There’s a lot of talk about the recently passed health-care reforms in the wake of the election, and some investors are wondering if provisions of the legislation could be rolled back. I won’t pretend to know what’s going to happen in Washington in the future, but I can tell you that no matter what happens to the so-called “Obamacare” initiative, a number of health-care stocks are in dire straits — and no amount of politicking is going to help them.
Specifically, I’m talking about a group of battered drug makers that have seen poor earnings performances lately and are up against looming patent expirations and fierce competition in emerging markets.
Here are five famous pharmaceutical stocks that you should sell immediately:
Abbott Laboratories (ABT)
Abbott Laboratories (NYSE: ABT) is engaged in the discovery, development, manufacture and sale of a variety of health-care products. Since January, ABT stock has dropped 6.6%, compared to gains of 9.5% and 9.3% for the S&P 500 and Dow Jones, respectively. While the stock regained slightly in September, ABT has lost 3.5% since October. While ABT has outperformed earnings estimates for four consecutive quarters, it has been by only one cent each quarter. Abbott stock currently trades at $50.45.
Sanofi-Aventis S.A. ADS (SNY)
Sanofi-Aventis (NYSE: SNY) is also involved with the research, development, manufacture and marketing of health-care products. The company is known for its pharmaceuticals, including vaccines, as well as its animal health-care products. Year-to-date, SNY stock has slid 9.4%. Additionally, Sanofi-Aventis has missed earnings estimates two of the last three quarters. While the stock has regained slightly in the last few months, it is still down from its 52-week high of $41.59, with a current price of $35.62
Teva Pharmaceutical Industries (TEVA)
Global pharmaceutical company Teva Pharmaceutical Industries (NASDAQ: TEVA) produces and markets a wide range of generic drugs. Its major products are Copaxone for multiple sclerosis and Azilect for Parkinson’s disease. Since January, TEVA is down 9.6%, compared to gains by the broader markets. After a productive September, TEVA has dropped 3.7% since the start of October. Trading at $50.80, TEVA is only a few dollars removed from its 52-week low of $46.99.
GlaxoSmithKline PLC ADS (GSK)
GlaxoSmithKline (NYSE: GSK) works with vaccines, over-the-counter medications and various other health-care consumer products. The company’s main products deal with the following: respiratory system, central nervous system, cardiovascular and urogenital, metabolic, anti-bacterials, oncology and emesis, dermatalogicals and vaccines. GSK stock is down 4.1% in 2010, despite seeing gains in September and October. Additionally, GSK reported a quarterly earnings drop of 3.5% in its last income statement, which certainly has disappointed shareholders.
Pfizer Inc. (PFE)
Research-based, global pharmaceutical company Pfizer Inc. (NYSE: PFE) rounds out the list of big pharma stocks to sell. Year-to-date, Pfizer has watched its stock decrease 6.5%, compared to gains by the broader markets. Analysts aren’t buying into Pfizer, as they have downgraded their earnings estimates to 47 cents a share this quarter after and actual EPS of 54 cents a share last quarter. A quarterly earnings decline of nearly 70% is another reason why Pfizer is a stock worth selling.
As of this writing, Louis Navellier did not own a position in any of the stocks named here
Best Cheap Stocks For 2011
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…
Best Cheap Stocks For 2011: 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 2011: 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 2011: 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 2011: 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 2011: 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 2011: 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.
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 2011: 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 2011: 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 2011: 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 2011: 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 2011: 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 2011: 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.
Best Penny Stocks To Buy
These companies have the wind at their sails from an earnings perspective, these penny stock prices will not last long. Now is the time to pounce before the rest of the market catches on. Here are best penny stocks to buy now:
Best Penny Stocks To Buy: SORL Auto Parts Inc. (SORL)
SORL Auto Parts, Inc., through its principal operating subsidiary, Ruili Group Ruian Auto Parts Co., Ltd., engages in the development, manufacture, and distribution of automotive brake systems and other safety related auto parts for commercial vehicles, such as trucks and buses. The company, through its 90% ownership in Ruili Group Ruian Auto Parts Co., Ltd., a Sino-foreign joint venture, offers various products, including spring brake chamber, clutch servos, air dryers, relay valves, and hand brake valves.
It also provides auto metering products, auto electric products, anti-lock brake systems, retarders, hydraulic brakes, and power steering products. SORL Auto Parts, Inc. markets its products under the SORL brand to automotive original equipment manufacturers and the related aftermarket customers in the People?s Republic of China and internationally. The company was founded in 2003 and is headquartered in Ruian City, the People?s Republic of China.
Advisors’ Opinion:
* Robert Hsu2011-9-13Sorl Auto Parts(NASDAQ: SORL) has purchased the assets of the hydraulic brake, power steering, and automotive electrical operations of Ruili Group Auto Parts. As a result of this acquisition, Sorl’s product offerings will expand to both commercial and passenger vehicles’ brake systems and other key safety-related auto parts. The company expects it will allow the company to streamline its management organization, as well as create efficiencies in production, R&D and its sales network. In addition, Sorl’s management expects the acquisition will be beneficial to the company’s revenues and earnings.Sorl paid 170 million yuan — or about $25 million — for the acquisition, and the company believes it will generate about $35 million in revenues and about $4 million in net income in 2011. In addition, Sorl expects the acquisition to generate incremental free cash flow in both 2010 and 2011. SORL has outperformed earnings estimates for four consecutive quarters, and its stock price rose 71.7% over the past 12 months. Now, the chairman and CEO of Sorl Auto, Xiao Ping Zhang, is also the controlling shareholder of the Ruili Group. However, the price paid for the acquisition was based on a valuation of the purchased business performed by Asia’s leading appraisal company, DTZ Debenham Tie Leung — lessening the possibility of a conflict of interest with regards to the sale.
Overall, I think this was a good purchase by Sorl. The acquisition will allow the company to offer its customers more high-quality products to fulfill their needs from one source. In addition, because both companies share similar visions, I expect the combination of their internal resources will create favorable economies-of-scale that will strengthen earnings and create shareholder value. Buy SORL under $10.
Best Penny Stocks To Buy: J.M. Smucker Company (The) (SJM)
The J. M. Smucker Company engages in the manufacture and marketing of branded food products in the United States and internationally. Its principal products include coffee, peanut butter, shortening and oils, fruit spreads, canned milk, baking mixes and ready-to-spread frostings, flour and baking ingredients, juices and beverages, frozen sandwiches, dessert toppings, syrups, and pickles and condiments. The company offers its products under various brands comprising Folgers, Dunkin? Donuts, Smucker?s, Jif, Hungry Jack, Uncrustables, Snack?n Waffles, Dickinson?s, Crosse & Blackwell, Adams, Laura Scudder?s, Goober, Golden Temple, and Magic Shell, Crisco, Pillsbury, Eagle Brand, Borden and Elsie design, and Martha White. It also provides its products under the LaPina, White Lily, Softasilk, Funfetti, Pet, Plate Scapers, Bick?s, Five Roses, Robin Hood, Carnation, Europe?s Best, R. W. Knudsen Family, Santa Cruz Organic, Double Fruit, Recharge, and Red River brand names. The company sells its products through direct sales and brokers to food retailers, food wholesalers, drug stores, club stores, mass merchandisers, discount and dollar stores, and military commissaries; and through retail channels, and health and natural foods stores and distributors, as well as through foodservice distributors and operators, such as restaurants, schools and universities, and healthcare operators. The J. M. Smucker Company was founded in 1897 and is headquartered in Orrville, Ohio.
Best Penny Stocks To Buy: SORL Auto Parts Inc. (SORL)
SORL Auto Parts, Inc., through its principal operating subsidiary, Ruili Group Ruian Auto Parts Co., Ltd., engages in the development, manufacture, and distribution of automotive brake systems and other safety related auto parts for commercial vehicles, such as trucks and buses. The company, through its 90% ownership in Ruili Group Ruian Auto Parts Co., Ltd., a Sino-foreign joint venture, offers various products, including spring brake chamber, clutch servos, air dryers, relay valves, and hand brake valves.
It also provides auto metering products, auto electric products, anti-lock brake systems, retarders, hydraulic brakes, and power steering products. SORL Auto Parts, Inc. markets its products under the SORL brand to automotive original equipment manufacturers and the related aftermarket customers in the People?s Republic of China and internationally. The company was founded in 2003 and is headquartered in Ruian City, the People?s Republic of China.
Advisors’ Opinion:
* Robert Hsu2011-9-13Sorl Auto Parts(NASDAQ: SORL) has purchased the assets of the hydraulic brake, power steering, and automotive electrical operations of Ruili Group Auto Parts. As a result of this acquisition, Sorl’s product offerings will expand to both commercial and passenger vehicles’ brake systems and other key safety-related auto parts. The company expects it will allow the company to streamline its management organization, as well as create efficiencies in production, R&D and its sales network. In addition, Sorl’s management expects the acquisition will be beneficial to the company’s revenues and earnings.Sorl paid 170 million yuan — or about $25 million — for the acquisition, and the company believes it will generate about $35 million in revenues and about $4 million in net income in 2011. In addition, Sorl expects the acquisition to generate incremental free cash flow in both 2010 and 2011. SORL has outperformed earnings estimates for four consecutive quarters, and its stock price rose 71.7% over the past 12 months. Now, the chairman and CEO of Sorl Auto, Xiao Ping Zhang, is also the controlling shareholder of the Ruili Group. However, the price paid for the acquisition was based on a valuation of the purchased business performed by Asia’s leading appraisal company, DTZ Debenham Tie Leung — lessening the possibility of a conflict of interest with regards to the sale.
Overall, I think this was a good purchase by Sorl. The acquisition will allow the company to offer its customers more high-quality products to fulfill their needs from one source. In addition, because both companies share similar visions, I expect the combination of their internal resources will create favorable economies-of-scale that will strengthen earnings and create shareholder value. Buy SORL under $10.
Best Penny Stocks To Buy: J.M. Smucker Company (The) (SJM)
The J. M. Smucker Company engages in the manufacture and marketing of branded food products in the United States and internationally. Its principal products include coffee, peanut butter, shortening and oils, fruit spreads, canned milk, baking mixes and ready-to-spread frostings, flour and baking ingredients, juices and beverages, frozen sandwiches, dessert toppings, syrups, and pickles and condiments. The company offers its products under various brands comprising Folgers, Dunkin? Donuts, Smucker?s, Jif, Hungry Jack, Uncrustables, Snack?n Waffles, Dickinson?s, Crosse & Blackwell, Adams, Laura Scudder?s, Goober, Golden Temple, and Magic Shell, Crisco, Pillsbury, Eagle Brand, Borden and Elsie design, and Martha White. It also provides its products under the LaPina, White Lily, Softasilk, Funfetti, Pet, Plate Scapers, Bick?s, Five Roses, Robin Hood, Carnation, Europe?s Best, R. W. Knudsen Family, Santa Cruz Organic, Double Fruit, Recharge, and Red River brand names. The company sells its products through direct sales and brokers to food retailers, food wholesalers, drug stores, club stores, mass merchandisers, discount and dollar stores, and military commissaries; and through retail channels, and health and natural foods stores and distributors, as well as through foodservice distributors and operators, such as restaurants, schools and universities, and healthcare operators. The J. M. Smucker Company was founded in 1897 and is headquartered in Orrville, Ohio.
The best stocks to invest in 2011
Despite the market’s recent resuscitation, many stocks are still trading at fire-sale prices-no surprise given the immense decline that preceded the advance. But which stocks to invest in 2011?
Between March 9 and May 4, Standard & Poor’s 500-stock index surged 34%. Beaten-down “value” stocks and stocks of smaller companies have been the best performers during the recovery. Examples of revived value stocks are Citigroup (symbol C), which tripled from an intra-day low of 99 cents on March 9 to $3.20 at the May 4 close, and Bank of America (BAC), which skyrocketed from $3 to $10.38. Meanwhile, Morningstar’s small-company-value index rose 22% in April, and its large-company-growth index gained just 8%.
I’m not jumping on the bandwagon. Given the fragility of the markets, the financial system and the economy, I don’t think stocks of small companies or companies with huge problems are the ones to buy. Instead, I think you should put most of your money into the highest-quality blue chips (companies with little or no debt and the ability to generate a lot of cash).
If you’re looking for ideas, Morningstar StockInvestor ($119 annually) is a great resource. According to the authoritative Hulbert Financial Digest, the newsletter’s stock picks returned an annualized 2.6% from the end of 1999 through last February, a period in which the broad-based Dow Jones Wilshire 5000 stock index lost an annualized 5.0%. What’s more, the Morningstar letter is less risky than the index and tends to do little trading; on average, the letter holds stocks for about three years.
Editor Paul Larson says he looks for companies with competitive advantages over their rivals: “My strategy is fairly simple. I focus on high-quality companies, and I buy them when they’re cheap.”
Morningstar’s 100-plus stock analysts estimate “intrinsic value” for every company they cover. They compare intrinsic value to a company’s share price to arrive at a star rating. Larson then draws up two lists — a “tortoise” portfolio and a “hare” portfolio-consisting of about 25 highly rated stocks each.
Larson’s favorite is Warren Buffett’s Berkshire Hathaway (BRK.B)(best stocks to invest in 2011). At $3,114.90 a share on May 4, the stock has shed more than one-third of its value in the past year. But Larson believes that Berkshire’s collection of more than 70 businesses, dominated by insurance, is dirt-cheap. Says Larson: “For a long time, people have been pricing Berkshire as though Buffett were no longer around. But he’s still alive and kicking-and adding value. And the balance sheet is still one of the strongest around, even though the company no longer carries a triple-A debt rating.”
The world’s largest and most diverse health-care company, best stocks to invest in 2011 -Johnson & Johnson (JNJ), is another favorite. Larson says that the company is largely insulated from economic downturns. “People need to take their medicines regardless of what the economy is doing,” he says. J&J is well-managed, has little debt and generates a staggering $1 billion in free cash flow per month (free cash flow is the money left after a company makes the capital expenditures needed to maintain the business). The stock closed at $53.76 on May 4.
Defense giant best stocks to invest in 2011- General Dynamics (GD) is another company that’s built to withstand recessions. It builds ships and armored vehicles, as well as information-technology systems for the military. “The government has a vested interest in maintaining the health of this company,” Larson says. “It came through the Defense Department budget cuts relatively unscathed.” The company boasts a rock-solid balance sheet. The stock closed at $54.00.
Wal-Mart Stores (WMT), the world’s largest retailer, has increased its market share during the economic slump. Its sales of consumer staples at discount prices have been increasing as other retailers have been going out of business. The company’s managers are focusing on cutting costs and satisfying customers. Wal-Mart, one of only two stocks in the Dow industrials to climb last year, closed at $50.84.
As employee benefits grow ever more complex, The best stocks to invest in 2011-Automatic Data Processing (ADP) benefits. It provides such services as payroll processing and benefits administration. Its large scale and respected brand, and the high cost of switching to another vendor, give it a big competitive advantage. The share price: $34.86.
When competitors were spending enormous sums to build up oil-and-gas reserves during last year’s bubble in oil prices, ExxonMobil (XOM) stayed focused on increasing profit margins. Because of that, Exxon can continue to buy back shares, raise its dividend and increase capital spending (at a price of $68.20, the stock yields 2.5%). It’s the world largest integrated oil-and-gas company, and participates in almost every facet of the business.
Between March 9 and May 4, Standard & Poor’s 500-stock index surged 34%. Beaten-down “value” stocks and stocks of smaller companies have been the best performers during the recovery. Examples of revived value stocks are Citigroup (symbol C), which tripled from an intra-day low of 99 cents on March 9 to $3.20 at the May 4 close, and Bank of America (BAC), which skyrocketed from $3 to $10.38. Meanwhile, Morningstar’s small-company-value index rose 22% in April, and its large-company-growth index gained just 8%.
I’m not jumping on the bandwagon. Given the fragility of the markets, the financial system and the economy, I don’t think stocks of small companies or companies with huge problems are the ones to buy. Instead, I think you should put most of your money into the highest-quality blue chips (companies with little or no debt and the ability to generate a lot of cash).
If you’re looking for ideas, Morningstar StockInvestor ($119 annually) is a great resource. According to the authoritative Hulbert Financial Digest, the newsletter’s stock picks returned an annualized 2.6% from the end of 1999 through last February, a period in which the broad-based Dow Jones Wilshire 5000 stock index lost an annualized 5.0%. What’s more, the Morningstar letter is less risky than the index and tends to do little trading; on average, the letter holds stocks for about three years.
Editor Paul Larson says he looks for companies with competitive advantages over their rivals: “My strategy is fairly simple. I focus on high-quality companies, and I buy them when they’re cheap.”
Morningstar’s 100-plus stock analysts estimate “intrinsic value” for every company they cover. They compare intrinsic value to a company’s share price to arrive at a star rating. Larson then draws up two lists — a “tortoise” portfolio and a “hare” portfolio-consisting of about 25 highly rated stocks each.
Larson’s favorite is Warren Buffett’s Berkshire Hathaway (BRK.B)(best stocks to invest in 2011). At $3,114.90 a share on May 4, the stock has shed more than one-third of its value in the past year. But Larson believes that Berkshire’s collection of more than 70 businesses, dominated by insurance, is dirt-cheap. Says Larson: “For a long time, people have been pricing Berkshire as though Buffett were no longer around. But he’s still alive and kicking-and adding value. And the balance sheet is still one of the strongest around, even though the company no longer carries a triple-A debt rating.”
The world’s largest and most diverse health-care company, best stocks to invest in 2011 -Johnson & Johnson (JNJ), is another favorite. Larson says that the company is largely insulated from economic downturns. “People need to take their medicines regardless of what the economy is doing,” he says. J&J is well-managed, has little debt and generates a staggering $1 billion in free cash flow per month (free cash flow is the money left after a company makes the capital expenditures needed to maintain the business). The stock closed at $53.76 on May 4.
Defense giant best stocks to invest in 2011- General Dynamics (GD) is another company that’s built to withstand recessions. It builds ships and armored vehicles, as well as information-technology systems for the military. “The government has a vested interest in maintaining the health of this company,” Larson says. “It came through the Defense Department budget cuts relatively unscathed.” The company boasts a rock-solid balance sheet. The stock closed at $54.00.
Wal-Mart Stores (WMT), the world’s largest retailer, has increased its market share during the economic slump. Its sales of consumer staples at discount prices have been increasing as other retailers have been going out of business. The company’s managers are focusing on cutting costs and satisfying customers. Wal-Mart, one of only two stocks in the Dow industrials to climb last year, closed at $50.84.
As employee benefits grow ever more complex, The best stocks to invest in 2011-Automatic Data Processing (ADP) benefits. It provides such services as payroll processing and benefits administration. Its large scale and respected brand, and the high cost of switching to another vendor, give it a big competitive advantage. The share price: $34.86.
When competitors were spending enormous sums to build up oil-and-gas reserves during last year’s bubble in oil prices, ExxonMobil (XOM) stayed focused on increasing profit margins. Because of that, Exxon can continue to buy back shares, raise its dividend and increase capital spending (at a price of $68.20, the stock yields 2.5%). It’s the world largest integrated oil-and-gas company, and participates in almost every facet of the business.
Best Stocks to Invest in 2011 With High Rate of Returns
Best Stocks to Invest in 2011 With High Rate of Returns — Best-traded stocks may not be the best stocks to invest in for the year. But there are still good stocks to invest in 2011 with high return on investments . It’s up to you to study stock market analyst predictions. In the Philippine Stock Market, Prince Anthony Yeung of AB Capital Securities advises investors who want to start buying good stocks for short-term and long-term investment to look at the banking and utilities sector particularly Security Bank (SECB), RCBC (RCB), Aboitiz Power (AP), Energy Development Corporation (EDC).
* Security Bank (SECB)
http://www.securitybank.com/
Established on June 18, 1951, it has established itself as one of the country’s most stable and best managed financial institution, with more than five decades of corporate success. Security Bank stands firm on a solid reputation as one of the Philippines’ top ten private domestic universal banks in terms of assets, deposits, capital and return on equity. For the 4th straight year Security Bank landed the Best Bank in Philippine Peso Government Bonds based on the results of The Asset Benchmark Survey conducted by The Asset Magazine, a leading finance magazine with a wide readership among global investors specializing in the Asian markets.
*RCBC (RCB)
http://www.rcbc.com/
Rizal Commercial Banking Corporation (RCBC) is the Philippines’ fifth largest private domestic commercial bank with total consolidated assets of about PhP 239 billion as of end of December 2007.
*Aboitiz Power (AP)
http://www.aboitizpower.com/
Aboitiz Power Corporation (AP) is a publicly-owned holding company listed with the Philippine Stock Exchange that, through its subsidiaries and affiliates, is a leader in the Philippine hydroelectric power generation industry and has interests in some of the largest privately-owned distribution utilities in the Philippines. Since its incorporation in 1998, AP has accumulated interests in both hydroelectric power generation facilities and in thermal plants.
* Energy Development Corporation (EDC)
http://www.energy.com.ph/
Energy Development Corporation is a pioneer in the geothermal energy industry with more than three decades of proven business viability. It has helped discover new ways of developing and commercializing renewable energy right at the heart of the resource – wherever the location and whatever the condition.
These stocks are expected to appreciate next year, supported by the strong fundamentals of the companies. With the economy started to show signs of recovering, many are now optimistic of a stock market rally for the whole year in the Philippine Stock Exchange.
Certainly, the equities market is ripe for a rally. And if it happens, be ready in investing in the stock market and looking for the good stocks to invest in with your hard-earned money.
Most of the stocks of these companies are also traded in the best online stock trading companies that will give you opportunities to buy stocks online.
Start planning up on how to take care of your finances for future investments. GoldenTree Asset Management and other firms can assist anybody in dealing such matters.
* Security Bank (SECB)
http://www.securitybank.com/
Established on June 18, 1951, it has established itself as one of the country’s most stable and best managed financial institution, with more than five decades of corporate success. Security Bank stands firm on a solid reputation as one of the Philippines’ top ten private domestic universal banks in terms of assets, deposits, capital and return on equity. For the 4th straight year Security Bank landed the Best Bank in Philippine Peso Government Bonds based on the results of The Asset Benchmark Survey conducted by The Asset Magazine, a leading finance magazine with a wide readership among global investors specializing in the Asian markets.
*RCBC (RCB)
http://www.rcbc.com/
Rizal Commercial Banking Corporation (RCBC) is the Philippines’ fifth largest private domestic commercial bank with total consolidated assets of about PhP 239 billion as of end of December 2007.
*Aboitiz Power (AP)
http://www.aboitizpower.com/
Aboitiz Power Corporation (AP) is a publicly-owned holding company listed with the Philippine Stock Exchange that, through its subsidiaries and affiliates, is a leader in the Philippine hydroelectric power generation industry and has interests in some of the largest privately-owned distribution utilities in the Philippines. Since its incorporation in 1998, AP has accumulated interests in both hydroelectric power generation facilities and in thermal plants.
* Energy Development Corporation (EDC)
http://www.energy.com.ph/
Energy Development Corporation is a pioneer in the geothermal energy industry with more than three decades of proven business viability. It has helped discover new ways of developing and commercializing renewable energy right at the heart of the resource – wherever the location and whatever the condition.
These stocks are expected to appreciate next year, supported by the strong fundamentals of the companies. With the economy started to show signs of recovering, many are now optimistic of a stock market rally for the whole year in the Philippine Stock Exchange.
Certainly, the equities market is ripe for a rally. And if it happens, be ready in investing in the stock market and looking for the good stocks to invest in with your hard-earned money.
Most of the stocks of these companies are also traded in the best online stock trading companies that will give you opportunities to buy stocks online.
Start planning up on how to take care of your finances for future investments. GoldenTree Asset Management and other firms can assist anybody in dealing such matters.
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