Aflac (AFL): Dirk Van Dijk's best stock picks for 2011
"Aflac (NYSE: AFL) is best known in the U.S. for its 'duck ads,' but actually earns over 75% of its money from Japan," says Dirk Van Dijk.
In selecting the stock as his top pick for 2011, the strategist for Zacks.com, recalls "Aflac happens to be an old favorite of mine, a stock that I first recommended back in 1991." Here's his current update.
"In the U.S., its policies are sold through employers on a payroll deduction, as part of companies 'cafeteria plans'. They are pretty straight forward. If you get sick and can't work, or are in the hospital, it pays out a set mount directly to the insured.
"It is thus not at risk for rising health care costs (but is if more people get sick). The U.S. unit was under some pressure as payrolls shrank, but with some positive news on the employment front, that should turn around.
"In Japan, once people get AFL insurance they don’t drop it (which is very important in the life and health insurance industry) with a persistency rate of 95%.
"The firm has a superb track record, but came under big pressure during the crash last year due to fears about its investment portfolio. I think those fears are being assuaged over time.
"It has already realized $1.7 billion (pre-tax) in investment losses. Some of those are not going to come back, like its holdings in Lehman Brothers and WAMU, but other parts of the holdings that were written down just might come back.
"Aflac did however write down $380 million as other than temporary losses in holdings of some Ford debt, and Ford has been doing much better of late, certainly much better that it looked back at the end of the first quarter when GM and Chrysler were going down for the count.
"The company has generated an ROE of 33.4% over the last 12 months, and its five year average ROE is 20.84% (it has leveraged up a bit, from having no debt to a still very manageable and conservative 22% debt to capital. As that happens AFL should return to its historic valuations.
"How much upside potential is that? A Lot. Over the last five years (which of course included the big sell o? last year) AFL’s P/E has averaged 15.4x.
"Based on 2009 earnings estimates it is going for 9.5x now, and 8.7X 2011 consensus estimates, and those estimates have been rising.
"AFL also has a habit of beating the estimates. It has done so the last three times out, and in 17 of the last 28 quarters, with only five disappointments.
"AFL currently yields 2.4%, which is nice. It has however, increased that dividend in each of the last 27 years, and over the last 15 years it has done so at a compound annual rate of 20.7%.
"AFL happens to be an old favorite of mine, a stock that I first recommended back in 1991, and was a core holding for most of my tenure at C.H. Dean. I know the management team well from those days, and they are amongst the best I know in the industry."
Weatherford International (WFT): Elliott Gue's best stock picks for 2011
Energy sector expert Elliott Gue turns to Weatherford International (NYSE: WFT) as his top pick for the coming year. In his The Energy Strategist, he explains, "As with most oil services firms, Weatherford's North American business has been hit hard and the stock now trades at a deeply discounted valuation.
"Weatherford is perhaps best known as an expert provider of services related to mature oilfields. Traditionally, Weatherford has had a strong presence in North America, which has been a proving ground for all sorts of technologies that squeeze oil from older fields.
"An example is underbalanced drilling, a technique that prevents damage to mature fields. Weatherford's genius in recent years has been to take homegrown North American technologies and sell them internationally.
"The firm has gradually lessened its exposure to North America and forged into international markets where profit margins are higher and profitability cycles less severe.
"It also wins points for expanding its business in Russia, a key market for both oil and natural gas production. Specifically, Weatherford purchased the oil services business of TNK-BP, BP's joint venture in Russia.
"Weatherford’s stock has significantly underperformed the rest of the oil services industry since October, primarily due to concerns about Weatherford's Chicontepec contract in Mexico.
"Chicontepec is a heavy oilfield that is the centerpiece of Petroleos Mexicanos’ (PEMEX) strategy to stabilize and grow oil production.
"The problem PEMEX faces is that production from its largest field, the o?shore Cantarell oilfield, has fallen o? rapidly in recent years to the point that Mexico's oil exports have tumbled.
"Accordingly, PEMEX has decided to reexamine its development plans for Chicontepec and has cut investment in the field 22%. Because Weatherford is a big player in Chicontepec, its stock has fallen.
"Although PEMEX’s recent announcements caught the market by surprise and are bad news for companies with significant exposure to Mexico, the sello? that’s hit Weatherford's shares is overdone.
"Mexican oil production is falling fast; the country will have no choice but to bump up spending on Chicontepec.
"Finally, Weatherford is trading at less than 17 times 2011 earnings estimates. This compares favorably to Schlumberger’s stock, which trades at 22.5 times 2011 earnings estimates. Shares of Halliburton and Baker Hughes (NYSE: BHI) trade at 21 times 2011 earnings.
"Weatherford's deeply discounted valuation more than prices in all the bad news surrounding Mexico and Chicontepec. Take advantage of the recent decline to buy Weatherford International under 26."
Virginia Mines (VGQ): Adrian Day's best stock picks for 2011
"Virginia Mines (Toronto: VGQ) remains my favorite gold exploration company," says resource expert Adrian Day.
In choosing the stock as his top pick for 2011, 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 2011 to be very good for Virginia and its shareholders."
T. Rowe Price New Asia (PRASX): Walter Frank's best stock picks for 2011
"My top investment idea for 2011 is T. Rowe Price New Asia (PRASX)," says long-standing fund expert Walter Frank.
In his The MoneyLetter, which has been published for over 30 years, he explains, "What attracts us to the fund is the weight it gives to both China and India." Here's his review.
"It may seem a strange pick considering that the fund is up almost 100% for 2009.
Normally, after such a run, we would not pick the fund as a favorite for next year. In addition the entire range of emerging market stocks are now among the favored by surveyed managers for 2011.
"That too should serve as a warning to stay away from the group. Having duly warned you we are nevertheless sticking with our recommendation.
"What attracts us to the fund is the weight it gives to both China and India. Each is about 30% of the fund. We like that mix.
"In fact, what attracted us to the fund in the first place is that it gave reasonable weight to India. We see most Asian funds as underweighting India. We would be wary of a pure India fund and right now we are not keen on a pure China fund. It is the blend that we like.
"Even though the emerging market funds have been Wall Street favorites this year we think their run is by no means over. The emerging markets are being valued at about the same level as are developed markets.
"Considering their potential growth rate, they are actually selling at a more than trivial discount of what they would sell for were they a developed market. We do not believe the discount makes much sense any more.
"Today’s emerging markets are no longer the crap- shoots of the past. As this is being recognized,we look for higher normal valuations (price/earnings ratios) than in the past.
"There was a manager change for the fund in April, as the former manager retired. So far the fund has not lost a beat.
"We would not expect it to, considering the strong bench T. Rowe Price brings to Asian investment. We are still recommending the fund despite its meteoric gains in ’09."
SPDR Small Cap Emerging (EWX): Ron Rowland's best stock picks for 2011
For his top fund selection for 2011, fund specialist Ron Rowland turns to the SPDR S&P Emerging Markets Small Cap (NYSE: EWX).
In his All Star Investor, he suggests, "This is the easiest way to gain access to the small cap stocks of all the emerging markets, as it includes stocks from more than 20 countries countries.
"SPDR S&P Emerging Markets Small Cap excludes stocks with a market caps exceeding $2 billion (US) -- the ones that dominate traditional cap-weighted emerging market ETFs.
"Historically, the growth of emerging market economies has been predominately export driven -- the large cap companies that produce and export products to the U.S., Europe, Japan, and other consuming nations.
"There are also a few large cap companies (banks, utilities, and construction) within each emerging market nation that help provide the infrastructure needed.
"The major change now underway is the growth of the middle class within each of these countries. The people of the emerging market nations are becoming more prosperous and are becoming significant consumers themselves.
"In addition to economic growth via exports, many of these nations are now experiencing rapid internal growth. The large cap and export oriented companies will still do well, but the real opportunity is in the small cap segment of emerging markets.
"These small cap companies are undervalued compared to their large cap brethren and are better positioned to benefit from the internal growth of each nation."
Powershares US Dollar Bullish (UUP): Alex Green's best ETF stock for 20112011
"When extreme valuations are accompanied by unbridled optimism or abject pessimism, it virtually always marks a turning point – and an opportunity; and this is no exception," says Alex Green, referring to the US dollar.
Here, the senior investment advisor to The Oxford Club and InvestmentU looks to PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP) as a favorite idea for the coming year.
"We all know the dollar is in the cellar right now and also know why it is expected to continue right through the basement floor:
1) Massive budget and trade deficits
2) Ultra-low interest rates. (Zero on the short end.)
3) $59 trillion in unfunded liabilities for Social Security, Medicare and Medicaid.
4) Bernanke conjuring extra trillions out of thin air to buy Treasuries and mortgage- back securities and patch various holes in the U.S. economy.
"There is no reason to believe any of these problems will vanish in the months ahead.
Yet the dollar will soar in 2011. Why? Two reasons:
"First, all of the problems mentioned above are already well recognized and priced into the greenback. Second, dollar psychology is overwhelmingly bearish.
"Just as 10 years ago investors couldn’t imagine internet stocks doing anything but soaring higher and five years ago they couldn’t imagine real estate doing anything but barreling down the same one-way street, record lows for the dollar are coinciding with enormous confidence that the dollar has nowhere to go but down.
"Commentators seem to forget that all currency values are contingent. You can’t just look at fundamentals here. You have to look at them abroad, too. And there isn’t much out there right now that’s terribly positive.
"In the third quarter, for example, the 16-nation euro-zone grew at a 1.5% annual rate. The U.S economy, by comparison, grew at 3.5%.
"European consumers and most business sectors are still feeling the pain from the deepest recession since the 1930s. The continent is likely to be the weakest region for global expansion next year, according to Julian Callow, chief European economist at Barclays Capital in London.
"The U.K. is no bastion of strength, either. Europe’s biggest economy outside the euro zone is still in recession due to overly indebted British households and tight credit. British GDP contracted at an annualized 1.6% in the third quarter.
"How about Japan? It has its own problems. At 172% of gross domestic product, Japan’s government debt is by far the largest among rich nations.
"The ratio is expected to reach 200% next year – and hit 300% within a decade. Rising social security costs and the weak economy are the primary culprits.
"The new government there is trying to prevent a double-dip recession by spending even more. But with government debt soaring to records, talk of new stimulus measures is already pushing up long-term rates and threatening to curtail the impact of fresh spending.
"Recognize that Europe and Japan are hardly experiencing heady economic growth and great fiscal probity. Most are bogged down economically and running fiscal deficits as bad as ours.
"And, personally, when the whole world is in this big a mess, I’ll take the greenback over the euro, the pound or the yen. My bet is in 201120112011 so will most world currency investors.
"Virtually no one is expecting it, but the dollar is likely to climb 20% against the euro and the pound next year and 15% against the yen.
"Given that, shares of the PowerShares DB US Dollar Index Bullish ETF will appreciate in price, accordingly.
"Hedging is fine, of course, too. But if you have too much exposure to foreign-currency denominated bonds, CDs or bank accounts, rein it in."
Proshares UltraShort Gold (GLL): ETF Trader's best stock for 2011
While many have jumped on the gold bandwagon, Jim Lowell is taking the opposite approach, selected a bearish gold fund as a top pick for the coming year.
The editor of The ETF Trader looks to Proshares Ultra Short Gold (NYSE: GLL); should gold bullion decline in value, this 2X leveraged fund would be expected to rise twice as much.
"In 2009, India, China and Russia’s big banks continued to buy gold, perhaps as an alternative currency. According to Bloomberg, if investors are dumb when it comes to buying gold, governments tend to be dumber.
"The last time we saw countries buying gold on a similar scale was in 1980 when gold peaked at $850 an ounce – a price that took 28 years to materialize again.
"After a year where most markets swatted the greenback as if it were a salt marsh fly, using a gold plated fly swatter on the assumption that the yellow metal could salve all trials and tribulations, I think 2011 finds a headwind for gold bugs and a tailwind for our dollar.
"I’d buy the ProShares Ultra Short Gold, which delivers twice (200%) the inverse (opposite) of the daily performance of gold bullion."
Oceaneering International (OII): Brandon Clay's best stock picks for 2011
"Oil recently su?ered a pullback, but we think it's temporary," says Brandon Clay, who turns to the oil sector for his top pick for 2011.
The editor of Invest with an Edge suggests, "One stock that should pull out of congestion when energy moves again in 2011 is Oceaneering International (NYSE: OII), a company involved in deepwater drilling services.
"The Texas-based oil and gas services company gets most of its revenue by providing goods and services to companies that are drilling for oil and gas o?shore. One of their specialties is deepwater remotely-operated vehicles (ROVs), or 'robots' in layman's terms.
"Oceaneering has turned a profit every year since 1999, including a record $3.65 a share in 2008. Analysts are forecasting a drop to $3.38 a share for 2009, but they also expect a nice rebound to $3.51 a share in 2011.
"The shares still appear inexpensive at just 16 times forward earnings. The firm's balance sheet is in good shape with just $140 million in debt and nearly $96 million in free cash.
"Oceaneering fills a unique niche in its industry. They help oil and gas explorers drill in deep water locations hundreds of miles o?shore. Its services are expensive, but producers like Chevron and ExxonMobil have little choice if they want to replace their reserves.
"OII is in a market sweet spot. For an indirect play on rebounding crude prices, go with oil services performer Oceaneering International."
National Cinemedia (NCMI) Nathan Slaughter's best stock picks for 2011
"Moviegoers represent a captive audience that can't change the channel or block a pop-up ad," observes value investor Nathan Slaughter.
In his Half-Priced Stocks, he suggests, "We expect more companies than ever before to spend ad dollars on theater ads, leading to a banner year for National CineMedia (NASDAQ: NCMI)."
"Coping with last year's painful recession was tough. To compensate for the lack of cash coming in, virtually every company went into cost-cutting mode.
"Unfortunately, the axe fell hard on advertising budgets. These deep cutbacks have helped many firms remain above water, but they are only a temporary solution. We've reached a point where businesses in every industry will soon be forced to aggressively reach out to new customers, or risk falling behind the competition.
"But advertisers will be smart and demand the most bang for the buck, which plays right into National CineMedia's hands. Because theatre advertising is far more e?ective than other mediums, National CineMedia commands premium rates and is attracting new clients.
"If you've been to the movies lately, chances are you were one of the 700,000 people to see the firm's exclusive 'First Look' content while waiting for the show to start.
"National CineMedia dominates the cinema advertising market, having locked up 30- year agreements with leading exhibitors like Cinemark and Regal Entertainment.
"TV and magazine ads are little more than a distraction, but the theatre is a whole di?erent ballgame. Studies have shown that 73% of theatre visitors can recall the commercials they saw, versus a mediocre television retention rate of 13%.
"Not surprisingly, advertisers are willing to pay extra to get their message out through this medium. Theatre ad rates run 1.3 times those of primetime TV broadcasts -- are premiums are even higher in more mature markets like Europe.
"In-theatre advertising is still in its infancy. With annual revenues of just $500 million, it only accounts for a two-tenths of 1% drop in an overall $280 billion advertising bucket.
"But that is changing rapidly. The industry has been expanding at an impressive +24% annual clip. And with media spending shifting towards digital platforms, National Cinemedia has been adding names like Lexus, Visa, E*Trade and Carnival Cruise Lines to its growing client roster.
"Keep in mind, theatre partners pay for their own digital projection equipment, so ongoing expenditures are minimal and sales growth should scale nicely to the bottom line."
Nabi Biopharmaceuticals (NABI): Dave Dyer's best stock picks for 2011
"Nabi Biopharmaceuticals (NASDAQ: NABI) is a small $250 million market cap company has a unique product with obvious benefits for a giant market," says growth stock specialist Dave Dyer.
In his Dave Dyer's Newsletter, he explains "The company has developed a vaccine against nicotine. Smoking is the world’s largest preventable cause of death, but current treatments are ine?ective because it is so easy to relapse.
"Nicotine is addictive and that next cigarette will provide a dose of it no matter what program or treatment you have been on. Failure rates for treatment can be as high as 95%. And, the existing competitors are ine?ective.
"NABI has developed a vaccine against nicotine that makes it impossible for the nicotine molecules to reach the nicotine receptors in the brain; you can still smoke if you want but you won’t get any pleasure from it and you can’t get addicted to it.
"The vaccine produces an antibody that attaches to the nicotine molecule and makes it so large that it can’t pass through the blood/brain barrier to reach the nicotine receptors.
"The vaccine is given in a shot that is e?ective for one year and there don’t seem to be any negative side e?ects. It is harder to relapse because the addictive power is blocked for a year.
"Most of the analysis and testing has been done on using this product to help people stop smoking, but I think the far larger opportunity is to use it to prevent smoking in the first place.
"Who would not want their kids to have this vaccine? They would take it once a year like flu shot. Also, since smoking causes so much medical expense, I can easily imagine the insurance companies providing large discounts to people who take the vaccine.
"The product is currently in Phase III clinical trials and NABI has cut a $500 million marketing deal with Glaxo SmithKline that depends on final FDA approval and other milestones.
"There is always a chance that it will not pass, but I’m willing to take that risk. And, the existing competitors are ine?ective."
Mindray (MR): Alan Newman's best stock picks for 2011
"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 2009.
"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 2009, 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 2011."
Matthews Asia Dividend (MAPIX): Mark Salzinger's best stock picks for 2011
"Though most investors do not associate Pacific-Rim investments with high dividend yields,Matthews Asia Dividend (MAPIX) could change their perception," says Mark Salzinger.
In his No-Load Fund Investor, he looks to this fund, which he notes recently o?ered a dividend yield of approximately 4%.
"The fund recently o?ered a dividend yield of approximately 4%. Managers Jesper Madsen and Andrew Foster seek to fill this fund with dividend-paying stocks of companies.
"The managers select stocks throughout the Asia-Pacific region, including Japan, China/Hong Kong, Taiwan and recently at least eight other Asian countries. Though dividends did not protect investors in American stocks from the carnage in 2008, they appear to have reduced losses for investors in Asian equities.
"Matthews Asia Dividend (formerly known as Matthews Asia Pacific Equity Income) fell only 26% in 2008, vs. 42.2% on average for the funds in Morningstar’s Diversified Pacific Stock category. So far in 2009 (through Dec. 14), Matthews Asia Dividend has gained a whopping 48.1%, vs. 31.1% for its peers.
"That means the fund did about 16 percentage points better than average in a down year, and has done about 17 percentage points better in the bull market so far in 2009!
"The Matthews funds specialize in attempting to form portfolios of 'indexes of the future' in Asian markets. In other words, they seek exposure to publicly traded companies in su?cient quantities to represent a picture of Asian economies as they are likely to develop over time, not as some index developer imagined them to be several years ago.
"So, compared to existing indexes of Asian stock markets, the Matthews funds tend to devote more of their assets to consumer stocks and midsize and small-cap companies, and less to big exporters and other famous companies.
"Matthews Asia Dividend is available directly from Matthews Funds (800-789-2742; matthewsfunds.com) as well as no-load at various fund supermarkets."
Legend International (LGDI): Mark Leibovit's best stock picks for 2011
Mark Leibovit uses a proprietary technical trading system known as volume reversal analyst; over time his buy and sell signals for the market has led to one of the top rankings among market timers -- including being ranked timer of the year in 2006 by Timer Digest.
He also uses this system to highlight trades among individual stocks -- such as his top pick for 2011: Legend International Holdings (Other OTC: LGDI). Here's the latest from his VRTrader.
"Legend International Holdings, Inc. engages in the exploration and development of mineral properties. It principally focuses on the development of its phosphate deposits located in the Mt. Isa district, along the margin of the Georgina Basin of Queensland, Australia.
"The company also owns interests in diamond and base metal projects located in Northern Territory. Its exploration licenses cover 40,525 acres in Queensland and 4.7 million acres in the Northern Territory, Australia.
"Legend International Holdings has a strategic alliance agreement with Wengfu Group Co. Ltd. The company was formerly known as Sundew International, Inc. and changed its name to Legend International Holdings, Inc. in March 2003. Legend International Holdings was founded in 2001 and is based in Melbourne, Australia. "Our technical target for the shares is a move to $2.25-$2.50."
Level 3 Communications (LVLT): Gene Inger's best stock picks for 2011
"Our bias has again shifted temporarily to the bearish side, which makes me cautious about picking stocks in early 2011," says Gene Inger. With that caveat in mind, the editor of The Inger Letter looks to the Level 3 Communications(NASDAQ: LVLT), s speculative, low-priced issue.
"We owned this stock years ago and when Level 3 bought Broadwing we got stock and cash; thus solid profits years ago or zero-cost basis on Level 3 shares. "After pundits hyped it (at triple current prices) the stock has dropped to an area of attractiveness. One caution: from sub-$1 levels during our forecast market panic a year ago, the shares have doubled; thus it's not impossible that 'capital gains taking' could suppress the stock somewhat early-on in the new year.
"Thus our buy-zone will be particularly wide; such as between 90 cents and $1.30 or so. One may elect to pay more and scale-in; though we’d prefer to buy in on pullbacks.
"Meanwhile, we note that their ability to service their debt should not be an issue presently; so we are interested to see what they do over the next year or two; not past 2012.
"Our original interest in Broadwing -- now absorbed by Level 3 -- was the all-digital-optical as well as transcontinental (now to Europe as well) fiber system.
"This system has no latency as still is common with satellite and many other systems (including most fiber networks).
"On top of that mobile carriers are increasingly looking to 'backhaul alternatives' to meet their increasing bandwidth needs, which should increasingly result in o?oading to fiber backhaul systems.
"The low latency is a reason why most sports and news networks are using Level 3 (two-way conversation reveals latency, whereas one-way conventional transmission doesn’t) for their HDTV broadcasts, and we believe that will increase in importance as 3D arrives eventually.
"Additional pluses in the fullness of time include bandwidth requirements in the Cloud Computing area; digitized medical record keeping; military uses (they have certain key Federal accounts) and certainly the growth of telecommunications in-lieu of physical travel.
"In the sense that reduced physical, and increased optical transport, is e?cient; that's actually a bit of a green' story as well."
iShares Silver (SLV): Gene Arensberg best ETF stock for 2011
"2011 will be the year that silver shines," says metals and mining specialist Gene Arensberg. In his Got Gold Report, a specialty service from The Gold Newsletter, he says, “We believe that the metal-backed exchange traded fund iShares Silver Trust (NYSE: SLV) is a safe and convenient way for most investors to gain exposure to the silver market.
"When the general public becomes fully involved in gold, silver shines brightly … for a time. At least it did so in the last public rush into gold which peaked about 30 years ago.
"SLV tracks the spot price of silver, less accumulated fees capped at 0.5% per annum.
Since the exchange traded fund’s inception in April, 2006, the trust has accumulated over 300 million ounces of silver.
"That is about 9,500 metric tonnes of bar silver held in ultra-secure soccer field sized vaults by a custodian in London. In December, 2009, the SLV silver stash was worth about $5.3 billion.
“Silver fell out of popularity until just recently, but we see that changing now. For more than 20 years, from 1980 to about 2003, investors all over the globe were conditioned by a weak silver price and not much joy of ownership.
"'Who cares?’ sums up the public attitude before this bull market for silver began in 2003. Even now that attitude prevails among the same investing establishment that has grudgingly accepted gold as an investment class.
“During that long bear market for silver, government dishoarding of excess silver metal, metal left over from when governments actually had silver in their coinage, acted as a cap to the price.
"That excess supply from o?cial sources is all gone now, but the e?ects of the artificial over-supply are only just now retreating.
“Silver stayed so low-priced for so long it made the second most popular precious metal di?cult to mine profitably. Because of that, annual production of silver has not kept pace with increasing industry and investment demand.
"A factoid that some will find di?cult to believe is that because prices for actual physical silver metal have been so cheap for so long, and because global industry consumes more silver each year than miners are able to produce, there is actually considerably less silver metal in existence than there is gold.
“Gold recently rose to new all-time nominal highs above $1,200 the ounce, but its sister precious metal has lagged so far. In fact it hasn’t even gotten to half of where it did in the last bull market peak in January, 1980.
"Silver reached about $50 an ounce briefly then, but so far this cycle has yet to beat its May 2008 $21.44 pinnacle. That is with gold having bested its 1980 high of $850 by more than $350 an ounce. As such, we believe that silver has some serious catching up to do.
"“What is so enticing about the silver story is that it currently takes about 64 ounces of silver to buy an ounce of gold. That is called the gold:silver ratio. During the bull market for precious metals thirty years ago the ratio fell to about 16:1 or 16 ounces of silver to one ounce of gold.
"If gold simply stood still at $1,100 an ounce and the ratio were to fall to 1980 levels, silver would climb to about $69 an ounce. That suggests achievable upside for silver and SLV of nearly 4X from today.
“But wait, there’s more. Consider that compared to period of the last bull rush for precious metals the world has about 50% more people in it. Governments have inflated their fiat currencies since then by a factor of 10.
"World inventories of actual physical silver metal for investment have actually fallen to less than half of the amount that was available in 1980.
"Recently the government of China re-legalized the ownership of precious metals for its 1.3 billion people and is actually encouraging its citizens to accumulate them.
"The number of people of a?uence and means in the developing countries like Brazil, Russia, China and India has increased exponentially in the last thirty years.
“So, we see the currently unloved silver market as ripe for an investment renaissance of epic proportions. Think about it.
"Today versus 1980 we have globally 50% more people who will be using 1,000% more dollars, yen, euro, pounds sterling, yuan, etc., to chase less than half as much silver metal in a world where anyone can buy a silver ETF with just a mouse click from their study, even in their underwear.
“Isn’t that a potent recipe for silver? We think 2011 could very well be the year that a global popular rush, a veritable tsunami of liquidity into silver gets underway in earnest as more and more people discover just how little of it remains above ground for investment. Our favorite way to participate is SLV.”
IMAX (IMAX): Dennis Slothower's best stock picks for 2011
For his top pick for 2011, Dennis Slothower turns to the "big screen" and highlights a company that could benefit from the recently release film, Avatar.
The editor of Stealth Stocks says, "IMAX Corporation (NASDAQ: IMAX) is one of the world’s leading entertainment technology companies, specializing in motion picture technologies and large-format film presentations." Here's the reasoning behind his buy recommendation.
"The company’s principal business consists of large-format digital and film-based theater systems. The sale or lease of such systems to, or contribution of such systems under, revenue-sharing arrangements with its customers and the conversion of two-dimensional (2-D) and three-dimensional (3-D) Hollywood feature films for exhibition on such systems around the world.
"IMAX’s theater systems are based on proprietary and patented technology. Its customers that purchase, lease or otherwise acquire their theater systems are theater exhibitors that operate commercial theaters, museums, science centers or destination entertainment sites.
"The company generally does not own IMAX theaters but instead licenses the use of its trademarks along with the sale, lease or contribution of its equipment.
"In 2002, IMAX introduced a technology that can digitally convert live-action 35mm films to its large format at a modest incremental cost while meeting the company's high standards of image and sound quality.
"In 2003, the company introduced IMAX MPX, a theater system designed specifically for use by commercial multiplex operators.
"The IMAX MPX system, which is highly automated, was designed to reduce the capital and operating costs required to run an IMAX theater, all without sacrificing image and sound quality.
"Avatar, a movie made in 3-D, was just released this Christrmas. Critics are saying that it could be the nextThe Lord of the Rings, only it uses a new kind of 3-D technology that is expected to revolutionize the movie industry, much as did sound and color did in the last century.
"High expectations are pushing theater chains around the world to invest in this new digital 3-D system. IfAvatar is, in fact, a big hit, we’re sure to see many more 3-D action films and many more 3-D theaters, which should increase IMAX’s earnings sustainably.
"According to my numbers, IMAX should be selling in the low teens over the next three to five years. It is currently trading around $10, so IMAX has large upside potential. Place a sell stop at 25% below your entry price. As the stock rises, continue to raise your stop so that you are trailing the Friday close by 25%."
