FBR Capital just upgraded its rating of the stock to “outperform.”
Moreover, company o#cers and directors are buying stock, 2.2 million shares worth since November 1 at between $1 and $1.35. In every way, this small bank stock is a super bargain. It could double in value and still sell below book.
Best Stocks To Buy In 2012#10: Goldcorp
by Curtis Hesler, editor Professional Timing Service
Gold was the hot topic in 2010. Since the underlying factors that pushed prices to new highs have not changed, I expect my long held target of $1,600 gold will be realized in 2012.
In fact, I expect that upside target of $1,600 will be woefully short of the mark. And my favorite gold stock for 2012 is Goldcorp (GG).
Gold belongs in everyone’s portfolio, and there are many ways to invest in precious metals. You can buy bullion in several forms, you can buy ETFs, or you can invest in mining companies.
Despite my long-term bullishness on gold, I would advise that spates of profit-taking set in from time to time. I caution against chasing strength.
Gold is going to have a di#cult time getting through $1,420 April 2012 basis without some further consolidation. There should be some support at $1,330, but there is still a good possibility that we might see gold correct to $1,250.
Nevertheless, that would be an excellent time to climb on and add to positions. The forces that put gold at $1,400 will still be in force, and the next leg should take gold to our long-held target of $1,600.
Meanwhile, mining shares o”er you the best leverage, but not all miners are created equal. At this point in the gold bull market with gold already having appreciated by 450%, it would be wise to stick with the best of the best.
Goldcorp, in my estimation, is the very best gold mining operation on the planet. Their revenues are expanding, they are the best managed and are among the most ecient of the major producers, and they just doubled their dividend. Goldcorp belongs at the core of your precious metals portfolio.
Best Stocks To Buy In 2012#11: Google
by Timothy Lutts’, editor Cabot Stock of the Month
As publisher of the Cabot advisories, I see the inner workings of a variety of successful investing systems, from pure momentum-driven systems to pure value-driven systems. And it’s interesting when they overlap For example, Google (GOOG) is currently recommended by both Cabot Market Letter and Cabot Benjamin Graham Value Letter. Google’s growth attraction is clear. Even with $28 billion in annual revenues, it’s still growing at a 23% rate.
Profit margins are a plump 33.8%. And the firm’s very bright employees are working diligently to expand outside its core advertising search business into businesses as di”erent as computer-guided cars and o”shore electric grids to connect wind farms.
As to value, GOOG has been treading water for the past three years, even while earnings ratcheted higher every month.
In fact, the stock is now 21% below its old 2007 high, even though revenues at the company are roughly 72% higher now and earnings are roughly 95% higher. Still, some people will argue the stock—currently trading near $600—is too expensive. To which we say, “It’s not how many shares you buy that counts; it’s how much money you invest.”
Best Stocks To Buy In 2012#12: Medifast (MED)
“My number one stock pick to start 2012 is Medifast Inc. (NYSE: MED), a weight and disease management company,” says Mike Turner.
The editor of Mastering the Markets explains, “The stock has skyrocketed from the $5 area to over $30 in just the last nine months.” Despite the gains, the advisor remains bullish on the stock’s prospects.
“My proprietary analysis software rates this stock as a fundamental ‘Strong Buy,’ with an overall score of 145 out of 200 — one of the highest rated stocks in my database.
“With regard to Medifast’s fundamentals, I like the following:
1 * The quarter-over-year-ago-quarter revenue growth rate of 45%. This is nearly twice the peer group average for MED.
2 * Quarter-over-year-ago-Quarter Earnings Growth Rate of 14%, which is above the average of its peer group.
3 * Its 5-year average annual sales growth is nearly 33%, almost 3 times the average of its peer group.
4 * Its 5-year average annual net income is over 18%, compared with 14.41% for its peer group.
5 * I consider any return on equity (ROE) of more than 15% as excellent. MED’s ROE is over 23%, more than twice its peer-group average.
“From a technical analysis perspective, my program gives Medifast a score of 75 out of a maximum of 100. This places MED in the top 10% of the stocks I watch, and very near the top of that group. Specifically, I like the following:
1 * The price trend for shares of MED has been moving higher for better than nine months. This trend is well above my system’s trend-line and well above MED’s 200-day moving average. This is indicative of a strong technical trend that shows no signs of abatement.
2 * Institutional ownership is at 30% — a large-enough chunk to convince me that the big traders believe this stock is heading higher.
3 * The average share price of all the stocks in Medifast’s Industry (Medical Equipment and Supplies) and sector (Healthcare) is moving higher. This is an indication that more money is likely moving in than moving out, helping to put upward pressure on MED.
“Disclosure: Mike Turner owns shares of MED either personally or via his managed account portfolio.”
Best Stocks To Buy In 2012#13: Mindray (MR): Alan Newman
“Mindray Medical International Limited (NYSE: MR), a China-based medical devices firm, is our top investment idea for the coming year,” says Alan Newman.
In his CrossCurrents newsletter, he notes, “The company is headquartered in Shenzhen, China and is one of many Chinese companies now specializing in the development, manufacture and marketing of medical devices worldwide.
“Its products range from patient monitoring units to in vitro diagnostics for bodily fluids, analyzers for same, ultrasound systems and digital radiography systems.
“The company has been around less than 20 years. It has operations in North America, Europe, China, and other Asian countries. Growth has been excellent. Revenues increased 57.5% in 2007 and 79% in 2008.In the same span, net income rose 74.9% and 34% respectively.
“The forward P/E is estimated to be 23.8. An $0.18 dividend was paid in March 2008 and a $0.20 dividend was paid in March 2010.
“Like most companies, the shares were crushed in the autumn swoon of 2008 that gripped world markets, but bottomed in late November 2008 and remained on a steady incline until mid-August 2010, rising roughly two-and-a-half fold.
“The shares have since consolidated quite well, trading in a narrow range while our charts suggest accumulation by smart money.
“We believe the stock is a buy at current levels and would not at all be surprised to see the October 2007 peak of $45.19 challenged and exceeded in 2012.”
Best Stocks To Buy In 2012#14: MDU Resources
by Roger Conrad, editor The Utility Forecaster
Even among great companies, one year’s leader is often the next’s laggard and vice versa; MDU Resources (MDU) is one under-performer that looks increasingly likely to get it’s legs back in 2012.
The company is best thought of as a financially conservative resource company, whose cash ?ows are anchored by solid regulated energy assets.
Management has systematically grown both sides of its business year after year, even while holding debt to 40 percent or less of capital and increasing its dividend 20 consecutive years.
The latest–a 3.2 percent boost e”ective with the quarterly payment in January–is remarkable for two reasons.
First, it comes at the end of a tough year for several operations and at the same time management has continued aggressive spending in several areas. Second, despite earnings that are likely to prove a nadir for the company, dividend coverage was still nearly 2-to-1.
That suggests immense staying power, even if the US economy remains sluggish. And the more growth picks up, the greater the potential for MDU’s profits to rise. As an oil and gas producer, the company has an increasingly lucrative position in the Bakken trend producing light oil.
Utility construction is in good shape to benefit from the buildout of transmission infrastructure to bring renewable energy from the upper Midwest to Chicago and other major cities.
And the company’s position as a top 10 producer of construction materials and aggregates is well placed to profit from government-sponsored infrastructure projects, such as road building and maintenance.
Finally, the company’s Montana, Dakotas and Pacific Northwest gas and electric utilities and pipeline unit enjoy some of the most supportive regulation in the country, ensuring planned investment will ?ow to rate base and earnings. That adds up to double-digit earnings growth in coming years, though a”ected by economic ups and downs.
Over the past 20 years, MDU has thrown o” a nearly 1,000 percent return–rising a combination of rising dividends and capital growth to annual returns approaching 13 percent. Buy up to 24.
Best Stocks To Buy In 2012#15: Medtronic
by Jim Stack, editor InvesTech Market Analyst
For over 50 years, Medtronic (MDT) has been the premier medical device manufacturer in the marketplace.
With the invention of the battery-powered pacemaker in the mid 1950s, Medtronic began a long string of technological innovations. Over time, that one breakthrough was transformed into a company that now holds over 21,000 filed patents and employs over 9,000 scientists and engineers.
Success has allowed Medtronic to develop a very healthy financial position. Without jumping into too many details, the company’s Free Cash Flow Margin – the percentage of sales that end up as actual “free cash” – has averaged a remarkably consistent 22% over the past 10 years.
Not only is this an impressive amount of cash generation, but the consistency with which the firm generates cash is even more amazing – it hardly deviates more than a percent or two from the mean.
There are very few businesses that have such a strong track record. To put this cash back in shareholder’s hands, management pays out a healthy 2.5% dividend. Even better, they have been aggressively increasing the dividend an average 20% per year for the past 5 years.
Today, Medtronic is bringing its knowledge of treating chronic ailments to a rapidly expanding worldwide middle-class.
Currently, international sales account for 41% of total revenue. In the most recent quarter, sales in China increased 24% year-over-year, while Latin America sales and Middle East & Africa sales each grew 19%.
Market share potential in emerging markets has many analysts forecasting double-digit earnings growth well into the future. For investors, Medtronic is being o”ered at valuation levels rarely seen and, in our opinion, levels that won’t last long.
This “discount” valuation is being driven by concerns over long-term growth potential in key areas – including the core cardiac rhythm segment. For reasons noted above, we think these concerns are overdone. Instead, we feel the current market gives us an opportunity to buy shares of a world class company at 11X earnings.
Compare the current valuation to Medtronic’s 10 year median P/E ratio of 27.8X and you get a sense of the value we see in this company.
As an added bonus, shares have come under pressure in recent weeks from year-end tax loss sellers. For new buyers, this provides a terrific entry point. Bottom line, Medtronic certainly fits our mold of finding good companies at attractive prices. It has the technical expertise, financial strength, growth potential, and valuation of a great investment.
Best Stocks To Buy In 2012#16: PepsiCo (PEP)
“PepsiCo (NYSE: PEP), my top pick for 2012, remains underrated by the market,” says Jim Stack.
The money manager and editor of InvesTech Market Analyst suggests, ”All too often, it’s viewed as a stodgy soft drink company, fully reliant on its namesake soda line. That’s a misconception.” Here, the sets the record straight.
“In reality, PepsiCo owns some of the most sought after brands in the world, including Gatorade, Tropicana, Frito-Lay, and Doritos. It does business in more than 200 countries worldwide, including key emerging market economies like China and India.
“Perhaps most important of all, it’s a growth company with analysts expecting long-term future earnings growth of 10-12% per year.
“In recent months, PepsiCo has taken another major step forward with the pending acquisition of its two primary bottlers – Pepsi Bottling Group and PepsiAmericas.
“The acquisition provides the potential to eliminate an estimated $500 million to $1 billion in redundant costs. If those cost savings are transferred directly to the bottom line, shareholders could see a significant increase in net income of 10% to 20%.
“Of perhaps even greater benefit, the purchase brings 80% of North American beverage distribution ‘in-house.’ This move will bring management one step closer to its final customers – injecting a level of flexibility into operations not often seen with a company of PepsiCo’s size.
“The acquisition further ties together the Pepsi story – a well run company with market leading growth positions and an attractive valuation.
“The executive suite neatly combines the beverage ‘megabrands’ such as Pepsi, Gatorade, Tropicana, and Mountain Dew with the world’s largest snack food company, Frito-Lay.
“Management then leverages these brands into international growth markets such as Latin America and Asia where sales volume increased more than 20% in 2008, and despite the most challenging world economy in decades, has seen high single-digit growth so far in 2010.
” On top of all this, Pepsi is currently trading at valuation levels not seen in 15 years. And although it’s a growth company, Pepsi still o?ers the dividend yield (3.0%) of a stalwart.
“Bottom line, Pepsi remains underrated by the market in general, and the bottler acquisition only enhances the company’s outlook.”
Best Stocks To Buy In 2012#17: Perfect World (PWRD)
“Perfect World Company Ltd. (NASDAQ: PWRD), an online game developer and operator, is my top investment idea for 2012,” says Alex Kolb.
The growth & income analyst for Zacks.com explains, “Chinese stocks have been on fire lately and Perfect World Co., Ltd. is no exception. And the company’s fundamentals point to even stronger momentum in 2012.
“The company develops online games based on its game engines and game development platforms. Perfect World’s games include massively multiplayer online role playing games (‘MMORPGs’) such asPerfect World, Legend of Martial Arts, Perfect World II, Battle of the Immortals and Fantasy Zhu Xian to name a few.
“Perfect World says that a substantial portion of the revenues are generated in China. However, its games have been licensed to leading game operators in a number of countries and regions in Asia, Europe and South America.
“The company also generates revenues from game operation in North America and plans to continue to explore new and innovative business models.
“Competitors like Shanda are also performing extremely well, an indicator that online role playing games are very popular and should continue attracting more players in 2012.
“PWRD shares have soared by more than 120% so far in 2010, surpassing the major averages by more than 100%. Despite the significant surge, the stock is attractively price with a forward P/E of 14.
“Perfect World’s fundamentals point to even stronger momentum in 2012. Analysts polled by Zacks currently have 2012 earnings pegged at $3.66 per share. The forecast is up from $3.45 over the past 2 months and compares favorably to the current 2010 Zacks Consensus estimate of $2.90.
“If history is any indication, earnings will exceed forecasts. Since 2007, Perfect World has consistently topped earnings expectations. Earnings surpassed estimates by an average of 31% over the past 4 consecutive quarters.
“The company is expected to see 33% earnings growth over the next 3 – 5 years, well above the industry’s expectation of 18% growth. Other strong industry comparisons include Perfect World’s return on equity (ROE) of 55.5%, versus the industry average of 2.5%.
“The company boasts a net profit margin of 47%, while the industry average is in the negative. It is also worth noting that Perfect World sports a solid balance sheet, showing no debt.
“The company saw robust results in the third quarter. Earnings per share of 81 cents came in 8% ahead of the Zacks Consensus Estimate. Total revenues jumped 13% year-over-year.
“Management mentioned that third-quarter results exceeded the company’s expectations, adding that Perfect World continues to strengthen its competitive advantages in the industry by strategically crafting a highly diversified portfolio of truly di?erentiated games.
“Recently, the company introduced a new 3D fantasy MMORPG, Forsaken World. Management explained that this game breaks new ground in terms of overall planning, programming and graphical designs.”
Best Stocks To Buy In 2012#18: PMC Sierra
by Paul McWilliams, editor Next Inning
PMC Sierra (PMCS) is a top speculative investment for the coming year. The company is a leader in the field of integration. By integrating more functions into a single chip, the company has doubled its market share in the SAS storage market as the industry moved from 3Gbs to 6Gbs.”
The company is also building significant traction with its single-chip “RAID on a Chip” solution and has leveraged its integration talent to become one of the dominant suppliers in the FTTx space serving both GPON and EPON requirements.
Most recently, PMCS announced its acquisition of Israeli based Wintegra — a private company and the world leader in network processors for access networks. ”
The market for network processors in access applications, which includes broadband wireless backhaul, is just now building traction, and Wintegra will likely dominate the market for at least the next few years.”" As I see it, the acquisition makes a ton of sense from many perspectives.” First, as I noted, Wintegra is the leader in a market that is set to expand rapidly during the next few years. ”
Second, once we factor in the Wintegra balance sheet and PMCS minority ownership (yes, PMCS was a venture” investor in Wintegra), PMCS paid only about $205M net for the company. ”
Third, PMCS and Wintegra” have worked together for years and in many of the design wins you’ll find a PMCS and a Wintegra chip sitting side-by-side. ”
This means there is a very good integration opportunity for PMCS to put the functions of both chips into a single chip, and by doing so extend competitive advantages and lower costs.
The short story is that in spite of the fact that the company has topped the earnings consensus for six out of the last seven quarters, and equaled it for the” seventh, Wall Street still insists on slapping the stock with a huge risk discount. ”
I believe as PMCS maintains this practice of topping Wall Street projections the risk discount will be removed, and with that, the forward price to earnings (valuation multiple) will rise considerably.
Best Stocks To Buy In 2012#19: PowerShares DB Agriculture ETF
by Gene Inger, editor The Inger Letter
One of the easiest ways to participate in the long-term demand for corn, wheat, cotton etc. is with a soft commodity-based exchange traded fund.
We recommend the PowerShares DB Agriculture ETF (DBA), our top pick for 2012. We believe the economy is entering a period of ‘hyper-stag?ation’, where prices for life’s necessities — such as gasoline, food and utility rates — will rise persistently over time.
The owerShares DB Agriculture ETF — soft commodity-oriented exchange traded fund — is one of the easiest ways to participate in the long-term demand for corn, wheat, cotton etc. is
This ETF has shown fairly steady progression over time. Given steady in?ation in food costs, soft commodities are likely to rise, with periodic bouts of selling and volatility. We think an investment retained over time in ‘soft commodities’, is relatively low risk contrasted to volatility in markets such as Oil, or the extended Gold market for now. Why? With Asian demand bound to increase over time, soft-commodity demand will too.
Nevertheless we caution investors against chasing strength; rather, one strategy to avoid timing is to scale into one’s position over time. If you scale-in, you get benefits of ensuing pullbacks while holding an initial stake.
Best Stocks To Buy In 2012#20: Verenium (VRNM): Andy Obermueller
“The Energy Security Act of 2007 has received little investor attention; however, it contains provisions that are likely to lead to significant returns for investors,” suggests Andy Obermueller.
In his Government-Driven Investing, he notes, “The law codifies the federal production targets for biofuel, which we believe presents a real opportunity for Vernenium (NASDAQ: VRNM).
“‘Biofuel’ has, for decades, been code for ‘corn-based ethanol.’ But this law also contains provisions for a new, advanced biofuel derived from cellulose, an organic compound found in all plant matter.
“Instead of using corn — which uses valuable farmland and can drive up the price of a staple food — cellulose can be derived from any plant, wheat or rice straw, corn stalks, scrap wood or even grass.
“The law calls for hundreds of millions of gallons of cellulose ethanol. There’s just one problem: Very little of cellulosic ethanol is being produced. By 2022, however, the nation will need, by virtue of federal law, 16 billion gallons.
“All problems, of course, are really opportunities in disguise. Especially for one company: Verenium. This is a biotech company that has mastered the enzymes required to unlock the energy in cellulose.
“It has built two demonstration-scale plants, one in Jennings, La., and another in Japan, and has announced it will build the nation’s first commercial-scale ethanol plant.
“It has two partners in this endeavor: Petroleum giant BP and the U.S. federal government, which has begun its due diligence on a federal loan guarantee for the project.
“The demand for cellulosic ethanol will rise many-fold in coming years, and Verenium, the leader in this field, will likely see similar gains as it puts this ground-breaking technology to work in the new plant and licenses the technology to hundreds of others.
“The loan guarantee for the plant will likely be a significant catalyst for these shares, and the continued demand for cellulosic ethanol will fill its co?ers — and reward shareholders — for years to come.”
Best Stocks To Buy In 2012#21: Virginia Mines (VGQ)
“Virginia Mines (Toronto: VGQ) remains my favorite gold exploration company,” says resource expert Adrian Day.
In choosing the stock as his top pick for 2012, the editor of The Global Analyst explains, “The company has a successful track record, top management and a super-strong balance.
“Virginia Mines has a successful track record, having discovered and subsequently sold to Goldcorp, the rich Eleonore deposit in northern Quebec. This discovery saw the stock go from the $2 range to the mid-teens. Following the sale (which saw a spin out to shareholders), the stock is in the low $5s, ready to try again.
“Exploration by its nature is very high risk, with very long odds of discovery. Most companies finance their exploration by continual equity o?erings, which mean dilution for shareholders even if they are successful.
“Virginia has a di?erent way: it is a prospect generating, looking for prospects, often by staking the ground, doing some exploration, and then looking for a joint venture partner.
“The partner spends the high-risk exploration dollars in return for a majority ownership in the property. This results in a low-risk business model.
“Even though the company gives up most of the property, it holds on to its balance sheet and by doing this over and over, can build a portfolio of properties in which it owns minority interests with someone else spending the money.
“As Virginia has grown and built a strong bank account (it has has $44 million on its balance sheet), it is now in a position to do a little more exploration than in the past. This enables it to sift through its projects, and by advancing them more, obtain better deal terms.
“Virginia has build a broad portfolio of projects, all in mining-friendly Quebec, in a range of metals and minerals, but emphasizing gold.
“Right now, it has six properties ready to drill over the winter season, all in the prospective but under-explored James Bay area. Some of these are very close to the Eleonore discovery, on ground not included in the sale to Goldcorp.
“Virginia is spending the money on four of these properties, with two being funded by partners. Some have brand new targets being drilled, others following up on previous drilling.
“While exploration remains long odds, Virginia has as good a shot as any, and at minimum, we expect the next six months or so to generate a lot of news on these properties that should see the stock buoyant.
“Any positive exploration results will see it move much higher. In the meantime, you can buy a fine company at less than NAV. Just the value of the royalty it retained on Eleonore and its cash in the bank are worth more than the entire market cap. All the exploration comes free.
“So you can buy a great company at below NAV. Despite the move up in the stock price in recent months, this is an excellent time to buy, ahead of this aggressive drilling campaign. We expect 2012 to be very good for Virginia and its shareholders.”
Best Stocks To Buy In 2012#22: Siga Technologies
by Dennis Slothower, editor Stealth Stocks
Last year for my favorite stock pick, I recommended IMAX which more than doubled. This year I would like to recommend Siga Technologies Inc. (SIGA), a bio-defense company that o”ers the same kind of upside potential for 2012.
In 2004, the US started an initiative called Project BioShield, which gave the government the right to purchase and stockpile vaccines and drugs to fight anthrax, smallpox and other potential agents of bio-terror.
SIGA is a leader in the development of pharmaceutical agents to fight potential bio-warfare pathogens and their ST-246 drug is considered to be the only known cure for smallpox, which the government is keenly interested in.
Recently, BARDA has stated their intent to award SIGA a $500 million contract, with options that potentially could be as high as $2.8 billion in orders. However, SIGA is being challenged in court by a competitor as being too big as a company to qualify for the government contract.
In fairness, BARDA has announced plans for a market survey to determine, whether there are any qualified small businesses with the capacity to produce an adequate supply of smallpox antiviral medication for the National Strategic Stockpile. It is unlikely that a small company will be able to meet the government’s needs as the drugs expire and need to be constantly replaced.
It is expected that SIGA will win this contract and if so investors could be rewarded with a double or triple in appreciation.
Top 10 Stocks NOT to Buy in 2012
It’s hard to believe, but the holiday season is upon us and there is only about a month and a half left in 2012. Because this is the busiest time of the year for investors like you, I thought I’d get out ahead of the New Year and I would give you 10 stocks that I think you should dump for 2012.
Some of these stocks have had a good run and some never really got anything going this year, but all are too risky if you’re looking to build a solid portfolio in 2012.
Let’s get right to this list of stocks you should sell or avoid as we close out 2012.Top 10 Stocks NOT to Buy in 2012
Some of these stocks have had a good run and some never really got anything going this year, but all are too risky if you’re looking to build a solid portfolio in 2012.
Let’s get right to this list of stocks you should sell or avoid as we close out 2012.Top 10 Stocks NOT to Buy in 2012
Best Energy Stocks Pick For 2012
President Obama made a speech where he announced a goal of cutting oil imports by a third over the next decade. He included a pledge to have federal agencies buy only alt-fuel vehicles by 2015 and a promise to expand U.S. oil exploration and production.
Transitioning half the cars and trucks in the U.S. to natural gas transportation over the next 5 to 10 years could reduce foreign oil imports by 5 million barrels every day.
So natural gas is an obvious play. Renewable/alternative fuels are other good choices.
Here are my four best picks that could make investors a bundle from the President’s new policy:
Best Energy Stocks Pick For 2012#1—
Clean Energy Fuels (CLNE)
The company owns and/or supplies more than 200 natural gas fueling stations across the U.S. and Canada. It serves over 320 fleet customers operating over 20,000 natural gas vehicles. The customers can use Clean Energy’s fuel stations to tank up their vehicles with compressed natural gas (CNG) or liquefied natural gas (LNG).
Clean Energy Fuels also provides natural gas vehicle systems and conversions for taxis, limousines, vans, pick-up trucks, and shuttle buses through its BAF subsidiary in Texas. Clean Energy helps customers buy and finance natural gas vehicles and obtain government incentives.
The company buys CNG from local utilities and produces LNG at its two plants (in California and Texas) with a combined capacity of 260,000 gallons per day.
Clean Energy owns and operates an LNG liquefaction plant near Houston, Texas, which it calls the Pickens Plant, capable of producing up to 35 million gallons of LNG per year.
And investors who buy CLNE won’t be alone …
Founder and billionaire oilman T. Boone Pickens owns a sizeable chunk of Clean Energy.
Best Energy Stocks Pick For 2012 #2—
Westport Innovations (WPRT)
This company makes natural gas engines for forklifts, oilfield services engines, trucks and buses and automobiles. Its 50-50 joint venture Cummins Westport project builds natural gas vehicle engines for trucks and buses that could refill at the clean energy stations built by Clean Energy.
It made revenues of $154 million in the last year and isn’t close to profitability yet. But a concerted push toward natural-gas powered vehicles could change that.
WPRT is at the top of its 52-week range. So I’d wait for a pullback.
Best Energy Stocks Pick For 2012 #3—
Talisman Energy (TLM)
Talisman had 1.4 billion barrels of oil equivalent in reserves last year. It has material positions in three world-class, liquids-heavy shale plays in North America: The Marcellus shale (Pennsylvania), Montney shale (British Columbia) and Utica shale (Quebec). It is also expanding its Eagle Ford shale properties, in a 50-50 joint venture with Statoil.
The company also signed two $1.05 billion deals with Sasol of South Africa. This partnership is sketching out plans for a new multibillion-dollar facility near Edmonton that could process as much as a billion cubic feet of natural gas a day into 96,000 barrels of refined products through the Fischer-Tropsch process.
Fischer-Tropsch works by using heat and chemical catalysts to break down a substance like natural gas into its molecular basics and then rebuild those molecules into something else — such as diesel.
Why do that?
A barrel of oil contains roughly six times the energy content of a thousand cubic feet of gas. Since 6 thousand cubic feet of gas is worth about $24 (U.S.), and one barrel of oil is worth about $100, there is a tremendous profit margin if you can convert one to the other cost-effectively.
Best Energy Stocks Pick For 2012 #4—
PowerShares Wilderhill
Clean Energy Fund (PBW)
This is one of the largest alternative energy ETFs with over $500 million in assets. Large holdings include GT Solar, Yingli Green Energy, SunPower Corp., Trina Solar and more.
Transitioning half the cars and trucks in the U.S. to natural gas transportation over the next 5 to 10 years could reduce foreign oil imports by 5 million barrels every day.
So natural gas is an obvious play. Renewable/alternative fuels are other good choices.
Here are my four best picks that could make investors a bundle from the President’s new policy:
Best Energy Stocks Pick For 2012#1—
Clean Energy Fuels (CLNE)
The company owns and/or supplies more than 200 natural gas fueling stations across the U.S. and Canada. It serves over 320 fleet customers operating over 20,000 natural gas vehicles. The customers can use Clean Energy’s fuel stations to tank up their vehicles with compressed natural gas (CNG) or liquefied natural gas (LNG).
Clean Energy Fuels also provides natural gas vehicle systems and conversions for taxis, limousines, vans, pick-up trucks, and shuttle buses through its BAF subsidiary in Texas. Clean Energy helps customers buy and finance natural gas vehicles and obtain government incentives.
The company buys CNG from local utilities and produces LNG at its two plants (in California and Texas) with a combined capacity of 260,000 gallons per day.
Clean Energy owns and operates an LNG liquefaction plant near Houston, Texas, which it calls the Pickens Plant, capable of producing up to 35 million gallons of LNG per year.
And investors who buy CLNE won’t be alone …
Founder and billionaire oilman T. Boone Pickens owns a sizeable chunk of Clean Energy.
Best Energy Stocks Pick For 2012 #2—
Westport Innovations (WPRT)
This company makes natural gas engines for forklifts, oilfield services engines, trucks and buses and automobiles. Its 50-50 joint venture Cummins Westport project builds natural gas vehicle engines for trucks and buses that could refill at the clean energy stations built by Clean Energy.
It made revenues of $154 million in the last year and isn’t close to profitability yet. But a concerted push toward natural-gas powered vehicles could change that.
WPRT is at the top of its 52-week range. So I’d wait for a pullback.
Best Energy Stocks Pick For 2012 #3—
Talisman Energy (TLM)
Talisman had 1.4 billion barrels of oil equivalent in reserves last year. It has material positions in three world-class, liquids-heavy shale plays in North America: The Marcellus shale (Pennsylvania), Montney shale (British Columbia) and Utica shale (Quebec). It is also expanding its Eagle Ford shale properties, in a 50-50 joint venture with Statoil.
The company also signed two $1.05 billion deals with Sasol of South Africa. This partnership is sketching out plans for a new multibillion-dollar facility near Edmonton that could process as much as a billion cubic feet of natural gas a day into 96,000 barrels of refined products through the Fischer-Tropsch process.
Fischer-Tropsch works by using heat and chemical catalysts to break down a substance like natural gas into its molecular basics and then rebuild those molecules into something else — such as diesel.
Why do that?
A barrel of oil contains roughly six times the energy content of a thousand cubic feet of gas. Since 6 thousand cubic feet of gas is worth about $24 (U.S.), and one barrel of oil is worth about $100, there is a tremendous profit margin if you can convert one to the other cost-effectively.
Best Energy Stocks Pick For 2012 #4—
PowerShares Wilderhill
Clean Energy Fund (PBW)
This is one of the largest alternative energy ETFs with over $500 million in assets. Large holdings include GT Solar, Yingli Green Energy, SunPower Corp., Trina Solar and more.
Best Cheap Stocks to Buy For 2012
This has been quite a winter.
From Arab states falling to Twitter revolutions, to U.S. states finally owning up to their own fiscal shortfalls, to natural disasters in New Zealand, Australia and now Japan, stock markets around the world have been swinging up and down in manic runs from hope to despair.
And one other thing is true: The markets hate uncertainty. That means, in our current circumstances, smart investors are looking for real assets — tangible commodities and resources that the world has to have to survive or hedge against uncertainty. In 2010, I picked silver miner Silver Wheaton (NYSE: SLW) as my top stock for the year. It doesn’t get much more tangible than silver, and with the metal’s run higher, the stock was up more than 150%.
This year, I’ve found a couple more standouts in the real asset sector.
This duo is a real asset play on the same megatrend that’s been building since the dawn of man: The world’s need for food…
On a per-capita basis, China has just a fraction of the available farmland as most other countries. And the gap is getting wider. Population is growing by around 10 million per year, while millions of acres of prime agricultural land are lost to soil erosion, urban construction, and heavy metals pollution.
This dire situation presents ongoing challenges for farmers — but unique opportunities for companies whose products can boost crop yields.
That’s where Yongye (Nasdaq: YONG) comes in. The firm is an emerging leader in the “green” agriculture movement, specializing in organic crop nutrients and animal feed supplements. The company has several advantages over the competition.
First, its chief marketing officer literally wrote the book on reaching out to rural farmers.
Second, its Shengmingsu brand’s liquid nutrient has proven to increase output by 22% and reduce harvest time by up to two weeks.
Finally, Yongye has been negotiating with independently owned supply stores to prominently display (and push) the Shengmingsu brand. The company has a year-end goal of 30,000 stores selling its product.
Ordinarily, you’d have to pay a rich premium for all this — but Yongye is trading at just five times forward earnings, a sharp discount to its expected 40%-plus growth rate. This stock could double in the next 12 months.
And prices are still rising at the wholesale level, which means more retail markups in the weeks and months ahead. According to the U.S. Department of Agriculture, producers fetched higher prices for corn, soybeans, eggs, milk and apples last month.
Some of the blame (or credit, depending on your perspective) belongs to the Fed‘s dollar debasement policies. By definition, a depreciating dollar boosts the prices of dollar-denominated agricultural commodities.
But old-fashioned supply/demand imbalances are also playing a major role. A bad Russian winter wheat harvest and subsequent export ban sent prices skyrocketing. Here in the United States, torrential rains in the Corn Belt have left supplies at the lowest levels in 15 years.
Growing demand and shrinking supplies intersect at rising prices. Corn futures have spiked more than 70% since June. Wheat prices have spiked 35% so far this year. Soybeans and sugar are the same story.
And, because beef, pork and dairy producers have to buy mountains of feed for their livestock, rising grain prices will likely spill into the meat aisle as well (there’s typically a six-month lag).
With all this in mind, I strongly recommend readers fight back against the relentless price hikes by converting a few dollars into bacon and cereal — or at least pork bellies and corn.
========================== Part 2 ==========================
Large pharmaceutical companies are facing a crisis. The industry spent a record $65 billion on research and development (R&D) in 2009, but approval rates for new drugs have fallen 44% during the past decade and continue to drop. Also in 2009, drugs launched in the previous five years accounted for only 7% of all sales, meaning that older drugs closer to patent expiration make up the vast majority of sales. The failure rate of drugs in the final stages of development has doubled in recent years.
Part of Glaxo’s shifting approach will be to outsource the initial stages of drug development. These earlier stages are the riskiest, as failure rates are high and are also costly, given the large number of compounds that must be tested. Finding the needle in a haystack is an understatement when it comes to bringing successful drugs to market. Other companies are following suit.The general belief is that Big Pharma will eventually outsource most of its drug development work to outsiders, be they university laboratories, smaller development-stage pharmaceutical and biotech startups, or companies known as contract research organizations (CROs).
Below is a list of the leading CROs…
Covance (NYSE: CVD) is the largest CRO in terms of sales and market capitalization, but not by a wide margin compared to Pharmaceutical Product Development Inc. (Nasdaq: PPDI). Charles River Labs (NYSE: CRL) and Parexel (Nasdaq: PRXL) are similar in terms of sales, while Icon plc (Nasdaq: ICLR), out of Ireland, is the smallest.
Here is an overview of the two that look most compelling to me from an investment standpoint.
Icon is one of the most globally diversified CROs and is also impressively profitable. The company posted operating margins of 11.2% and returns on invested capital (ROIC) in the mid-teens (see table above) in its latest fiscal year. The stock looks a bit expensive looking at the forward P/E and trailing free cash flow, but the company is using this year to invest in its business and expects profits to take a short-term dip, after which growth has a solid chance of returning to historical levels and generating impressive returns for investors.
Best Cheap Stocks For 2012: Pharmaceutical Product Development Inc. (Nasdaq: PPDI)
Pharmaceutical Product Development Inc., or PPDI for short, has been another consistent grower over time that is impressively profitable. The company has been around for more than 25 years, which makes it one of the oldest CRO firms, allowing it time to extend its services to 43 countries. It has strong capabilities in the earliest stages of drug development, such as Phase I clinical trials.
From Arab states falling to Twitter revolutions, to U.S. states finally owning up to their own fiscal shortfalls, to natural disasters in New Zealand, Australia and now Japan, stock markets around the world have been swinging up and down in manic runs from hope to despair.
And one other thing is true: The markets hate uncertainty. That means, in our current circumstances, smart investors are looking for real assets — tangible commodities and resources that the world has to have to survive or hedge against uncertainty. In 2010, I picked silver miner Silver Wheaton (NYSE: SLW) as my top stock for the year. It doesn’t get much more tangible than silver, and with the metal’s run higher, the stock was up more than 150%.
This year, I’ve found a couple more standouts in the real asset sector.
This duo is a real asset play on the same megatrend that’s been building since the dawn of man: The world’s need for food…
Best Cheap Stocks For 2012: Agricultural demand is growing
China, for instance, has a lot of mouths to feed — 1.3 billion at last count, or 15-20% of the world’s population. Unfortunately, it only has 7% of the planet’s arable land (and most of that is relatively unproductive).On a per-capita basis, China has just a fraction of the available farmland as most other countries. And the gap is getting wider. Population is growing by around 10 million per year, while millions of acres of prime agricultural land are lost to soil erosion, urban construction, and heavy metals pollution.
This dire situation presents ongoing challenges for farmers — but unique opportunities for companies whose products can boost crop yields.
That’s where Yongye (Nasdaq: YONG) comes in. The firm is an emerging leader in the “green” agriculture movement, specializing in organic crop nutrients and animal feed supplements. The company has several advantages over the competition.
First, its chief marketing officer literally wrote the book on reaching out to rural farmers.
Second, its Shengmingsu brand’s liquid nutrient has proven to increase output by 22% and reduce harvest time by up to two weeks.
Finally, Yongye has been negotiating with independently owned supply stores to prominently display (and push) the Shengmingsu brand. The company has a year-end goal of 30,000 stores selling its product.
Ordinarily, you’d have to pay a rich premium for all this — but Yongye is trading at just five times forward earnings, a sharp discount to its expected 40%-plus growth rate. This stock could double in the next 12 months.
Best Cheap Stocks For 2012: Prices for agricultural staples are rising
The bureaucrats can say all they want about benign inflation. Apparently, they haven’t been to a grocery store lately.And prices are still rising at the wholesale level, which means more retail markups in the weeks and months ahead. According to the U.S. Department of Agriculture, producers fetched higher prices for corn, soybeans, eggs, milk and apples last month.
Some of the blame (or credit, depending on your perspective) belongs to the Fed‘s dollar debasement policies. By definition, a depreciating dollar boosts the prices of dollar-denominated agricultural commodities.
But old-fashioned supply/demand imbalances are also playing a major role. A bad Russian winter wheat harvest and subsequent export ban sent prices skyrocketing. Here in the United States, torrential rains in the Corn Belt have left supplies at the lowest levels in 15 years.
Growing demand and shrinking supplies intersect at rising prices. Corn futures have spiked more than 70% since June. Wheat prices have spiked 35% so far this year. Soybeans and sugar are the same story.
And, because beef, pork and dairy producers have to buy mountains of feed for their livestock, rising grain prices will likely spill into the meat aisle as well (there’s typically a six-month lag).
With all this in mind, I strongly recommend readers fight back against the relentless price hikes by converting a few dollars into bacon and cereal — or at least pork bellies and corn.
========================== Part 2 ==========================
Large pharmaceutical companies are facing a crisis. The industry spent a record $65 billion on research and development (R&D) in 2009, but approval rates for new drugs have fallen 44% during the past decade and continue to drop. Also in 2009, drugs launched in the previous five years accounted for only 7% of all sales, meaning that older drugs closer to patent expiration make up the vast majority of sales. The failure rate of drugs in the final stages of development has doubled in recent years.
Best Cheap Stocks For 2012: PFE,GSK
These facts are sobering proof that productivity levels for bringing successful drugs to market have declined severely in recent years. It is leading to soul searching in the industry and large cutbacks in R&D expenditure. Pfizer (NYSE: PFE), one of the largest of the Big Pharma firms, is cutting R&D from 2010 levels of $9.4 billion to between $6.5 billion and $7 billion by 2012. European drug giant GlaxoSmithKline (NYSE: GSK) will cut spending by up to $4 billion and plans to radically change how it tries to bring new drugs to market. One industry source found it extremely troubling that the market sees R&D as destroying shareholder value.Part of Glaxo’s shifting approach will be to outsource the initial stages of drug development. These earlier stages are the riskiest, as failure rates are high and are also costly, given the large number of compounds that must be tested. Finding the needle in a haystack is an understatement when it comes to bringing successful drugs to market. Other companies are following suit.The general belief is that Big Pharma will eventually outsource most of its drug development work to outsiders, be they university laboratories, smaller development-stage pharmaceutical and biotech startups, or companies known as contract research organizations (CROs).
Below is a list of the leading CROs…
Covance (NYSE: CVD) is the largest CRO in terms of sales and market capitalization, but not by a wide margin compared to Pharmaceutical Product Development Inc. (Nasdaq: PPDI). Charles River Labs (NYSE: CRL) and Parexel (Nasdaq: PRXL) are similar in terms of sales, while Icon plc (Nasdaq: ICLR), out of Ireland, is the smallest.
Here is an overview of the two that look most compelling to me from an investment standpoint.
Best Cheap Stocks For 2012: Icon plc (Nasdaq: ICLR)
Hands down, Icon has been the fastest growing of the CROs. In the past three, five, and 10-year periods, sales growth has averaged more than 20% annually, as has profit growth. 55% of its business stems from long-term contracts that are fixed in price, which provides a fair level of revenue stability. The company also counts the top 20 pharmaceutical companies in the world as clients and boasts more than 650 clients total.Icon is one of the most globally diversified CROs and is also impressively profitable. The company posted operating margins of 11.2% and returns on invested capital (ROIC) in the mid-teens (see table above) in its latest fiscal year. The stock looks a bit expensive looking at the forward P/E and trailing free cash flow, but the company is using this year to invest in its business and expects profits to take a short-term dip, after which growth has a solid chance of returning to historical levels and generating impressive returns for investors.
Best Cheap Stocks For 2012: Pharmaceutical Product Development Inc. (Nasdaq: PPDI)
Pharmaceutical Product Development Inc., or PPDI for short, has been another consistent grower over time that is impressively profitable. The company has been around for more than 25 years, which makes it one of the oldest CRO firms, allowing it time to extend its services to 43 countries. It has strong capabilities in the earliest stages of drug development, such as Phase I clinical trials.
Best Cheap Stocks For 2012: Merck (NYSE: MRK)
PPDI trades for one of the lowest free cash flow multiples and also boasts double-digit returns on invested capital. The company has a reputation for low client turnover, and counts Merck (NYSE: MRK) as a key strategic client. It is also the only CRO to pay a dividend, which demonstrates its confidence in generating stable and consistent profits. Its current dividend yield is 2.1% and should appeal to income-oriented investors.7 Marvelous Media Stocks to Watch in 2012
There’s no question the time is right to buy media stocks. Despite last year’s volatility and summer stock slam, media stocks have risen quite considerably. A lot of factors play into this, but one thing that is without a doubt is the race for the White House will prove to be a huge cash cow for media companies. With an estimated $8 billion worth of political ads to be played throughout the country, you can see why.
Now it’s time to choose which media stocks are the best for you. I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. And this week, I’ve got seven media companies making positive headway over the past 12 months.
Here they are, in alphabetical order. Each one of these stocks gets an “A” or “B” according to my research.
7 Marvelous Media Stocks to Watch in 2012- CBS (NYSE:CBS) is a mass-media company, known best for its television stations. In the past year, CBS stock has jumped 47%. CBS stock gets an “A” for operating margin growth, a “B” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month, a “B” for cash flow and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of CBS stock.
Comcast (NASDAQ:CMCSA) is a provider of video, high-speed Internet and phone services to residences and businesses. CMCSA is up 16% in the past year, compared to a gain of almost 7% for the Dow Jones in the same time. CMCSA stock gets an “A” for sales growth, a “B” for earnings momentum and a “B” for cash flow in my Portfolio Grader tool. For more information, view my complete analysis of CMCSA stock.
7 Marvelous Media Stocks to Watch in 2012-Discovery Communications (NASDAQ:DISCA) is a nonfiction media and entertainment company that provides programming across the world. In the last 12 months, DISCA has climbed nearly 11%. DISCA stock gets a “B” for sales growth, an “A” for operating margin growth, a “B” for earnings growth, a “B” for earnings momentum, a “B” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month, an “A” for cash flow and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of DISCA stock.
DISH Network (NASDAQ:DISH) is a satellite television provider with more than 14 million subscribers. In the past year, DISH stock is up more than 32%, compared to smaller gains by the broader markets. DISH stock gets an “A” for operating margin growth, a “B” for earnings growth, an “A” for cash flow and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of DISH stock.
7 Marvelous Media Stocks to Watch in 2012-News Corp. (NASDAQ:NWS) is a diversified global media company, known best for its controversial owner, Robert Murdoch, as well as for many popular prime time shows such as “American Idol” and “Family Guy”. NWS is up 16% in the past year, despite the controversy surrounding Murdoch. NWS stock gets a “B” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of NWS stock.
Sirius XM Radio (NASDAQ:SIRI) is a satellite radio provider that offers music, sports, news, talk, entertainment, traffic and weather channels. In the past year, SIRI stock has posted a significant gain of 28%. SIRI stock gets an “A” for operating margin growth, a “B” for earnings growth, an “A” for earnings momentum, an “A” for its ability to exceed the consensus earnings estimates on Wall Street, an “A” for the magnitude in which earnings projections have increased over the past month, a “B” for cash flow and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of SIRI stock.
7 Marvelous Media Stocks to Watch in 2012-Time Warner Cable (NYSE:TWC) is a cable operator that has customers in several markets across the U.S. TWC is up about 10% since last February. TWC stock gets a “B” for operating margin growth, a “B” for earnings momentum, an “A” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month, a “B” for cash flow and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of TWC stock.
Now it’s time to choose which media stocks are the best for you. I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. And this week, I’ve got seven media companies making positive headway over the past 12 months.
Here they are, in alphabetical order. Each one of these stocks gets an “A” or “B” according to my research.
7 Marvelous Media Stocks to Watch in 2012- CBS (NYSE:CBS) is a mass-media company, known best for its television stations. In the past year, CBS stock has jumped 47%. CBS stock gets an “A” for operating margin growth, a “B” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month, a “B” for cash flow and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of CBS stock.
Comcast (NASDAQ:CMCSA) is a provider of video, high-speed Internet and phone services to residences and businesses. CMCSA is up 16% in the past year, compared to a gain of almost 7% for the Dow Jones in the same time. CMCSA stock gets an “A” for sales growth, a “B” for earnings momentum and a “B” for cash flow in my Portfolio Grader tool. For more information, view my complete analysis of CMCSA stock.
7 Marvelous Media Stocks to Watch in 2012-Discovery Communications (NASDAQ:DISCA) is a nonfiction media and entertainment company that provides programming across the world. In the last 12 months, DISCA has climbed nearly 11%. DISCA stock gets a “B” for sales growth, an “A” for operating margin growth, a “B” for earnings growth, a “B” for earnings momentum, a “B” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month, an “A” for cash flow and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of DISCA stock.
DISH Network (NASDAQ:DISH) is a satellite television provider with more than 14 million subscribers. In the past year, DISH stock is up more than 32%, compared to smaller gains by the broader markets. DISH stock gets an “A” for operating margin growth, a “B” for earnings growth, an “A” for cash flow and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of DISH stock.
7 Marvelous Media Stocks to Watch in 2012-News Corp. (NASDAQ:NWS) is a diversified global media company, known best for its controversial owner, Robert Murdoch, as well as for many popular prime time shows such as “American Idol” and “Family Guy”. NWS is up 16% in the past year, despite the controversy surrounding Murdoch. NWS stock gets a “B” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month and a “B” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of NWS stock.
Sirius XM Radio (NASDAQ:SIRI) is a satellite radio provider that offers music, sports, news, talk, entertainment, traffic and weather channels. In the past year, SIRI stock has posted a significant gain of 28%. SIRI stock gets an “A” for operating margin growth, a “B” for earnings growth, an “A” for earnings momentum, an “A” for its ability to exceed the consensus earnings estimates on Wall Street, an “A” for the magnitude in which earnings projections have increased over the past month, a “B” for cash flow and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of SIRI stock.
7 Marvelous Media Stocks to Watch in 2012-Time Warner Cable (NYSE:TWC) is a cable operator that has customers in several markets across the U.S. TWC is up about 10% since last February. TWC stock gets a “B” for operating margin growth, a “B” for earnings momentum, an “A” for its ability to exceed the consensus earnings estimates on Wall Street, a “B” for the magnitude in which earnings projections have increased over the past month, a “B” for cash flow and an “A” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of TWC stock.
Why Tech Stocks Look Better—Even for the Risk Averse
The technology sector is known for two things: growth potential and risk.
Apple's trouncing of Wall Street earnings forecasts this past week suggests growth is still abundant. Yet Big Tech is looking less risky than it has in the past.
Here are four reasons conservative investors should consider adding exposure to tech stocks.
An Apple store in New York: Apple holds more than $97 billion in cash and securities.
Valuation. Tech stocks have had more than a decade to work off the bloated share prices from the dot-com stock bubble of the 1990s, says Cliff Hoover, chief investment officer of Dreman Value Management in Jersey City, N.J., which manages $5 billion. Many have become a good home for safety-oriented investors, he says.
The information-technology sector of the Standard & Poor's 500-stock index recently traded at 13 times estimated 2011 earnings, on par with the broad index, according to S&P data. The consumer staples and utilities sectors, typically considered safe and stodgy, fetch 14 times earnings. And Wall Street expects the tech sector to increase its earnings by almost 14% in 2012, versus 8% for consumer staples and 1% for utilities.
! Volatility. Over the past five years, large pockets of the tech sector, including hardware makers, systems software firms and consulting shops, have been no more volatile in terms of share-price changes than the broad S&P 500 index, according to S&P data.
Financial strength. The tech sector of the S&P 500 sits on $380 billion in cash and equivalents, more than any other sector and equal to 15% of its market value, according to Howard Silverblatt, senior index analyst at S&P. That doesn't include holdings in long-term securities. Apple holds a $67 billion portfolio that is "very liquid," Mr. Silverblatt says.
The two largest companies in the sector, Apple and Microsoft, have forward price/earnings ratios in single digits after deducting their cash and investments from their stock-market values. Microsoft and Intel now have fatter "dividend yields," or the percentage of share price paid out as dividends, than the 500 index average.
Mr. Hoover, who considers himself a "deep value" stock picker, likes Microsoft, Intel, Cisco Systems and Applied Materials. "They're big free-cash-flow generators and pretty good dividend payers," he says. Microsoft pays 2.7%, Cisco 1.2%, Intel 3.1% and Applied Materials 2.6%, versus 2% for the broad S&P 500.
Low expectations. With 37% of S&P 500 companies having announced December-quarter earnings results, 68% of the technology companies that have reported have beaten analysts' estimates, versus 59% for the index and 40% for consumer-staples companies, according to a Friday report from Thomson Reuters. (Only three utilities have reported, with one beating estimates.)
Tech outfits are doing well in part because companies that delayed technology purchases during the 2008 financial crisis are starting to spend, says David B. Armstrong, co-founder of Monument Wealth Management in Alexandria, Va., which oversees $200 million.
"Techno! logy has become more of a necessity, and companies can only delay investments for so long," he says. "That helps make the sector more stable."
When hunting for tech stocks, investors should consider not only traditional factors like valuation and income growth, but also the "network effect," says Kishore Rao, a research principal with Sustainable Growth Advisers in Stamford, Conn., which manages $3 billion in pension funds and other assets. The term refers to goods and services becoming more valuable as more people use them. For example, securities exchanges benefit from the network effect because as they attract more traders they become better able to handle additional trading volume.
Mr. Rao cites eBay's marketplace, Google's search advertising and Apple's community of mobile-application developers as examples of the network effect. "There's a high degree of predictability for these companies," he says. His firm, which tends to hold 25 to 30 stocks at a time, invests in all three companies.
Another factor to consider beyond financial results is "switching costs," says Grady Burkett, an analyst at Morningstar. The best companies are ones whose customers would find it a burden to switch to competitors, he says.
That typically means companies with plenty of large business customers, such as Cisco and Oracle, Mr. Burkett says. He calls Apple a rare example of a consumer-focused business with high switching costs because customers are attached to its music, photo and other applications. "They'll find it harder to give up their iPhones than they did their Motorola flip phones years ago," he says.
Of course, the technology sector remains exposed to sharp economic downturns, says David Roda, an investment strategist at Wells Fargo Private Bank. But breakthroughs in areas like mobile computing and Web-based, or "cloud," services are "just beginning," he says, and emerging markets have shown a voracious appetite for technology.
Mutual-fund investors who favor portfolios run by ! stock pi ckers should look for long-tenured management, solid returns and limited volatility, says Flynn Murphy, a mutual-fund analyst at Morningstar. He highlights two examples: Columbia Seligman Communications & Information, which has returned an average of 6.6% a year after expenses over the past 10 years, and Waddell & Reed Advisers Science & Technology, which has returned 7% a year, according to Morningstar data. The category average is 3.3% a year. Returns for both funds are for Class A shares, which carry upfront sales charges of up to 5.75% and yearly expenses of 1.36%.
For investors who chafe at high fees, exchange-traded funds like Vanguard Information Technology and Technology Select Sector SPDR offer broad exposure to technology at yearly expenses of 0.19% and 0.20%, respectively.
Another option is a more broadly focused mutual fund that happens to favor tech. The Oakmark Global fund, one of Morningstar's top picks, has 35% in tech, versus an average for world stock funds of 14%, Mr. Murphy says. It has returned 9.0% a year on average over the past decade, versus an average for world stock funds of 5.2%. There isn't an upfront sales charge, and yearly expenses are 1.16%.
Apple's trouncing of Wall Street earnings forecasts this past week suggests growth is still abundant. Yet Big Tech is looking less risky than it has in the past.
Here are four reasons conservative investors should consider adding exposure to tech stocks.
An Apple store in New York: Apple holds more than $97 billion in cash and securities.
Valuation. Tech stocks have had more than a decade to work off the bloated share prices from the dot-com stock bubble of the 1990s, says Cliff Hoover, chief investment officer of Dreman Value Management in Jersey City, N.J., which manages $5 billion. Many have become a good home for safety-oriented investors, he says.
The information-technology sector of the Standard & Poor's 500-stock index recently traded at 13 times estimated 2011 earnings, on par with the broad index, according to S&P data. The consumer staples and utilities sectors, typically considered safe and stodgy, fetch 14 times earnings. And Wall Street expects the tech sector to increase its earnings by almost 14% in 2012, versus 8% for consumer staples and 1% for utilities.
! Volatility. Over the past five years, large pockets of the tech sector, including hardware makers, systems software firms and consulting shops, have been no more volatile in terms of share-price changes than the broad S&P 500 index, according to S&P data.
Financial strength. The tech sector of the S&P 500 sits on $380 billion in cash and equivalents, more than any other sector and equal to 15% of its market value, according to Howard Silverblatt, senior index analyst at S&P. That doesn't include holdings in long-term securities. Apple holds a $67 billion portfolio that is "very liquid," Mr. Silverblatt says.
The two largest companies in the sector, Apple and Microsoft, have forward price/earnings ratios in single digits after deducting their cash and investments from their stock-market values. Microsoft and Intel now have fatter "dividend yields," or the percentage of share price paid out as dividends, than the 500 index average.
Mr. Hoover, who considers himself a "deep value" stock picker, likes Microsoft, Intel, Cisco Systems and Applied Materials. "They're big free-cash-flow generators and pretty good dividend payers," he says. Microsoft pays 2.7%, Cisco 1.2%, Intel 3.1% and Applied Materials 2.6%, versus 2% for the broad S&P 500.
Low expectations. With 37% of S&P 500 companies having announced December-quarter earnings results, 68% of the technology companies that have reported have beaten analysts' estimates, versus 59% for the index and 40% for consumer-staples companies, according to a Friday report from Thomson Reuters. (Only three utilities have reported, with one beating estimates.)
Tech outfits are doing well in part because companies that delayed technology purchases during the 2008 financial crisis are starting to spend, says David B. Armstrong, co-founder of Monument Wealth Management in Alexandria, Va., which oversees $200 million.
"Techno! logy has become more of a necessity, and companies can only delay investments for so long," he says. "That helps make the sector more stable."
When hunting for tech stocks, investors should consider not only traditional factors like valuation and income growth, but also the "network effect," says Kishore Rao, a research principal with Sustainable Growth Advisers in Stamford, Conn., which manages $3 billion in pension funds and other assets. The term refers to goods and services becoming more valuable as more people use them. For example, securities exchanges benefit from the network effect because as they attract more traders they become better able to handle additional trading volume.
Mr. Rao cites eBay's marketplace, Google's search advertising and Apple's community of mobile-application developers as examples of the network effect. "There's a high degree of predictability for these companies," he says. His firm, which tends to hold 25 to 30 stocks at a time, invests in all three companies.
Another factor to consider beyond financial results is "switching costs," says Grady Burkett, an analyst at Morningstar. The best companies are ones whose customers would find it a burden to switch to competitors, he says.
That typically means companies with plenty of large business customers, such as Cisco and Oracle, Mr. Burkett says. He calls Apple a rare example of a consumer-focused business with high switching costs because customers are attached to its music, photo and other applications. "They'll find it harder to give up their iPhones than they did their Motorola flip phones years ago," he says.
Of course, the technology sector remains exposed to sharp economic downturns, says David Roda, an investment strategist at Wells Fargo Private Bank. But breakthroughs in areas like mobile computing and Web-based, or "cloud," services are "just beginning," he says, and emerging markets have shown a voracious appetite for technology.
Mutual-fund investors who favor portfolios run by ! stock pi ckers should look for long-tenured management, solid returns and limited volatility, says Flynn Murphy, a mutual-fund analyst at Morningstar. He highlights two examples: Columbia Seligman Communications & Information, which has returned an average of 6.6% a year after expenses over the past 10 years, and Waddell & Reed Advisers Science & Technology, which has returned 7% a year, according to Morningstar data. The category average is 3.3% a year. Returns for both funds are for Class A shares, which carry upfront sales charges of up to 5.75% and yearly expenses of 1.36%.
For investors who chafe at high fees, exchange-traded funds like Vanguard Information Technology and Technology Select Sector SPDR offer broad exposure to technology at yearly expenses of 0.19% and 0.20%, respectively.
Another option is a more broadly focused mutual fund that happens to favor tech. The Oakmark Global fund, one of Morningstar's top picks, has 35% in tech, versus an average for world stock funds of 14%, Mr. Murphy says. It has returned 9.0% a year on average over the past decade, versus an average for world stock funds of 5.2%. There isn't an upfront sales charge, and yearly expenses are 1.16%.
Consider This Gasoline ETF As A Hedge (UGA)
The United States Gasoline Fund (NYSEARCA:UGA) is a way for investors and hedgers to manage their exposure to gasoline prices. This exchange traded fund is designed to reflect changes in percentage terms of the price of gasoline as measured by the change in the price of the gasoline futures contract traded on the New York Mercantile Exchange.
Let's take a look at the chart below. UGA formed a breakaway gap from a "Descending Triangle" pattern to start 2012. A descending triangle pattern shows demand at a fixed price level which is where I drew the blue horizontal trendline. It also shows increasing supply pressures with each rally off of support marked by the falling blue trendline.
Eventually either the demand or the supply is going to be depleted by the other. Normally this is a very bearish pattern, since once demand has been depleted; you can almost hear on the chart "look out below". The path of least resistance is lower below $45. Why? Traders who were buying and holding inside the triangle now have a losing position and potentially will be looking to cut losses. This increases supply. Bids become smart money doesn't like to catch a falling knife. Increasing supply with decreasing demand means down we go in price. Eventually the market hits a stopping price where the prior sellers are gone and long term investors now believe there is value and step in for a bargain. This is the reality of a two way auction.
The breakout that we see now on the other hand is not the most bullish indicator. What happened does signal a potential change in trend when the trendline is broken to the upside but you may still have some buy and hold investors at higher levels looking to get out. This can cause a false breakout. Volume was not that strong so this has potential to fill the gap.
I do not rely on technical indicators to make trading decisions, but it's worth pointing out that we had a MACD centerline crossover while UGA was inside the triangle as well as some prior positive bullish! diverge nce the last time UGA was bouncing on support. This was a signal to some technicians that momentum was building to the upside.
I would like to see Gasoline fill the gap and retest that backside of the falling trendline to see if any additional supply comes in. Any move back above this recent high afterward will be bullish and have me taking trades.
A longer term investor might find the horizontal support a great place to put a protective stop, but keep in mind this would be about a 10% move if you are proven wrong. Position sizing would be critical to keep losses to a minimum. Position sizing has everything to do with your account size and how much you are comfortable risking in capital (or how much you drive, since you may offset losses in your UGA hedge at the pump).
UGA often trades less than 100,000 shares so this is not a wise day trading vehicle.
Let's take a look at the chart below. UGA formed a breakaway gap from a "Descending Triangle" pattern to start 2012. A descending triangle pattern shows demand at a fixed price level which is where I drew the blue horizontal trendline. It also shows increasing supply pressures with each rally off of support marked by the falling blue trendline.
Eventually either the demand or the supply is going to be depleted by the other. Normally this is a very bearish pattern, since once demand has been depleted; you can almost hear on the chart "look out below". The path of least resistance is lower below $45. Why? Traders who were buying and holding inside the triangle now have a losing position and potentially will be looking to cut losses. This increases supply. Bids become smart money doesn't like to catch a falling knife. Increasing supply with decreasing demand means down we go in price. Eventually the market hits a stopping price where the prior sellers are gone and long term investors now believe there is value and step in for a bargain. This is the reality of a two way auction.
The breakout that we see now on the other hand is not the most bullish indicator. What happened does signal a potential change in trend when the trendline is broken to the upside but you may still have some buy and hold investors at higher levels looking to get out. This can cause a false breakout. Volume was not that strong so this has potential to fill the gap.
I do not rely on technical indicators to make trading decisions, but it's worth pointing out that we had a MACD centerline crossover while UGA was inside the triangle as well as some prior positive bullish! diverge nce the last time UGA was bouncing on support. This was a signal to some technicians that momentum was building to the upside.
I would like to see Gasoline fill the gap and retest that backside of the falling trendline to see if any additional supply comes in. Any move back above this recent high afterward will be bullish and have me taking trades.
A longer term investor might find the horizontal support a great place to put a protective stop, but keep in mind this would be about a 10% move if you are proven wrong. Position sizing would be critical to keep losses to a minimum. Position sizing has everything to do with your account size and how much you are comfortable risking in capital (or how much you drive, since you may offset losses in your UGA hedge at the pump).
UGA often trades less than 100,000 shares so this is not a wise day trading vehicle.
The Reorganization Man - the government we have is not the government we need
The Washington rap on President Obama is that he's humorless, but that's unfair. He may not be Jay Leno funny, but his bit Friday on reforming and reducing government was great.
There he was in the East Room, explaining that "the government we have is not the government we need." That's for sure, and Mr. Obama even added the Gingrichian theme that "We live in a 21st-century economy, but we've still got a government organized for the 20th century. Our economy has fundamentally changed—as has the world—but our government, our agencies, has not."
Alas, the President wasn't talking about modernizing Medicare or the entitlement state. He merely wants Congress to give him more power to reorganize the government. He says he wants his team to scrub down the executive branch looking for waste, duplication and bureaucratic complexity, and then to fast-track their proposals to Congress for an up-or-down vote within 90 days.
Mr. Obama's first targets for such "consolidation authority" are the six agencies related to business and the world economy, from the Commerce Department to the Export-Import Bank to the U.S. Trade Represen! tative. Maybe the White House chose to start there because, with an eye on the GOP campaign, Rick Perry wants to eliminate Commerce and a few other cabinet departments he can't remember.
Another way of putting it is that this new emphasis on streamlining the bureaucracy is Mr. Obama's version of the Texas Governor's "Oops." Having presided over the largest expansion of government since LBJ—health care, financial reregulation, spending 24% of GDP, the surge of industrial policy—Mr. Obama's pollsters must be saying that voters have the jimmy-legs about bigger government and that he thus can't run only as a Great Society man.
This jobs boom is projected to decline slightly this year, to 2.116 million public employees, and the Administration says the Commerce unwind will take it down by another 1,000 or so. Yet even that would come through attrition, which usually means the competent people leave when they've had it with the lifers.
Proposals for government reorganization are the elevator music of politics, always present but never leaving much of an impression. Newt Gingrich says he's running in part to apply Lean Six Sigma best practices to the bureaucracy. Al Gore famously drew up a scheme for "reinventing government" in the late 1990s. He abandoned it after the airline unions revolted amid his attempt to reinvent the Federal Aviation Administration.
Reshuffling agencies rarely works because what's important in government isn't where the bureaucrats sit but their mindset. The incentives are for inertia, turf protection and blame-shifting—unless change is imposed from the top. Mr. Obama has made it clear with his priorities over three years that his preference is for the government status quo, only more of it.
But Mr. Obama is now at least bowing to the principle of smaller government, and our advice to Congress is to weigh his proposals and extract some concessions to see if the President means what he says.
A major concern is the office of the U.S. trade rep, which Mr. Obama wants to subsume within the Commerce monolith. But the trade rep office is one of the best in government precisely because it is small, reports to the White House, and is focused on the single mission of trade expansion. As part of Commerce it may be drowned out by protectionist voices.
Another priority ought! to be r eforming the 47 separate job retraining programs, all but three of which overlap. The Government Accountability Office calls this wasteful with "no measurable benefit," but the White House has rebuffed any meaningful change.
This is a President who last year promised a review of all regulations while riding the greatest rule-making wave in American history. Now he's calling for leaner government without mentioning ObamaCare and Dodd-Frank, which create so many new boards and commissions that government auditors (literally) can't even count them. We suspect many in the White House were laughing themselves when they came up with this one.
There he was in the East Room, explaining that "the government we have is not the government we need." That's for sure, and Mr. Obama even added the Gingrichian theme that "We live in a 21st-century economy, but we've still got a government organized for the 20th century. Our economy has fundamentally changed—as has the world—but our government, our agencies, has not."
Alas, the President wasn't talking about modernizing Medicare or the entitlement state. He merely wants Congress to give him more power to reorganize the government. He says he wants his team to scrub down the executive branch looking for waste, duplication and bureaucratic complexity, and then to fast-track their proposals to Congress for an up-or-down vote within 90 days.
Mr. Obama's first targets for such "consolidation authority" are the six agencies related to business and the world economy, from the Commerce Department to the Export-Import Bank to the U.S. Trade Represen! tative. Maybe the White House chose to start there because, with an eye on the GOP campaign, Rick Perry wants to eliminate Commerce and a few other cabinet departments he can't remember.
Another way of putting it is that this new emphasis on streamlining the bureaucracy is Mr. Obama's version of the Texas Governor's "Oops." Having presided over the largest expansion of government since LBJ—health care, financial reregulation, spending 24% of GDP, the surge of industrial policy—Mr. Obama's pollsters must be saying that voters have the jimmy-legs about bigger government and that he thus can't run only as a Great Society man.
But let's go to the videotape. One measure of government size is the federal work force, measured by the White House budget office as civilian full-time equivalent employees, excluding the military and Post Office. The executive branch had about 1.875 million workers in 2008 when the financial crisis hit, a number that held relatively constant throughout the post-9/11 Bush Administration. That number climbed to 2.128 million two years later under the 111th Congress—or growth of 13.5%. That's the largest government since 1992, when the Clinton Administration began to slash defense! spendin g.
This jobs boom is projected to decline slightly this year, to 2.116 million public employees, and the Administration says the Commerce unwind will take it down by another 1,000 or so. Yet even that would come through attrition, which usually means the competent people leave when they've had it with the lifers.
Proposals for government reorganization are the elevator music of politics, always present but never leaving much of an impression. Newt Gingrich says he's running in part to apply Lean Six Sigma best practices to the bureaucracy. Al Gore famously drew up a scheme for "reinventing government" in the late 1990s. He abandoned it after the airline unions revolted amid his attempt to reinvent the Federal Aviation Administration.
Reshuffling agencies rarely works because what's important in government isn't where the bureaucrats sit but their mindset. The incentives are for inertia, turf protection and blame-shifting—unless change is imposed from the top. Mr. Obama has made it clear with his priorities over three years that his preference is for the government status quo, only more of it.
But Mr. Obama is now at least bowing to the principle of smaller government, and our advice to Congress is to weigh his proposals and extract some concessions to see if the President means what he says.
A major concern is the office of the U.S. trade rep, which Mr. Obama wants to subsume within the Commerce monolith. But the trade rep office is one of the best in government precisely because it is small, reports to the White House, and is focused on the single mission of trade expansion. As part of Commerce it may be drowned out by protectionist voices.
Another priority ought! to be r eforming the 47 separate job retraining programs, all but three of which overlap. The Government Accountability Office calls this wasteful with "no measurable benefit," but the White House has rebuffed any meaningful change.
This is a President who last year promised a review of all regulations while riding the greatest rule-making wave in American history. Now he's calling for leaner government without mentioning ObamaCare and Dodd-Frank, which create so many new boards and commissions that government auditors (literally) can't even count them. We suspect many in the White House were laughing themselves when they came up with this one.
Chapter 7 Or 13 on Personal Bankruptcy in 2012
Bankruptcy laws in the United States are made to ensure the interests of the borrower are safeguarded, and are formed by the federal government and addressed accordingly by various US Bankruptcy Courts, and it is believed that each year as many as one million Americans go bankrupt and are found filing for bankruptcy. Most of these individuals that file for bankruptcy do so under different personal bankruptcy laws that include chapter thirteen and also chapter 7, and in a few instances, they can even qualify for chapter twelve, especially if they are anglers or farmers and business is owned by the family.
Filing Under Chapter Seven
You can file personal bankruptcy and at the same time do so under chapter seven in which case it is necessary for you to provide a list of all your assets to the court and also have to assign a trustee who will liquidate items in order to pay off creditors. Furthermore, filing personal bankruptcy is allowed once in seven years and the cost of filing personal bankruptcy is approximately three hundred dollars which goes towards filing fee.
If you plan on filing personal bankruptcy under chapter thirteen, it will help in reducing your debt though unlike chapter seven, does not cancel out your debt. And, chapter thirteen personal bankruptcies also means having to set out a plan for repayment with creditors and courts and assigning trustee who will make monthly payments after paying them the money. The trustee will receive payments from you and apportion them to various creditors, and an advantage to using chapter thirteen for filing personal bankruptcy is that unlike in chapter seven, under this chapter you may hold on to everything that would have been lost under chapter seven.
However, both these types of personal bankruptcy allows the debtor to rid him or herself of debts, though remember when filing chapter thirteen bankruptcy, you need to have debt that is not more than two hundred fifty thousand dollars and that such debt is uns! ecured, while debts that are secured should not exceed seven hundred and fifty thousand dollars.
The bottom line is that before filing for personal bankruptcy, makes sure to know what the ramifications of different chapters are and in most instances it may be better to file for chapter thirteen instead of chapter seven as the latter shows that you are a person that does not pay your debts.
Filing Under Chapter Seven
You can file personal bankruptcy and at the same time do so under chapter seven in which case it is necessary for you to provide a list of all your assets to the court and also have to assign a trustee who will liquidate items in order to pay off creditors. Furthermore, filing personal bankruptcy is allowed once in seven years and the cost of filing personal bankruptcy is approximately three hundred dollars which goes towards filing fee.
If you plan on filing personal bankruptcy under chapter thirteen, it will help in reducing your debt though unlike chapter seven, does not cancel out your debt. And, chapter thirteen personal bankruptcies also means having to set out a plan for repayment with creditors and courts and assigning trustee who will make monthly payments after paying them the money. The trustee will receive payments from you and apportion them to various creditors, and an advantage to using chapter thirteen for filing personal bankruptcy is that unlike in chapter seven, under this chapter you may hold on to everything that would have been lost under chapter seven.
However, both these types of personal bankruptcy allows the debtor to rid him or herself of debts, though remember when filing chapter thirteen bankruptcy, you need to have debt that is not more than two hundred fifty thousand dollars and that such debt is uns! ecured, while debts that are secured should not exceed seven hundred and fifty thousand dollars.
The bottom line is that before filing for personal bankruptcy, makes sure to know what the ramifications of different chapters are and in most instances it may be better to file for chapter thirteen instead of chapter seven as the latter shows that you are a person that does not pay your debts.
Marathon Petroleum Corp (NYSE: MPC) May Soon Be the World¡¯s Richest Refiner
There's an oil price trend that's giving some oil refining companies a huge competitive edge.
Specifically I'm referring to Marathon Petroleum Corp. (NYSE: MPC).
You see, production from North Dakota's Bakken oil shale formation - the largest known reserve of light sweet crude in North America - is soaring. It went from a mere 3,000 barrels a day in 2005 to 225,000 in 2010, and could hit 350,000 barrels a day by 2035, according to the Energy Information Administration.
Currently, there aren't many ways to ship oil out of the basin, and supply in the region is outpacing refining capacity. That's helped keep the price of West Texas Intermediate (WTI) crude lower than the price of Brent crude in London, with the spread now around $17.
Since U.S. East Coast refineries usually source Brent-priced crude oil, their input costs have skyrocketed. This is one of the reasons major integrated oil companies have shed their refining capacities.
But Midwest refineries have been able to save money by running WTI-priced oil, getting crude at significantly cheaper prices than globally sourced locations.
With the Bakken formation ramping up production in coming years to meet growing demand, the region's refineries will continue to enjoy low input costs. It also means refineries that have access to Bakken oil will have a steady supply that's cheaper than their competitors.
This is why Marathon Petroleum Corp., the largest Midwest refiner, is a "Buy." (**)
Specifically I'm referring to Marathon Petroleum Corp. (NYSE: MPC).
You see, production from North Dakota's Bakken oil shale formation - the largest known reserve of light sweet crude in North America - is soaring. It went from a mere 3,000 barrels a day in 2005 to 225,000 in 2010, and could hit 350,000 barrels a day by 2035, according to the Energy Information Administration.
Currently, there aren't many ways to ship oil out of the basin, and supply in the region is outpacing refining capacity. That's helped keep the price of West Texas Intermediate (WTI) crude lower than the price of Brent crude in London, with the spread now around $17.
Since U.S. East Coast refineries usually source Brent-priced crude oil, their input costs have skyrocketed. This is one of the reasons major integrated oil companies have shed their refining capacities.
But Midwest refineries have been able to save money by running WTI-priced oil, getting crude at significantly cheaper prices than globally sourced locations.
With the Bakken formation ramping up production in coming years to meet growing demand, the region's refineries will continue to enjoy low input costs. It also means refineries that have access to Bakken oil will have a steady supply that's cheaper than their competitors.
This is why Marathon Petroleum Corp., the largest Midwest refiner, is a "Buy." (**)
Marathon Petroleum Corp.
Ohio-based Marathon Petroleum Corp. was formed July 1, 2011 when Marathon Oil Corp. (NYSE: MRO) spun off its highly profitable refinery and gas station business. It's the fifth largest petroleum refiner in the United States, with its six refineries offering a combined capacity of 1,142,000 barrels of oil per day.G! ary R. H eminger, Marathon's new chief executive officer, said his company has built a strong enough refining position in the Midwest to ward off competition. He doesn't expect new pipelines and rail yard capacity bringing oil from the Bakken to the Gulf Coast to soften his competitive edge. The oil still needs a high-volume consumer and his refineries are the most obvious choice.
"If you look at Midwest refineries, we already have plenty of pipeline capacity into our plants," Heminger said at the Reuters Global Energy and Climate Summit. "It really comes back to (West Texas Intermediate) and lighter-type crudes that are in and around Cushing [Oklahoma, where WTI is priced]. They're looking for a home."
Marathon also will profit from its operations beyond the Midwest.
It's negotiating with pipeline companies to use its Texas refinery to process more crude from the new Eagle Ford Shale. The new Eagle Ford is unconventional shale oil that's extremely light, and can be mixed with another cheap blend - a heavy, sour crude - to make a more expensive finished product.
Marathon's Detroit refinery is undergoing a $2.2 billion overhaul that'll let it process heavy Canadian crude, which currently is priced even cheaper than WTI.
Marathon also has a profitable retail footprint. It operates 5,100 Marathon-branded gas stations in 18 states and 1,350 Speedway-branded convenience stores in seven states. It has more than 9,600 miles of pipelines into and out of its facilities.
The new refining company has a market cap of $13.3 billion with an enterprise value of $14.6 billion once net cash and debt is taken into consideration. The company reported $66.8 billion in revenue over the last trailing 12 months.
Third quarter earnings released Nov. 1 showed a 309% increase in net income from 2010's third quarter to $1.13 billion. Earnings per diluted share rose to $3.16 from $0.77 last year. Marathon also announced Oct. 26 a 25% div! idend in crease, for a yield of 2.6%.
The company has historical price/earnings (P/E) ratio of 7.2 over the last 12 months with an estimated forward P/E ratio of 5.6.
Its stock has soared more than 17% in the past month, closing yesterday (Wednesday) at $37.02.
Action to Take: Buy Marathon Petroleum Corp. (NYSE: MPC) (**).
It's time to buy Marathon Petroleum Corp. as it positions itself to profit from low input costs and high refining capacity.
I would buy half of our position now at market price, with an eye toward selling naked puts contracts for the other half of the position. This would give you a chance to be exposed to the upside move while increasing the overall cash yield on your first-half position.
(**) Special Note of Disclosure: Jack Barnes has no interest in Marathon Petroleum Corporation. (NYSE: MPC).
It's time to buy Marathon Petroleum Corp. as it positions itself to profit from low input costs and high refining capacity.
I would buy half of our position now at market price, with an eye toward selling naked puts contracts for the other half of the position. This would give you a chance to be exposed to the upside move while increasing the overall cash yield on your first-half position.
(**) Special Note of Disclosure: Jack Barnes has no interest in Marathon Petroleum Corporation. (NYSE: MPC).
A123 Systems Expands Partnership With IHI Corporation to Meet Increasing Demand for Lithium Ion Battery Technology in Japanese Transportation Market
IHI to License A123’s Nanophosphate(R) Battery System Technology to Develop Solutions for Passenger and Commercial Electric Vehicles in Japan; IHI Will Make $25 Million Equity Investment in A123
WALTHAM, Mass., Nov. 7, 2011 (CRWENewswire) — A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate(R)lithium ion batteries and systems, today announced that it has expanded its business development partnership with IHI Corporation, one of the largest industrial equipment manufacturers in Japan, to more strategically meet increasing demand for A123’s solutions in the Japanese transportation market. A123 will license its battery system technology to IHI, which will develop solutions for passenger and commercial electric vehicles in Japan using A123 battery cells. In addition, IHI will make a $25 million equity investment in A123.
“Since first partnering with A123 in 2009, we have seen increasing interest in A123’s advanced lithium ion battery technology for transportation and other applications. We believe that expanding our partnership enables IHI to address this growing market opportunity by commercializing innovative solutions powered by A123’s batteries,” said Taizo Suga, Associate Director, General Manager, Corporate Development Division at IHI. “A123’s Nanophosphate lithium ion chemistry has proven to be among the highest-performing, most durable and longest lasting battery technologies we’ve seen, which we feel makes them optimal for vehicle electrification. We look forward to working closely with A123 as a technology partner, and we also believe our equity investment in A123 will demonstrate a meaningful commitment to our expanded strategic business relationship.”
Under the terms of a technology license agreement, IHI will be the exclusive provider of A123 battery systems and modules in the Japanese transportation market, licensing A123’s advanced battery system technol! ogy and systems integration expertise to manufacture solutions for electric vehicles. It is expected that this will enable A123 to leverage the customer relationships IHI has developed with leading Japanese automakers. A related product supply agreement also establishes A123 as the exclusive supplier of lithium ion battery cells to IHI for transportation as well as non-transportation applications that IHI may develop as a future value-added reseller, which has the potential of creating new market opportunities for A123 technology across IHI’s global businesses.
“IHI is a well-established technology supplier to the Japanese auto industry , so we believe that expanding our relationship provides us with a strong strategic partner to help us more effectively and efficiently deliver our solutions to the Japanese transportation market,” said Jason Forcier, vice president of the Automotive Solutions Group at A123. “Additionally, we believe that we have a competitive advantage as the exclusive provider of lithium ion battery cells to IHI for the licensed applications as well as potential additional applications beyond transportation, allowing us to capitalize on new market opportunities introduced by IHI’s robust global network of businesses.”
About A123 Systems
A123 Systems, Inc. (Nasdaq:AONE) is a leading developer and manufacturer of advanced lithium-ion batteries and energy storage systems for transportation, electric grid and commercial applications. The company’s proprietary Nanophosphate(R) technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density, increased safety and extended life. A123 leverages breakthrough technology, high-quality manufacturing and expert systems integration capabilities to deliver innovative solutions that enable customers to bring next-generation products to market. For additional information please vis! it www.a 123systems.com.
Safe Harbor Disclosure
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors, including statements with respect to the anticipated benefits of the expanded strategic business relationship, the market for alternative energy transportation in Japan and the timing of expected production and availability of IHI’s solutions based on A123’s system technology and their anticipated performance, benefits and features, as well as the expected demand by IHI for battery cells to be supplied by A123, and the expected performance of A123’s battery technology and lithium ion battery cells . Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: delays in customer and market demand for and adoption ofIHI’s battery system products, delays in the development, production and supply of IHI’s products, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which A123 and IHI operate and other risks detailed in A123 Systems’ 10-Q for the quarter ended June 30, 2011 and other publicly available filings with the Securities and Exchange Commission. All forward-looking statements reflect A123’s expectations only as of the date of this release and should not be relied upon as reflecting A123’s views, expectations or beliefs at any date subsequent to the date of this release.
WALTHAM, Mass., Nov. 7, 2011 (CRWENewswire) — A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate(R)lithium ion batteries and systems, today announced that it has expanded its business development partnership with IHI Corporation, one of the largest industrial equipment manufacturers in Japan, to more strategically meet increasing demand for A123’s solutions in the Japanese transportation market. A123 will license its battery system technology to IHI, which will develop solutions for passenger and commercial electric vehicles in Japan using A123 battery cells. In addition, IHI will make a $25 million equity investment in A123.
“Since first partnering with A123 in 2009, we have seen increasing interest in A123’s advanced lithium ion battery technology for transportation and other applications. We believe that expanding our partnership enables IHI to address this growing market opportunity by commercializing innovative solutions powered by A123’s batteries,” said Taizo Suga, Associate Director, General Manager, Corporate Development Division at IHI. “A123’s Nanophosphate lithium ion chemistry has proven to be among the highest-performing, most durable and longest lasting battery technologies we’ve seen, which we feel makes them optimal for vehicle electrification. We look forward to working closely with A123 as a technology partner, and we also believe our equity investment in A123 will demonstrate a meaningful commitment to our expanded strategic business relationship.”
Under the terms of a technology license agreement, IHI will be the exclusive provider of A123 battery systems and modules in the Japanese transportation market, licensing A123’s advanced battery system technol! ogy and systems integration expertise to manufacture solutions for electric vehicles. It is expected that this will enable A123 to leverage the customer relationships IHI has developed with leading Japanese automakers. A related product supply agreement also establishes A123 as the exclusive supplier of lithium ion battery cells to IHI for transportation as well as non-transportation applications that IHI may develop as a future value-added reseller, which has the potential of creating new market opportunities for A123 technology across IHI’s global businesses.
“IHI is a well-established technology supplier to the Japanese auto industry , so we believe that expanding our relationship provides us with a strong strategic partner to help us more effectively and efficiently deliver our solutions to the Japanese transportation market,” said Jason Forcier, vice president of the Automotive Solutions Group at A123. “Additionally, we believe that we have a competitive advantage as the exclusive provider of lithium ion battery cells to IHI for the licensed applications as well as potential additional applications beyond transportation, allowing us to capitalize on new market opportunities introduced by IHI’s robust global network of businesses.”
About A123 Systems
A123 Systems, Inc. (Nasdaq:AONE) is a leading developer and manufacturer of advanced lithium-ion batteries and energy storage systems for transportation, electric grid and commercial applications. The company’s proprietary Nanophosphate(R) technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density, increased safety and extended life. A123 leverages breakthrough technology, high-quality manufacturing and expert systems integration capabilities to deliver innovative solutions that enable customers to bring next-generation products to market. For additional information please vis! it www.a 123systems.com.
Safe Harbor Disclosure
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors, including statements with respect to the anticipated benefits of the expanded strategic business relationship, the market for alternative energy transportation in Japan and the timing of expected production and availability of IHI’s solutions based on A123’s system technology and their anticipated performance, benefits and features, as well as the expected demand by IHI for battery cells to be supplied by A123, and the expected performance of A123’s battery technology and lithium ion battery cells . Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: delays in customer and market demand for and adoption ofIHI’s battery system products, delays in the development, production and supply of IHI’s products, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which A123 and IHI operate and other risks detailed in A123 Systems’ 10-Q for the quarter ended June 30, 2011 and other publicly available filings with the Securities and Exchange Commission. All forward-looking statements reflect A123’s expectations only as of the date of this release and should not be relied upon as reflecting A123’s views, expectations or beliefs at any date subsequent to the date of this release.
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