4 Top Dividend Funds to Invest in 2012

With the grueling stock market fall, investors are certainly looking for defensive investments. The good news is that there are many high-quality companies — such as AT&T (NYSE:T), Pfizer (NYSE:PFE) and Coca-Cola (NYSE:KO) — that are paying juicy dividends. In many cases, the yields are higher than 30-year Treasury bonds.
And yes, one effective way to invest in dividend-paying stocks is to buy a mutual. So here’s a look at some top offerings:

4 Top Dividend Funds to Invest in 2012 - Hartford Dividend & Growth A Fund

The Hartford Dividend & Growth A Fund (MUTF:IHGIX), which has $6.2 billion in assets, is primarily focused on mega-companies. Top holdings include AT&T, Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), IBM (NYSE:IBM) and Wells Fargo (NYSE:WFC). What’s more, the overall yield is 1.29%.
Because of the focus on quality and stability, the fund’s portfolio manager, Edward Bousa, has been able to deal quite effectively with market volatility.

4 Top Dividend Funds to Invest in 2012 -

Franklin Rising Dividends A Fund

Founded in 1947, Franklin Resources (NYSE:BEN) has built a powerhouse in mutual funds. Then again, it has been able to post solid long-term returns for its investors.
One of the standouts is the Franklin Rising Dividends A Fund (MUTF:FRDPX), which got its start in 1987. In fact, the fund’s portfolio manager, William Lippman, still is at the helm.
Basically, the strategy is to focus on companies that have consistently increased their dividends. And yes, there must be a compelling case that the strength will continue for the long haul. In other words, the portfolio has many companies that generate large amounts of cash flows and have low debt levels.

Invesco Diversified Dividend Y Fund

Meggan Walsh, who manages the Invesco Diversified Dividend Y Fund (MUTF:LCEYX), looks for investments that have growth ramps yet are selling at discounted valuations. Actually, in light of the recent market plunge, these opportunities are certainly easier to find.
Keep in mind that dividends are not the only requirement. For example, Walsh looks for companies that also have aggressive share buyback programs. Some of the top holdings include SunTrust Banks (NYSE:STI), Kimberly-Clark (NYSE:KMB) and Johnson Controls (NYSE:JCI).
The fund also has a healthy dividend payout, coming to about 2.13%.

4 Top Dividend Funds to Invest in 2012 -

Vanguard Dividend Growth Fund

The Vanguard Dividend Growth Fund (MUTF:VDIGX) invests primarily in large companies that have strong track records of paying dividends. This certainly helps to provide downside protection.
As should be expected, the expense ratio is at a low 0.34%, which helps to boost returns. Consider that the overall dividend yield is 1.99%.
The fund also avoids aggressive trading. That is, the turnover is only 17% per year.
Tom Taulli is the author of various books, including “All About Commodities” and “All About Short Selling.” You can find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.
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Best Stocks to Buy

5 Top Stock Picks to Start the Summer in 2013

Our list of stocks to buy for this month all pack a punch in three different ways.
First, following my prediction that retail stocks would be the place to be for 2012, June’s best stocks are those whose bread-and-butter is the American consumer.
In addition, investors are increasingly favoring companies engaged in aggressive stock buyback programs, so I’ve included a few of our biggest share repurchase players in this list.
Finally, with first-quarter earnings under our belt, this list of  stocks represents some of the biggest winners from the past earnings season.
In the current narrow market, the following five stocks represent some of the best buying opportunities out there.

5 Top Stock Picks to Start the Summer in 2013 1) Alexion Pharmaceuticals

Alexion Pharmaceuticals (NASDAQ:ALXN). Ever since I first highlighted ALXN in October, this stock has been on a steady climb, gaining nearly 40%.
Sales of Alexion’s blood disorder drug Soliris continue to gain, helping to fuel strong first-quarter operating results. Profits boomed 69% to $45.5 million, or 45 cents per share, and net sales jumped 47% to $244.7 million. Better yet, Alexion was able to beat the Street earnings view by 15%.
Looking ahead, management remains bullish; it has raised its 2012 sales guidance to between $1.07 billion and $1.09 billion and its earnings guidance to a range of $1.65 and $1.75 per share. This also tops analyst estimates of earnings of $1.74 per share on $1.07 billion in sales.

5 Top Stock Picks to Start the Summer in 2013 2) Dollar Tree

Dollar Tree (NASDAQ:DLTR) has been on a great run since October, gaining more than 30%. But there’s plenty of upside left to this stock considering its $1.5 billion buyback program and its most recent earnings announcement.
The company recently reported record first-quarter sales and earnings. Earnings jumped 16% to $116.1 million, or $1.00 per share. Over the same period, net sales increased 11% to $1.72 billion. Although the company’s second-quarter guidance just missed analyst expectations, I’m encouraged that Dollar Tree raised its full-year guidance.

5 Top Stock Picks to Start the Summer in 2013 3) O’Reilly Automotive

O’Reilly (NASDAQ:ORLY) may have started out as a mom-and-pop auto parts business, but with a $500 million share repurchase program currently under its belt, this company has clearly grown into a major force in the Auto Parts industry.
This company recently announced stunning first-quarter operating results. To start, compared with Q1 2011, net income jumped 44% to $147.5 million, or $1.14 per share. Adjusted earnings weighed in at $1.14 per share, which topped the $1.04 consensus by 10%. Over the same time frame, sales rose 11% to $1.53 billion, beating analyst estimates by 3%.
Looking ahead to the second quarter, the company expects earnings to weigh in between $1.13 and $1.17 per share, while the Street sees $1.17 in earnings per share. The company also raised its 2012 earnings guidance to $4.47 to 4.57 per share, compared with the Street view of $4.51 per share.
5 Top Stock Picks to Start the Summer in 2013 4)  Ross Stores
Ross (NASDAQ:ROST) is a bargain apparel and home fashion chain that is known for letting its customers “Dress for Less.” And, as shoppers continue to be judicious with their spending, this business model is clearly paying off.
Thanks to robust sales growth across many of its markets, the company reported a 21% year-over-year jump in profits. Over the same period, total sales jumped 14% to $2.36 billion. Looking forward, the company plans to more-than double its store count and buy back $450 million of its stock in 2012.
I fully expect Ross to continue to show relative strength into the summer months.

5 Top Stock Picks to Start the Summer in 2013 5) Verisk Analytics

Verisk (NASDAQ:VRSK) is a newcomer to our list that I added in April, and it’s already posted a tidy little gain.
One reason that this is such an exciting company is that it recently expanded its business operations to include crime-related risk management. Thanks to a series of product launches and acquisitions, Verisk now has national crime databases at its disposal — opening Verisk up to new clients and increasing its attractiveness with existing customers. Plus, it should be accretive to next quarter’s earnings.
In the most recent quarter, Verisk posted 11% sales growth and 13% earnings growth; the company also topped the consensus earnings estimate by 2%. Verisk is also in the middle of an aggressive stock buyback program; the company plans on repurchasing an additional $267.9 million of its own shares.

Top 8 Companies to Invest in 2012 that Increasing Dividends

Volatility in the equity markets is back, as stocks continue their quick reactions to the myriad news events and developments coming out of Europe. Sharp selloffs and big price spikes occurred throughout the week, much to the delight of swing traders.
For investors, and particularly for income investors, the week also saw some very big names boosting their payouts to shareholders, including several large retail and industrial firms. Eight companies made it onto our Companies Increasing Dividends list this week. Here they are:

Top 10 Dow Dividend Stocks

As the largest owner of life science real estate, Top 8 Companies to Invest in 2012 that  Increasing Dividends - Alexandria Real Estate Equities (NYSE:ARE) collects big rents from its tenants. This week, the REIT returned some of that rent to shareholders in the form of a 4% increase in its quarterly dividend to 51 cents per share. The new payout will be made on July 16 to shareholders of record as of June 29. The new dividend yield, based on the June 12 closing price of $69.36 (the day the dividend was announced), is 2.94%.
Convenience market operator Casey’s General Stores (NASDAQ:CASY) stocked shareholder shelves with a 10% higher quarterly payout to 16.5 cents per share. The dividend increase came despite quarterly earnings that missed Wall Street estimates. The new dividend is payable Aug. 15 to shareholders of record as of Aug. 1. The new dividend yield, based on the June 12 closing price of $59.91, is 1.1%.
Iconic construction and mining equipment maker Top 8 Companies to Invest in 2012 that  Increasing Dividends - Caterpillar (NYSE:CAT) dug into its fiscal mountain and unearthed a 13% higher dividend to 52 cents per share. The pumped up payload will be delivered on Aug. 20 to shareholders of record as of July 20. The new dividend yield, based on the June 13 closing price of $85.29, is 2.44%.
Medical device maker and Dependable Dividend Stock Top 8 Companies to Invest in 2012 that  Increasing Dividends - C.R. Bard Inc. (NYSE:BCR) sells products for vascular, urology and oncology applications. This week, the company fashioned a fiscal device for shareholders that boosted its payout 5% to 20 cents per share. The new dividend is payable Aug. 3 to shareholders of record as of July 23. The new dividend yield, based on the June 13 closing price of $99.44, is 0.8%. C.R. Bard has been paying dividends every year since 1960.
Diversified energy provider Top 8 Companies to Invest in 2012 that  Increasing Dividends - DTE Energy (NYSE:DTE) serves clients in the state of Michigan, and this week the Great Lakes-based company moved to add more fiscal water to shareholders’ ponds. The new dividend of 62 cents per share represents a 5.5% boost from the prior quarterly dividend. The new payout will be made Oct. 15 to shareholders of record as of Sept. 17. The new dividend yield, based on the June 14 closing price of $59.47, is 4.17%.
Industrial controls manufacturing giant Rockwell Automation (NYSE:ROK) turned up the dial on its quarterly dividend, lifting its payout 11% to 47 cents per share. The newly increased dividend is payable Sept. 10 to shareholders of record as of Aug. 13. The new dividend yield, based on the June 8 closing price of $69.87, is 2.69%. Separately, the company’s board approved the addition of $1 billion to its share repurchase program. This is in addition to the previous buyback authorization of $1 billion.
Cheap-chic retail behemoth Top 8 Companies to Invest in 2012 that  Increasing Dividends - Target (NYSE:TGT) increased the price it pays to shareholders by 20% to 36 cents per share. The new dividend price tag will be marked up on Sept. 10 to shareholders of record as of Aug. 15. The new dividend yield, based on the June 13 closing price of $58.05, is 2.48%. This payout represents the 180th consecutive quarter the company has paid dividends since it went public in 1967, putting it squarely on our list of Dependable Dividend Stocks.
Industrial conglomerate Top 8 Companies to Invest in 2012 that  Increasing Dividends - United Technologies (NYSE:UTX) is the parent company of jet engine maker Pratt & Whitney, Otis elevator, Sikorsky Aircraft and several other companies. This week, the diversified firm declared a new quarterly dividend of 53.5 cents per share, which represents an 11.5% increase over the prior payout. The new dividend will be delivered Sept. 10 to shareholders of record as of Aug. 17. The new dividend yield, based on the June 13 closing price of $73.54, is 2.91%.

3 Railroad Stocks To Invest That Keep Rolling in 2012

Freight railroads are at a crossing. While the volume of freight rail’s core staples — coking coal, grain and scrap metal — is down significantly compared to last year, volume of “intermodal” freight — shipments that travel in containers or trailers and can be handled by rail, ship or truck — is on the rise.
And that growth is likely to help some publicly traded freight rail companies deliver healthy returns to shareholders.

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It’s no secret that railroads have had to contend with some adversity so far this year: Total carload volume is down more than 3% compared to the same period last year. Cheap natural gas, regulatory pressure and a warmer-than-usual winter drove down coal volume, which accounts for more than 35% of all rail shipments. Grain exports are sluggish due to the mild drought in the nation’s heartland and rising international production.
But intermodal volume is 4% higher today than it was a year ago. And if you remove coal and grain from the equation, freight rail volume rose by nearly 8% in the first quarter of this year, according to the Association of American Railroads (AAR).
Intermodal is becoming an increasingly attractive option for shippers because of tight trucking capacity. Railroads can transport a ton of freight more than 480 miles on a single gallon of diesel, making them more efficient than other transport modes.
As a result, overall freight rail revenue rose by more than 15% in 2011, and rails also gained market share from truckers — especially in intermodal, according to a Council of Supply Chain Management Professionals report released this week.
For investors, the best railroad stocks are those that are well prepared to take advantage of growing intermodal traffic. Here are three freight railroads that are poised to keep on rolling:

3 Railroad Stocks To Invest That Keep Rolling in 2012 - CSX 

CSX (NYSE:CSX) would have taken a huge hit on its first-quarter earnings released in April because coal volume dropped 14%. Instead, intermodal shipments soared, accounting for 37% of total volume in the first quarter. That made all the difference: CSX earnings beat analysts’ estimates as first-quarter profits rose 14%, to 43 cents a share, on revenue of nearly $3 billion versus expectations of 35 cents a share.
CSX is trading near $22, around 25% above its 52-week low last October. With a market cap of nearly $23 billion, CSX has a price-to-earnings growth (PEG) ratio of 0.8, indicating the stock may be undervalued, and a fairly low forward P/E of around 11. It also has a current dividend yield of 2.6%.
Bottom Line: CSX has a lot going for it in intermodal. It has been cashing in on increased conversion of highway intermodal shipments to rail. Growth in its UMAX interline container program and new international volume bode well.
Buy CSX with a price target of $27.

3 Railroad Stocks To Invest That Keep Rolling in 2012 -

Norfolk Southern

Norfolk Southern’s (NYSE:NSC) domestic intermodal operations helped offset weakness in coal shipments. First-quarter intermodal revenue rose 9%, reflecting a volume increase of 5%. NSC beat the Street on both the top and bottom lines: Earnings rose 26% in the first quarter to $1.23 a share; revenue grew 6% to $2.8 billion.
NSC is trading around $68, about 18% above its 52-week low last October. With a market cap of about $22 billion, NSC has a PEG ratio of 0.8, indicating the stock could be undervalued, and a forward P/E a little over 10, which is at the low end of the freight rail sector. It also has a current dividend yield of nearly 2.8%.
Bottom Line: The company’s intermodal terminal in Franklin County, Pa., is scheduled to open later this year, and the intermodal facility in Birmingham, Ala., that began construction last year are big bets on that business.
I like NSC at a price target of $85.

3 Railroad Stocks To Invest That Keep Rolling in 2012 -

Union Pacific

Union Pacific (NYSE:UNP) expanded its intermodal revenue by 15% in the first quarter, reflecting a small increase in volume and higher revenue per container. It’s also using innovations in technology such as smartphone apps to make gate reservations at intermodal facilities. In April, Union Pacific reported a 35% increase in first-quarter earnings to $1.79 a share, on revenue that rose 14% to $5.1 billion, beating analysts’ estimates on the top and bottom lines.
UNP is trading around $113, nearly 46% above its 52-week low last October. With a market cap of nearly $54 billion, UNP is the largest freight railroad in the U.S. by that measure. It has a PEG ratio of 1, indicating the stock is fairly valued, and a forward P/E a little over 12, which is the midrange for the freight rail sector. It also has a current dividend yield of 2.1%.

Top 10 Dow Dividend Stocks to Invest in 2012

The eurozone debt crisisstill is in focus, investors remain jittery and the stock market has given up nearly all of its gains made this year.
That all adds up to a “risk-off” environment where many investors are turning to stable stocks with big brands, bulletproof balance sheets and reliable income generation via quarterly dividends. This is especially true for retirement investors who are equally concerned with capital preservation as they are with tapping into a rally — if and when one ever transpires.
When you are thinking in terms of retirement decades down the road, dividends can add up in a hurry. Consider this: If you buy a stock with a 4% dividend, you will double your money in about 18 years even if the stock goes nowhere. That’s peace of mind that many long-term investors thirst for right now.
So if you’re looking for the biggest brands with the biggest-yielding stocks, here’s a list of the top 10 dividend stocks in the Dow Jones Industrial Average to help you out:

Top 10 Dow Dividend Stocks to Invest in 2012 #10: DuPont

Current Dividend Yield: 3.5%
Performance So Far in 2012: +8%
E.I. du Pont de Nemours & Company (NYSE:DD), or simply DuPont, is a chemicals giant made famous by products including Tyvek house wrap, Teflon non-stick coatings and stretchy Lycra synthetic fabric.
DuPont isn’t quite as sexy as a Silicon Valley tech shop but clearly is an innovator with a long history of great product creation. DD stock lagged the market in 2011 with an 8% decline, but has topped the Dow’s 3.5% gains considerably with its 8% returns so far in 2012.
Revenue is up year-over-year for the 10th consecutive quarter after strong earnings in April, and DuPont’s EPS have gone from $1.92 for fiscal 2009 to an impressive $3.68 in fiscal 2011 — almost double — and are forecast to jump another 15% in fiscal 2012.
Dividend investors in it for the long term know the staying power of DuPont. The company has paid dividends for more than 100 years and is a stable industrial giant that isn’t going anywhere. At the end of April after DuPont’s earnings, it added another 2 cents to its quarterly payday, too, proving this industrial company is not just preserving dividends — but improving them.

Top 10 Dow Dividend Stocks to Invest in 2012 #9: General Electric

Current Dividend Yield: 3.5%
Performance So Far in 2012: +10%
General Electric (NYSE:GE) might forever be tarnished in the minds of some dividend investors after slashing its payout by two-thirds during the financial crisis. While the quarterly dividend remains about half of what it was — at just 17 cents vs. 31 before the market meltdown — the recent history is worth noting.
Consider that in April 2011, GE paid 14 cents each quarter. By the summer it was paying 15 cents, and by January 2012 it was up to 17 cents a quarter. Now we just received news that General Electric’s finance arm received the green light to share some of its wealth with shareholders, too. Specifically, regulators signed off on a special dividend from GE Capital along with permission for the group to resume paying regular dividends later this year.
GE admittedly has its troubles. We saw rather lackluster General Electric earnings in February, but a stronger showing in April as GE reported its fiscal first-quarter earnings. With 40% of its revenue coming from GE Aviation, it’s hard for the company to break out without big airplane orders or defense contracts.
But dividend investors should be encouraged by the GE Capital dividend news. With a current 3.5% yield, this stock is steadily climbing back into the ranks of Wall Street’s best income stocks. A nice market-beating gain since Jan. 1 also is a plus.

Top 10 Dow Dividend Stocks to Invest in 2012

#8: JPMorgan Chase

Current Dividend Yield: 3.5%
Performance So Far in 2012: +4%
JPMorgan Chase (NYSE:JPM) has been making a lot of headlines lately, and for all the wrong reasons. May’s disastrous $2 billion JPM trading loss has resulted in golden-child banker Jamie Dimon receiving a summons to Capitol Hill to take a whipping from Congress and supporters of the Volcker Rule.
But the stock still is hanging tough, boasts a great yield and is the largest American bank by assets.
On the dividend side, JPM was granted Federal Reserve permission to raise its dividend in March, even as competitors like Citigroup (NYSE:C) and Bank of America (NYSE:BAC) have failed to improve their payouts beyond a nominal penny per quarter in dividends. You can bet that Ben Bernanke and others at the Fed wouldn’t have allowed JPM to boost its payout if it wasn’t sustainable. And on the profits side, JPM still is tracking earnings growth of over 20% this fiscal year even after the trading loss.
If you’re a long-term investor, you might want to take advantage of the recent turmoil in JPMorgan Chase to get into a nice dividend stock at a decent price.

Top 10 Dow Dividend Stocks to Invest in 2012

#7: Procter & Gamble

Current Dividend Yield: 3.6%
Performance So Far in 2012: -5%
Procter & Gamble (NYSE:PG) hasn’t been very pleasing to shareholders so far in 2012. Yes, the yield is nice — but the stock has been slumping, and at the end of April, P&G earnings showed a disappointing outlook for the rest of the year.
But Procter & Gamble CEO Bob McDonald is looking overseas to prop up the balance sheet amid rising commodity costs, frugal U.S. consumers and performance that lags rivals like Colgate-Palmolive (NYSE:CL). And let’s face it: Even though the consumer products giant is slightly down, it is hardly out. P&G is going nowhere thanks to brands like Gillette, Pampers and Duracell that provide reliable revenue across rough economic times — and thus reliable dividend payments, too.
Yes, PG stock hasn’t seen much growth, and that is a concern. But you can’t get more defensive than consumer staples, so dividend investors wary of a summer downturn might want to turn to Procter & Gamble if they are planning on staying fully invested in the stock market right now.

Top 10 Dow Dividend Stocks to Invest in 2012

#6 Chevron

Current Dividend Yield: 3.6%
Performance So Far in 2012: -4%
Worried about expensive gas? Don’t be. Crude oil has rolled back slightly from its 2012 high of around $111 a barrel — into the low $80s as of this writing — and is challenging lows not seen since October of last year.
So it’s no surprise that amid weaker prices and pretty flat demand, Chevron (NYSE:CVX) hasn’t done well lately. CVX stock actually is in the red in 2012 vs. gains for the broader market. Recent oil stock earnings show that refining continues to be a bit of a drag in the short term for Chevron and other oil majors.
But on the income side, Chevron has strength that is difficult to overlook. The company has paid dividends since 1912. It has increased its payouts twice in the last year, from 72 cents quarterly in March 2011 to 78 cents in June, then up again to 81 cents as of December 2011.
And while crude oil prices have rolled back, let’s not pretend we’re going to get back to $50 per barrel anytime soon, with geopolitical unrest in the Middle East and hungry emerging markets like China and Brazil increasing energy demand at an impressive clip despite risks of a broader economic slowdown. If you’re a dividend investor looking for a low-risk stock with a reliable revenue stream that ensures juicy payouts, Chevron certainly is worth looking into.

Top 10 Dow Dividend Stocks to Invest in 2012

#5: Johnson & Johnson

Current Dividend Yield: 3.7%
Performance So Far in 2012: Flat
Johnson & Johnson (NYSE:JNJ) has hit some headwinds in recent years over quality control, calling into question how well-run the company really is. But with a new Johnson & Johnson CEO at the helm, some are hoping that change is in the wind at JNJ. Product recalls have weighed heavily on the company, and consumers and investors alike need confidence for this health care giant to once again win their support.
One thing that never has been uncertain, however, is the dividend potential of Johnson & Johnson. JNJ has raised dividends for 49 years in a row. During the past decade, the company has managed to boost distributions by more than 12% per year — all while delivering a headline yield of about 3.7% right now.
And unlike some big pharma stocks that pay nice yields, the biggest dividend driver isn’t prescription drug offerings. While JNJ does offer some vaccines and medical products, consumer health offerings like Band-Aid and Tylenol provide its steadiest revenue stream.
Revenue admittedly has been a bit stagnant at J&J during the past few years; hence, the stock has seen some underperformance. But if you believe projections, Johnson & Johnson could see a stunning 48% jump in earnings per share for fiscal 2012 compared with fiscal 2011. Time will tell if management can hit those targets. But in the meantime, the dividend is a pretty nice hedge, even if the stock moves sideways.

Top 10 Dow Dividend Stocks to Invest in 2012

#4: Pfizer

Current Dividend Yield: 3.9%
Performance So Far in 2012: +4%
Pfizer (NYSE:PFE) outperformed the market nicely in 2011 with one of the best returns in the entire Dow Jones — 23% in gains, to be precise. While performance has cooled a bit and Pfizer was sitting on a loss earlier this year, the stock has come roaring back since February as defensive investments like health care return to favor. It’s now neck-and-neck with the broader Dow Jones Industrial Average.
Yes, long-term challenges at Pfizer are the same as the risks that persist across all of Big Pharma — looming patent expirations, challenges from generic medications and the frantic race to lock up patients in emerging markets. But the goose still is laying golden eggs for shareholders in the form of 22-cent quarterly disbursements, with dividend payments dating back to 1901.
Looking forward, the company has a decent research pipeline with some up-and-coming drugs that could rotate in to prop up revenues. Most importantly for dividend investors, the company has $29 billion in cash on the books. Even if revenue hits a hiccup across 2012 — as it did in fiscal 2011 when it slid from $67.8 billion to $67.4 billion — the cash is there to preserve this juicy dividend.

Top 10 Dow Dividend Stocks to Invest in 2012

#3: Merck

Current Dividend Yield: 4.3%
Performance So Far in 2012:
+3%
Merck (NYSE:MRK) is very similar to Pfizer (NYSE:PFE) in many ways. It too faces patent expirations. It too is hoping its pipeline will step up to fill the void. And it too pays a huge dividend.
There obviously is no breakneck growth in pharmaceuticals, at least on a share appreciation basis. But the continued roll-in of the $41 billion Schering-Plough buyout from a few years ago surely will provide new opportunities for Merck. At the very least, it ensures the company won’t fade away.
And like its cohort Pfizer, MRK is sitting on a huge war chest. Some $13.5 billion in cash and $1.4 billion in short-term investments keeps this pick pretty safe when it comes to writing the checks.
Dividends have been paid at Merck since 1935, and last year the payout was increased about 10%, from 38 cents a quarter to 42 cents. You might not find massive share appreciation in this stock, but you certainly will find stability.

Top 10 Dow Dividend Stocks to Invest in 2012

#2: Verizon

Current Dividend Yield: 4.6%
Performance So Far in 2012:
+9%
Verizon (NYSE:VZ) remains the leading wireless telecom provider in the U.S. by subscriptions and gets 50% of its revenue from wireless subscribers. The company also is one of the top high-speed Internet providers in America via its FiOS fiber optic network. As the world becomes increasingly wired, it’s more important than ever for companies like Verizon to be involved with the operations of businesses and the lives of regular Americans.
This provides a very stable revenue stream that accounts for huge dividends. Like many low-risk dividend stocks, this is a double-edged sword because there might not be any huge growth opportunities for the entrenched telecom. But strong cash flow generation and the lack of any real competition from anyone other than AT&T (NYSE:T) means this telecom stock is a stalwart that’s here to stay.
The telecom giant recently made waves with a decision to kill almost all voice plans and move to a “Share Everything” data model that will allow users to get up to 10 gadgets wired — including laptops, tablets and smartphones — on the same plan. The goal is to get more folks hooked up with more gadgets and using more data (which VZ can charge more for, of course).
And if this mobile move doesn’t move the stock? Well, you could do worse than a 4.6% annual return via dividends.

Top 10 Dow Dividend Stocks to Invest in 2012

#1: AT&T

Current Dividend Yield: 5%
Performance So Far in 2012:
+18%
One of the biggest stories in 2011, as previously mentioned, was that AT&T (NYSE:T) tried to leapfrog rival Verizon (NYSE:VZ) in the wireless market via a buyout of T-Mobile. But regulators ran interference, and AT&T abandoned its bid. Don’t think that means the biggest dividend payer in the Dow Jones Industrial Average should be cut loose from your portfolio, though. With a dividend yield of about 5%, this is a heck of an income play.
The story is the same for AT&T as Verizon, where a strong balance sheet and its entrenched status are offset by the lack of growth and the highly regulated nature of the telecom sector (case in point: the squashed T-Mobile bid). AT&T delivered pretty strong first-quarter earnings, though, so it’s not like this company is completely stagnant.
Admittedly, these U.S. telecoms aren’t “growthy” and won’t deliver massive share appreciation. But if you’re looking for a big dividend payer that will keep throwing off cash for decades, AT&T might be your best bet in the whole Dow Jones Industrial Average.

5 Best Mutual Funds for the First Quarter

For the first quarter, there were certainly enough reasons to dump stocks or mutual fund investments.  Of course, the world saw revolutionary changes — with the removal of several long-time dictators in the Middle East as well as a war in Libya.  Also, there was the massive earthquake and tsunami that resulted in a nuclear crisis in Japan. 401k investors had a lot to deal with.
Other problems?  Well, oil prices surged and inflation started to perk-up.  There were even continued debt issues in places like Portugal.
But such things were not problems as the S&P saw its best gains since 1998, with a 5.4% return.  The Dow was up 6.4%.  And many mutual funds performed in kind.
And yes, equity mutual funds were a good place to put your money.  Some of the best categories included  energy (+13.34%), small growth (+9.66%), health (8.34), natural resources (+8.30%) and even European stocks (+6.98 %).
So, let’s take a look at some of the mutual funds that were the best performers of the first quarter:

Fidelity Select Energy (FSENX)

For the quarter, crude oil futures spiked 17% to over $106 per barrel. No doubt, the Middle East turmoil has been a big driver.  Consider that Libyan oil is light, sweet quality – which is tougher to refine.
A beneficiary of the price increase was the Fidelity Select Energy (MUTF: FSENX) mutual fund, which has $3 billion in assets.  No doubt, the portfolio manager, John Dowd, has a good sense for value and timing.  This was definitely the case on how he traded the shares of BP (NYSE: BP) during the Deepwater Horizon oil spill.
And as for the first quarter, Dowd had a standout performance.  His fund posted a sizzling gain of 18.80%.

Oppenheimer Discovery (OPOCX)

As investors warm-up to risks, they are putting more money into small cap companies.  After all, as the economy rebounds, they should be winners.
One of the quarter’s top small cap funds was Oppenheimer Discovery (MUTF: OPOCX).  The mutual fund manager, Ron Zibelli, looks for growth opportunities but tries to minimize the risks.  This includes investing in various industries as well as keeping a focus on lower valuations.  The top market segments include industrials (17.02%), technology (31.49%), healthcare (14.40%) and consumer cyclicals (18.49%).
The performance for the first quarter?  It was a hefty 15.32%.

T. Rowe Price Health Sciences (PRHSX)

Over the past couple years, healthcare stocks have been laggards.  But with attractive valuations – as well as less concern about Obama-care – investors have been putting more money into the sector.
For example, the T. Rowe Price Health Sciences (MUTF: PRHSX) fund posted a 13.64% return in the quarter.  Interestingly enough, the focus is mostly on smaller companies.  The fact is that mega pharma companies are facing tough problems with patent expirations and a thin pipeline of new drugs.
The top five holdings of the T. Rowe Price fund are:  Alexion Pharmaceuticals (NASDAQ: ALXN), Gilead Sciences (NASDAQ: GILD), Merck (NYSE: MRK), Celgene (NASDAQ: CELG) and Incyte (NASDAQ: INCY).

Ivy Global Natural Resources (IGNAX)

There seems to be no end to the commodities boom.  Then again, there continues to be heavy demand from emerging economies like China and India.
A strong performer for the quarter is the Ivy Global Natural Resources (MUTF: IGNAX) fund, which has $7.1 billion in assets.  The fund posted a 12.77% return.
In light of the growth in natural resources, it is not easy to find cheap companies.  But Ivy Global’s portfolio manager, Fred Sturm, has been able to uncover good values.  He also understands market cycles.  Keep in mind that Sturm has managed the Ivy Global fund since 1997.

ING Euro STOXX 50 Index (IDJAX)

It seems that most of the news that comes from Europe is bad.  There is even talk that the euro will eventually go away.
Despite all this, that there are still many opportunities.  Just look at the ING Euro STOXX 50 Index (MUTF: IDJAX).  In the quarter, the fund increased by 12.77%.
The fund is based on the Dow Jones Euro STOXX 50 Index and has a reasonable expense ratio of 0.90%.  Top holdings include Total (NYSE: TOT), Siemens (NYSE: SI), Telefonica (NYSE: TEF), Banco Santander (NYSE: STD) and BASF (PINK: BASFY).

How to Find a Stock's Value Using the Dividend Discount Model: Introduction

One of the most elusive questions in investing is, "What is the right price for this stock?"
There are a number of ways to calculate a stock's value, but one of the most elegant and relatively simple ways continues to be via the dividend discount model (DDM). By using the DDM, individual investors can estimate the price they should be willing to pay for a stock or determine whether a given stock is undervalued or overvalued.
The dividend discount model starts with the premise that that a stock's price should be equal to the sum of its current and future cash flows, after taking the "time value of money" into account.
Now, there are two different concepts in that sentence, and both of them are vital to your understanding of investing. Let's walk through each one, and then discuss how they are joined together in the DDM.
Estimating Current & Future Cash Flows
The cleanest and most clear-cut measure of cash flow is the dividend. Hopefully this makes sense to you, but if it doesn't, consider that the dividend is the mechanism companies use to pay their investors. People invest in companies with the intention of getting their money back and then some. Dividends are one of the main ways companies return money to investors. Dividends are paid out in cash, and therefore are the most straightforward estimate of the future cash you can expect to receive.
Even if a company does not pay a dividend right now, the price of its stock is calculated under the assumption that at some point in time the company will begin paying one. If there is no hope of ever getting money back, investors would have no reason to buy a stock. It would be worth nothing.
The Time Value of Money
Investing is a method of saving. Because you have extra money left over after paying your expenses, you can set it aside for future use. The whole point of investing is to turn a sum of today's money into a larger sum in the future.
Understanding the time value of money is of utmost importance to investing. Time value of money is a series of concepts that allows you to compare different options: Is it better to receive $24,000 today or $25,000 one year from today? If you understand the concept of present value, you can easily perform a calculation and come up with the right decision.
The time value of money is directly relevant to the dividend discount model because the DDM's main objective is to put future cash flows into today's dollars. To do so, we'll use present value calculations.
Using the DDM Formula
Now let's get to the DDM formula itself. The dividend discount model is based on a basic valuation model that is the foundation for many other investing techniques. This basic valuation principle, used far and wide, combines expected future cash flows and the time value of money into one easy-to-use formula:
Stock Price = the Sum of the Present Value of All Future Dividends
Or, more precisely,
Price = ∑ (Dt / (1 + r)t)
where,
t = period
Dt = dividend during period t
r = required rate of return on the stock
If you don't understand the concept right now, it should get easier after looking at a couple of examples.
Buy-and-Hold
Let's look at the stock of hypothetical Company ABC.  Stock ABC pays a $3 annual dividend. We decide that we must make 5% annually on this investment for it to be worth our while (this is known as the required rate of return, also known as the discount rate, or "r" in this tutorial).  We're also planning on holding the stock for the very long term.
Luckily, when we talk about an infinite holding period and a constant dividend, the DDM simplifies to this formula:
Stock Price = D / r
So to calculate the price of Stock ABC, we plug in the numbers to get:
Stock Price = $3 / (0.05) = $60
This formula tells you that if you buy at $60, the $3 annual dividend will ensure you receive a 5% return on your investment. If Stock ABC is trading below $60 right now, it's a buy. If it's trading above $60, we should wait for the price to come down.Note that this model could be used for any asset that throws off a constant stream of cash flow. For example, assume you've found a commercial property, and the tenants just signed a lease to pay $100,000 per year for an unlimited term. If you want to make a 5% return on your investment, then the property is worth $100,000 / 0.05 = $2,000,000.
Calculating the value of a stock using the dividend discount model is easy if we assume the dividend will never change and we'll hold the stock forever. But in the real world, most investors expect companies to grow dividends. So let's look at another example.
Factoring in Dividend Growth
So what happens if Stock ABC has potential to grow its dividend? This isn't an unreasonable assumption at all. As long as a company can grow its earnings, it should be able to grow its dividend. Let's assume we think Company ABC can grow its dividend by 2% every year.
Adding this growth assumption gives us the "reduced form DDM" with the following formula:
Stock Price = D1 / (r - g)
where,
D1 = the dividend at year 1
g = the dividend growth rate
To calculate the dividend at year 1, all we need to do is multiply the current dividend ($3) by the dividend growth rate (2%): D1 = $3 x (1 + 0.02) = $3.06. Now we can plug it into the formula with the rest of our assumptions:
Stock Price = $3.06 / (0.05 - 0.02) = $102
Note how much more valuable Stock ABC comes if it is able to realistically grow dividends by 2% per year ($102 vs. $60).
The calculation gets more and more complicated as you add other assumptions. For example, what if you only want to hold the stock for 1 year, 5 years or 10 years? What if the dividend growth rate is expected to change over time? What if the company doesn't pay a dividend yet? These more advanced scenarios will be addressed in future tutorials.
For now, let's look at the pros and cons of the DDM to get even more insight into how and why the model is used.
Model Advantages and Disadvantages
The main advantage of the dividend discount model is that it is relatively easy to use. There are only a few calculations involved. This model is a good starting point for valuing stocks, since it connects dividend payments and dividend growth to the stock price.
The dividend discount model works best for companies that are experiencing stable growth. There is a version of the model that can be used for companies transitioning from rapid growth to more moderate growth, but the calculations are much more complicated.
There are also some drawbacks to using the dividend discount model. A major shortcoming of the model is that it works best for a stock that already pays dividends. But almost two-thirds of publicly traded companies don't pay a dividend. Instead, these companies retain all of their earnings so they can grow. You can use the DDM for non-dividend paying companies, but you need to make some pretty tenuous assumptions about when they will start paying a dividend and how much they'll pay.
Another flaw of the dividend discount model (and any model, for that matter) is that it requires numerous assumptions to be made. Investors must guess a company's growth rate as well as the required rate of return. The model is only as good as its inputs. Even a slight miscalculation in any of these inputs can result in dramatically overvaluing or undervaluing a stock.
An odd weakness of the model is that it cannot value a company if that company is growing its dividend faster than the required rate of return. If the dividend is growing faster, the denominator in the dividend discount model becomes a negative value.  For example, suppose Stock A pays a $3 dividend, has a 15% growth rate and has a required rate of return of only 10%. According to the dividend discount formula, the value of Stock A = ($3 x 1.15) /(0.10-0.15) = -$69.  That's not terribly useful.
Despite these flaws, the dividend discount model remains a worthwhile analytical tool. It's simple to use and the model's basic premise -- that the value of a stock is equal to the sum of current and future dividend payments -- is sound. The dividend discount model is a good starting point for valuing a stock since the model encourages investors to think about the relationship between risk, returns and growth.

5 Top Bond Funds & ETF Bond Investments in 2013

Investing in bond funds is usually not exciting.  But then again, in today’s volatile world, investment in a bond ETF with reliable returns can be a comfort.
Bond investment can be a excellent way to stabilize your portfolio. Bond funds and ETFs during the 2008 financial crisis performed well.  Keep in mind that during that tough year the Barclays Capital U.S. Aggregate Bond Index returned 5.24% to investors.  During this time, the S&P 500 fell a staggering 37%.
However, the bond market has many flavors – and also risk levels.  So here’s a look at some of the top:

Vanguard GNMA Bond Fund

The word “mortgage” can be scary to many investors.  But the fact is that a mortgage can be good a investment – especially if the mortgage bond funds focus on good credit quality.
This is certainly the case with the Vanguard GNMA (MUTF: VFIIX) bond funds, which has $35.3 billion in assets.  Much of the portfolio is in Ginnie Maes.  And yes, these are backed by the U.S. government.  There are also investments in Treasuries as well as positions in some Fannie Mae and Freddie Mac issues.
But there are still some risks.  Perhaps the most significant is prepayments from the mortgages.  This generally happens when rates fall.  In other words, there will be a lower return on the portfolio.
The good news is that the Vanguard GNMA has been skillful in dealing with prepayment risk.  At the same time, the fund’s low expense ratio – at 0.23% — gives returns a boost for this bond investment.

PIMCO Real Return (PRTNX)

A terrible enemy of bonds is inflation.  Because bonds, bond funds and bond ETF investments generally provide a fixed amount of income, there will be less purchasing power from these cash flows when the value of the dollar falls.  In light of the budget deficits and commodity surges, it is reasonable that there will be higher inflation over the long haul.
But there are various bond investments that adjust their value for inflation, such as Treasury Inflation Protected Securities.  And one of the top mutual funds in the sector is the PIMCO Real Return (MUTF: PRTNX) fund, which has $18.9 billion in assets.
Interestingly enough, the fund has much flexibility.  For example, it will use exotic investments like futures and forward contracts.  There are even positions in other countries, with a big position in Brazil.
More about the best and top stocks in

Best Vanguard Mutual Funds for Your 401k

When it comes to 401k investing, investors have a lot of options for retirement. But with 20 new funds on the table in 2010 (most have already launched, but a few have been temporarily delayed), free trading in Vanguard ETFs, and drastically reduced minimums for its lower-cost Admiral shares, Vanguard’s in the business to win over investors. And they’re going to keep picking off the competition, one-by-one, using their heft and low costs.
Yet, while all this will help Vanguard gather assets and reduce costs for you and me, the longer the list of funds gets, the more confusing it can be to pick the winners from the losers.
To make matters worse, the major drawback of investing for retirement in a 401(k) is that your options are limited to the funds your plan administrators make available. Typically, they choose middle-of-the-road funds deemed safe enough to keep employees from losing their shirts — and the administrators from losing their jobs.
  • Related Article: 7 deadly sins of 401k investing
So unless you use your 401k plan’s brokerage option, you aren’t likely to be able to invest in any Vanguard fund you like (and even the brokerage service may not have access to all Vanguard funds). In the case of Vanguard Precious Metals & Mining Fund (VGPMX), that’s a good thing. The fund is incredibly volatile, with a maximum cumulative loss of 69.8% in the most recent bear market versus 50.9% for Vanguard Total Stock Market (VTSMX) and 51.0% for Vanguard 500 Index (VFINX). So much for gold funds being a safe haven.
On the other hand, you also aren’t likely to have access to some funds that you probably should have an allocation to, such as the Vanguard Emerging Markets Index Fund (VEIEX), which I highly recommend for 401(k) investors (not for all of your money, of course, but a 5% portion).
In fact, I believe that as the global economy continues healing, having an allocation to emerging markets will become a virtual requirement for investors with long-range objectives, like retirement. That’s why I’d suggest you ask your plan administrator to add this fund to the mix of choices your company includes in its 401k plan. (I’m also doubtful your 401(k) gives you access to Vanguard’s terrific Health Care fund, which in itself offers access to the growing demand for medical products and services in the emerging world.)
Here are several other Vanguard funds I’d like to see in your 401k portfolio. Use them if they’re available to you. But if they’re not, try requesting them. You might need to enlist your colleagues to convince your benefits department to add them. But remember, it’s your retirement that’s at stake. Your 401k plan should be serving you, not covering them.
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PRIMECAP is #1

As a retirement savings vehicle, a 401(k) is inherently geared toward the long term. But when planning for retirement, you don’t just want to save your money, you want it to grow. Consider that even at a retirement age of 60 to 65, you could live another 30 years or more. Invest too conservatively, and you could outlive your money. To prevent this, my first choice for your 401(k) is a trio of Vanguard funds run by the redoubtable team at PRIMECAP Management: PRIMECAP (VPMCX), PRIMECAP Core (VPCCX) and Capital Opportunity (VHCOX).
Unfortunately, there’s a hitch: All three funds are now closed to new investors outside of established 401(k) plans. However, they may be available to you. If so, consider yourself lucky, and don’t hesitate to give a big slug of money to this group of managers who take a value-oriented eye to buying growth stocks. Their funds are the largest single component of my retirement and nonretirement accounts, as well as those of my wife and kids.

Balancing risk and return since 1929

If the PRIMECAP funds are closed to you, Vanguard Wellington (VWELX) is an excellent choice for the core around which you build the rest of your 401(k) portfolio. Since its inception in July 1929, it has held out the promise of strong relative returns in good and bad markets by focusing on one very important investment discipline: Diversification.
As a balanced fund, approximately 60% to 70% of Wellington’s assets are in high-quality blue-chip stocks, and 30% to 40% are in top-notch investment-grade government and corporate bonds. You can easily get the entire bond exposure you need in your 401(k) portfolio from this fund. The fund also has the flexibility to invest as much as 20% of its equity assets in foreign securities, an important part of a diversified portfolio.
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What I like most about Wellington is its excellent management team. Wellington manager Ed Bousa took the lead management position at Wellington in 2003 with nary a change in the fund’s strong and consistent gait, and very minor changes in the portfolio, which is precisely what I had expected, as he had worked with former manager Ernst Von Metzsch for so long.
Bonus: By investing through your 401(k), you can avoid the hefty $10,000 minimum initial investment required to get into Wellington on your own. If you decide to follow this strategy, I’d suggest putting about 40% of your money in Wellington.
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Growthing Small Caps Stocks For 2012

Early-stage companies spend many years planning for the day when everything clicks. For a number of them, 2012 could be the year when all their hard work pays off. So I decided to look at companies set to see sales rise more than 200% next year.
Most of the companies in the table below each already sport market values of more than $400 million, so they're no mere wallflowers. Clearly, they already hold great promise for some investors. If they can actually deliver on the strong growth expected of them, shares may surge.

Stay away from these stocks...
Of course, you should take some of these forecasts with a grain of salt. Alimera Sciences (Nasdaq: ALIM) has a promising device (an insertable tube that delivers steroids directly into the eye for those suffering from diabetes-related blindness), but the Food and Drug Administration (FDA) has been dragging its feet on approval.

Some think the company's product, Illuvien, may never get the green light and those lofty sales forecasts will never come to fruition. Still others think Illuvien will be approved and see annual sales approach $300 million in coming years. If that happens, shares would likely double or triple from today's levels.
Growthing Small Caps Stocks For 2012: Tesla Motors (Nasdaq: TSLA)
In a similar vein, Tesla Motors (Nasdaq: TSLA) will have to sell a lot of cars in 2012 to meet expectations of scorching sales growth. Yet competition in the electric car market is getting awfully crowded. Privately-held Fisker Automotive is aiming directly for Tesla at the high end of the market with a new model to be released this month, and firms such as Porsche, BMW and Mercedes-Benz are ramping up electric offerings in coming years as well. I'm in the camp that feels Tesla will be unable to sell enough cars to become profitable.
And legal wrangling may impede sales growth in 2011 for SIGA Technologies (Nasdaq: SIGA), which as I recently noted, may be forced to share a large government contract with Pharmathene (NYSE: PIP).
Consider these stocks instead...
Yet a pair of companies in the health field clearly have the makings of robust growth in 2012 -- and beyond.
Little-known Pacific Biosciences (Nasdaq: PACB) has developed a technology platform that can rapidly sequence strands of DNA at a lower cost than rivals. That was the promise held by rival Illumina (Nasdaq: ILMN), which is now worth more than $8 billion, more than eight times the value placed on Pacific Biosciences. To be sure, Illumina spent the first half of the past decade falling short of sales forecasts before sales finally took off in recent years. So there's still a chance Pacific Biosciences struggles to meet aggressive growth expectations in the near-term.
Pacific Biosciences has secured pre-orders for $24 million worth of equipment and has a decent shot of hitting 2011 sales forecasts of $38 million. But to meet the 2012 sales forecast of $139 million, the sales force needs to start moving at a more rapid clip. Longer-term, annual sales could exceed $500 million (rival Illumina had $666 million in sales last year), at which point, per-share profits could exceed $3 or $4 and shares would be twice as high as they are now. When that happens, though, is an open question.
Growthing Small Caps Stocks For 2012: Savient Pharma (Nasdaq: SVNT)
In a similar vein, Savient Pharma (Nasdaq: SVNT) may be looking at a very large market opportunity with its gout drug, Krystexxa, which helps alleviate gout-related pain and inflammation in patients who don't respond to other forms of treatment. Savient would have preferred to be acquired. When the company announced in late October that no takers were found, shares quickly plunged from $21 to $12 and now sit around $10.
Yet it's too soon to write Savient off. The company's team of 60 sales people just started selling Krystexxa at the end of February, and investors will start to more clearly see the drug's demand in coming quarters.
The real promise for Savient lays in the nature of gout. Cases of the arthritic condition have been rising quickly, particularly among U.S. males, likely due to a corresponding increase in the current spikes in diabetes and obesity in America. Once a patient starts suffering from gout, the disease can wield painful, but short-lived episodes. However, gout attacks have a tendency to become more frequent and painful with time and it is considered to be an irreversible condition once it reaches later stages.
Savient's Krystexxa has proven more effective in treating extreme gout pain than any other drug on the market, leading analysts at Global Hunter Securities to predict annual sales may eventually exceed $500 million. (As a note of caution, there are other promising gout treatments undergoing clinical testing, and if they reach the market, Krystexxa's potential opportunity would shrink.)
Savient is unlikely to be profitable before 2013, so patience will be required. Then again, the company still may end up in the hands of a suitor long before then and deliver big share price gains in the process.

Best Nu Stock Quote 2012

Best Nu Stock Quote 2012: AgFeed Industries (FEED)

By Ian Wyatt

"With the worlds largest and a quickly growing population of 1.3 billion people, China has many mouths to feed," observes small cap specialist Ian Wyatt. In his Small Cap Investor Pro, he explains, "One of my favorite China small cap stocks is AgFeed Industries Inc. (NASDAQ: FEED), a hog feed and breeding company.

"I’ve been bullish on China for several years, but my recent 3-week trip confirmed my bright outlook for this emerging market. The best news for investors is that just like the rapid growth Chinese economy, many China stocks are profitable and expanding, yet their shares are trading at very attractive valuations.

"AgFeed Industries sells products to distributors and large-scale pig farms. Pork is a big business in China, and the country is the largest consumer of pork in the world.
"In China it is estimated that nearly half of consumer spending goes towards food, and pork is an essential component of the Chinese diet and accounts for over 60% of total meat consumed. My first-hand experience is that pork is far and away the most popular meat in China.

"China discourages pork imports, so suppliers operating within the country need to meet almost all of the nation's pork demand. The country produced 625 million hogs in 2008, almost 50% of the total worldwide production and five-times the number produced in the U.S.

"The challenge for Chinese producers is that undersized backyard farms still account for over 70% of production, and the country has yet to industrialize the farming industry.
"However, the government is encouraging sustainable farming with the goal of increasing food production, and this is a mandate that should bode well for agricultural stocks.

"AgFeed Industries has made two strategic agreements this year that will boost production and expand margins.

"The company recently signed a joint venture with M2P2, a production and management consulting firm. This venture will modernize AgFeed Industries' production facilities and enhance total production capability.

"The company also formed a partnership with Hypor, a genetics development company which will increase the quality of the hogs.  "Both partnerships combined may boost total output by 30%, while improving the product quality. The end result for AgFeed will be a higher market price and contribute to margin expansion in 2012 and beyond.

"During the first nine months of this year, AgFeed Industries grew revenues by 20% to $117 million from $97.2 in the first nine months of last year.

"Margins have decreased this year as hog prices cannot keep up with the rise in feed price. As a result, profit margins declined to 15.8% from 27% in the first three quarters of fiscal 2012. Naturally, earnings have also come down from last year's record levels, with EPS of $0.18 versus $0.42 in the same period last year.

"But investors should view these results as a short-term bump in the road on a long- term growth opportunity. AgFeed shares have fallen 45% since their 52-week high back in June, a reflection of the poorer than expected financial results.

"This minor set back should not concern long-term investors in AgFeed. Despite the fall in hog prices earlier this year, the company was still able to bring in $1.9 million in operating cash flow. AgFeed is also sitting on over $36 million in cash, and has minimal debt obligations.

"I expect EPS of $0.31 for this year and $0.70 in 2012. Shares of AgFeed are currently trading 14.5-times my 2012 EPS estimate. And looking forward to 2012, shares are valued at just 6-times my earnings estimates.

"For a company with expanding sales and future upside from expanding profit margins, I see significant upside for AgFeed shares which I believe should trade at a P/E of 15.5-times 2012 EPS.

"My AgFeed share price target of $10.50 represents a 138% increase from the late December share price, and provides investors in this stock with lots of upside."


Best Nu Stock Quote 2012: China Mobile (CHL)


Validea is an intriguing advisory that bases its stock selections on the known investment criteria of legendary stock market investors.

John Reese explains, "China Mobile Ltd. (NYSE: CHL) is one of the rare stocks to get approval from three of tour Guru Strategy computer models; it earns top marks from my Warren Bu?ett-, Peter Lynch-, and James O'Shaughnessy-based models.

"With the Western world still working its way through the aftermath of the credit crisis, a number of top strategists are looking eastward for growth in 2012.

"Byron Biggs, Anthony Bolton, Jim Rogers -- these are just some of the market gurus who have been keying in on China, where one of the world's greatest exporting nations is now poised for some major domestic growth as well.

"I also see a lot of opportunities in China, and Hong Kong-based China Mobile may be the greatest. The country's largest mobile phone network, it topped the 500-million- subscriber mark in the third quarter.

"The Bu?ett approach looks for firms with lengthy histories of earnings growth and conservative financing, and China Mobile delivers.

"It has upped earnings per share in each year of the past decade (and is on track to do so again in 2012), and its debt of $1.45 billion is less than a tenth of its annual earnings ($16.6 billion).

"The company also has averaged a 23.1% return on equity over the past ten years, a sign of both the strong management and durable competitive advantage Bu?ett is known to look for.

"The Lynch model, meanwhile, considers China Mobile a 'fast-grower' -- Lynch's favorite type of investment -- because of its 24.4% long-term EPS growth rate. (I use an average of the three-, four-, and five-year EPS growth figures to determine a long-term rate.)

" Lynch is famous for using the P/E/Growth ratio to identify growth stocks selling on the cheap, and the model I base on his writings considers P/E/Gs below 1.0 acceptable, and those below 0.5 the best case.

"When we divide China Mobile's 11.3 P/E ratio by its growth rate, we get a P/E/G of just 0.46, a great sign. Lynch also liked conservatively financed firms, and China Mobile's tiny 2.3% debt/equity ratio easily passes muster with my Lynch-based strategy.

"Finally, the model I base on James O'Shaughnessy's value stock approach targets large firms with strong cash flows and high yields.

"China Mobile's $185 billion market cap, $6.97 in cash flow per share (vs. the market average of just $0.49), and 3.8% dividend yield are all good enough to earn this model's approval. Disclosure: I'm long CHL and own the stock in the portfolios o?ered by my advisory firm, Validea Capital Management."



Best Nu Stock Quote 2012: China Tel (CHTL)


Growth stock specialist Toby Smith turns to a speculative micro-cap stock for his top pick for 2012:ChinaTel Group, Inc. (Other OTC: CHTL).

With the added disclosue that he personally own shares in CHTL, along with his clients at ChangeWave Research, the advisor looks to the firm's potential role in a new joint venture in the China telecom space.

"Our bullishness is based on a pending China Tel and Chinacomm joint venture as a 'basic telephone service' (BTS) licensed carrier in China. The other BTS carriers are all large companies with $10 billion+ market caps, such as China Mobile, China Netcom and China Unicom. Today's market cap for China Tel is $130 million.

"The Chinacomm/ChinaTel joint venture owns 37,000 kilometers of fiber-optic network and 3.5Ghz spectrum for wireless broadband in 29 of the biggest China cities. That infrastructure alone has a book value of over $1 billion.

"ChinaTel has su?ered a great credibility problem on the Street due to a set of failed capital raising deals that failed to close.

"But the delays in their closing equity financing over the last 18 months has turned out to be a blessing in disguise, as the potential valuation for the China Wi-Max network has at least doubled since the previous failed deal.

"We have advised clients to be positioned in China Tel now, ahead of what we consider to be imminent PIPE  (private investment in public equity) deal, which CHTL announced in their latest SEC 8K. The size of the PIPE will undoubtedly be larger and at higher value than the failed $3.14 per share Olotoa deal.

"CHTL's announcements in the last few weeks on $500M+ of new private network business alone from the People's Republic of China ministries adds $1 a share (or more) to the $3.20 book value that Olotoa was paying for 49% of CHTL.

"In addition, CHTL just closed stock-only consulting contracts with their key employees on Dec 1. Nobody takes a stock deal in lieu of cash unless they know a lot about the near future of the PIPE transaction.

"Based on our analysis, the PIPE deal o?ers disclosed in Oct 8K are from Asian telco/ high tech firms itching to capitalize on the China Internet miracle - -they are the only market other than India with less than 40% wirless/fixed broadband penetration.

"We believe ChangeWave Research is the only independent research firm following China Tel Group; we rate the stock a 'strong buy' with a $5 a share target for 2012 and a $9-$10 target for 2012."


Best Nu Stock Quote 2012: Canadian Oil Sands Trust

by David Dittman, contributing editor Canadian Edge

Canadian Oil Sands Trust (COSWF) has clearly lagged broad-based and energy-sector benchmarks alike over the trailing 12 months. A series of unplanned turnarounds at the Syncrude operation, of which Canadian Oil Sands owns 36.7 percent, have analysts questioning whether rising costs will ever allow Canadian Oil Sands to really benefit from elevated oil prices.

And the very skeptical wonder if actual output will ever match Syncrude's capacity potential. All in all, after years of hype and outperformance the bar is now set rather low for Canadian Oil Sands. The stock is likely to revert back to its usual pattern of trading in sympathy with crude oil prices, a relationship that did break down in 2010.

New demand from Asia, old demand in the developed world and a desire from investor for hard assets will keep the per barrel price of oil elevated over the next 12 months.

Canadian Oil Sands will restrain the excruciating growth of unplanned turnaround costs, and Syncrude will get on the path to realizing its potential.

At the new rate of CAD0.20 per share per quarter, the stock will yield about 3 percent. The stock has taken a hit in the second half of 2010, and management has shown it will boost the payout to re?ect upside oil-price surprises. Soon-to-convert Canadian Oil Sands Trust is a solid total return play on one of the world's most intriguing resource stories, set up for capital appreciation as well as dividend growth. Buy it up to $28.


Best Nu Stock Quote 2012: Catlin Group

by Vivian Lewis, editor Global Investing

Insurers benefit when things go wrong. That explains our latest pick, Catlin Group (CNGRY). Incorporated and regulated in Bermuda, listed primarily in London as CGL, the stock's ADR is equal to two British shares.

It is the largest syndicator at Lloyd's of London, the reinsurance business. It's also a favorite holding of institutional investors.

It very conservatively invests its premiums, in cash and fixed income with only 2.5% in hedge funds, yet it managed to produce a return on equity of 1.8% in H1 and of 2.9% in 2009 and Q3.

It keeps raising its dividend, more steadily if you buy in sterling than the ADR. Given its current yield of 6% I'm satisfied with the payout but Citigroup analysts say it will go to 7.7%..

It's a family businees, under CEO Steve Catlin, established as a Lloyd's underwriter in 1984.

It's green, funding the Catlin Arctic Survey to measures the thickness and density of ice foes in the Arctic Sea and carbon dioxide absorption (ocean acidification). Nice but not why to buy.

Rather, you should buy because Catlin is a globally diversified insurance business operating 88-89% in US dollars. It is quick to develop new businesses to benefit from macro-economic trends.

It shifted its casualty lines from insuring British solicitors and surveyors, to hot button more profitable US insurance lines: medical malpractice; directors and o#cers (D&O) insurance; cover for architects, engineers, and construction and design professions; and environment risk.

Catlin justifies these new lines (priced by its experienced actuaries) as "short tail" controlled latent risk cover for underserved niches.

Longer-tail risk is very selectively underwritten by Catlin based on claims made. (Tails refer to the extremes of a normal curve, the unexpected events. Longer-tails mean unexpected payouts.)

"Crysalis" is innovative oil production insurance, launched in Feb for oil and gas drillers. New business is booming post-Gulf of Mexico, and not just from US drillers.

BP's disaster explains the rush for Crysalis cover. BP had a Bermuda "captive" (self-financed) insurance firm.

What it will be able to collect for its captive, say industry sources, is $1.5-3.5 bn. Against this, the economic loss from the Gulf disaster is $40 bn. And since the Macondo sank, BP shareholders losses from the stock's drop topped $73 bn, a compelling argument for buying insurance. Crysalis standard contracts cap the amount of cover per event at $200 mn, and per company at $100 mn, shortening the tail.

Not everything went Catlin's way. Its first half earnings were nipped 8% from prior year by Chilean earthquake claims and the Gulf of Mexico. However, we had a benign hurricane season.

And for all the dollar's appeal, getting a decent investment return is not easy in the present QE2 environment.

If in?ation takes o", claims will be higher and coverage from investment income lower. But then Catlin can raise its premiums. And it may have shifted the policies it o"ers into another currency.

Citi expects the total payout next year for this "undervalued" (rated low risk, high return) share to come to 23.4% in sterling, and 16.6% in dollars at its target price of $12.80. Citi's 2010 profit forecast is $369 million, vs $243.8 million in 2009 and $384.9 million in 2008. (Per share, the hit was even greater in 2009 because Catlin did a rights o"ering to invest more during the crisis.).

Its Sept. quarter saw Catlin premium income up 9% and earned income up 13%. Market cap is $1.982 billion, with the ADR stock at $11.50. It has an A.M. Best A rating from the insurance watchdog.

Its combined ratio, a key metric, is 97% -- meaning expenses are 97% of premium income so underwriting was 3% to the good before any investment income. Buy CNGRY.



Best Nu Stock Quote 2012: Eldorado Gold (EGO)


"While my primary focus is on the international financial markets, it’s the glint of gold that has caught my eye for 2012," says Martin Hutchison.

The contributing editor to both Money Map Report and Money Morning, explains, "Gold – or mining companies like Eldorado Gold (NYSE: EGO) – an especially compelling investment for 2012.

"There hasn’t really been a commodity bubble like the current one since the late 1970s. It will end, as these things always do – but only when the world’s central banks decisively tighten monetary policy and turn o? the spigots flooding the system with cash.

"That’s unlikely to happen until consumer inflation has shown itself rising sharply. In relative terms, gold’s price is still far below its all-time highs – the 1980 top at $875 per ounce is equivalent to $2,400 today, roughly double the current price.

"Supply is also becoming an ever-larger factor – the total global supply of new gold in 2012 was valued at under $90 billion, with another $35 billion or so available from recycling.

"That first number is unlikely to change as mining output has been declining by about 1% per annum in volume terms, in spite of the recent surge in gold’s price.

"This means that if the big boys – such as the hedge funds (global assets of $1.9 trillion) or China (o?cial reserves of $2.3 trillion) – get involved, demand is likely to quickly exceed supply by a huge margin.

"Even though all the gold ever mined is still with us, it has a value of only about $5 trillion – a lot of money, but not huge in light of global investment flows.

"So, if the money really pours into gold, the price could again take o?. After all, $2,400 an ounce is still some distance away, and there’s a lot more speculative capital around today than there was in 1980.

"There’s no money tightening in the works currently. The Fed has kept monetary policy extremely loose for a year now, and has said it has no intention of raising rates in the near term.

"The European Central Bank, the Bank of Japan and the Bank of England have also indicated they do not intend to tighten, while China’s M2 money supply has risen by 29% in the past year.

"Given all this money supply sloshing around, it’s not surprising that gold prices have zoomed upwards – and will continue doing so as long as the Fed and its central bank brothers maintain a loose-money policy.

Rather than gold itself, I’d recommend gold mining shares – first choice, Eldorado Gold – for two reasons:

1    * First, there’s the leverage. A gold mining company with extraction costs of $600 per ounce doubles its profits when gold goes from $900 to $1200.

2    * Second, commodity speculation pushes up share valuations, so chances are you’ll make even more money. After all, the earnings growth rate becomes pretty spectacular, which can make a very simple company look like a Google!

"As a bonus, Eldorado is not just in gold, it’s in Chinese gold – both internally and through a takeover it recently executed.

"That means it benefits not only from any rise in gold prices, but directly from increases in Chinese wealth. Chinese investors, when they buy gold, will naturally turn first to domestic output.

"Eldorado plans to double current production by 2013 (even without its recent acquisition) – no decline here. What’s more, it’s reasonably valued – actually quite cheap – considering its earnings potential.

"The company was founded in 1992, and has come a long way in a relatively short time, building to a recent market capitalization of $5.15 billion.

"It owns the Kisladeg gold mine in Turkey, which produced 58,000 ounces of gold in the third quarter of 2012, and the Tanjanishan gold mine in western China, which produced 31,000 ounces.

"In addition, its Efemcukuru project, with projected reserves of 1.7 million ounces of gold in Turkey, is expected to begin production in the fourth quarter of 2012.

"Eldorado also has gold-development projects in Greece and Brazil and an iron-ore project in Brazil. Its current gold reserves, proved and probable, total 7.6 million ounces.

"In September 2012, Eldorado made an agreed-share-exchange o?er for Sino Gold, the largest international gold mine in China. The o?er values Sino Gold at approximately $2.2 billion and will give Sino shareholders approximately 25% of the combined group.

"Sino has two operating mines in China – Jinfeng, the country’s second-largest mine with production of 151,000 ounces, and the White Mountain Gold Mine, which began production in January 2012. The Eastern Dragon project in Heilongjiang province will become Sino’s third mine.

"The combined companies will have gold reserves of 12.7 million ounces, with annual production expected to reach 850,000 ounces in 2012. In the third quarter, Eldorado earned $30.2 million, or 8 cents a share – up from 5 cents a share in the third quarter of 2008.

"That’s at an average gold price received of $957 per ounce, compared with a total production cost, including overhead, of $430 per ounce. Based on third-quarter earnings, EGO has a P/E ratio of about 35 times – steep, but not excessive given the growth potential.

"That should become obvious in the year-end figures, which will show the rise in gold prices we saw in recent months dropping straight to Eldorado’s bottom line.

"Just estimating, if the gold price for the fourth quarter averages $1,100 an ounce, that will send an extra $150 per ounce or so in profits to shareholders, adding about 35% to EPS and reducing the P/E correspondingly.

"Yes, labor and energy costs could rise a bit, but not much – Eldorado’s costs were only $402 per ounce in the third quarter of 2008, when oil was at $147 a barrel.

"Bottom line: Increasing gold production – check. Contained costs – check. In the middle of the world’s fast-growing Chinese gold market – check.  Decent balance sheet and profitability – check. What’s not to like?"


Best Nu Stock Quote 2012: 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 Nu Stock Quote 2012: Hard Asset Producers (HAP)


"Whenever inflation heats up, there's no better place to park your cash than in tangible commodities," says Nathan Slaughter.

his The ETF Authority, he noes "Our favorite play on this sector is Market Vectors Hard Asset Producers (NYSE: HAP), an ETF whose 300-stock portfolio provides one-stop shopping for six distinct commodity sub- sectors.

"History has shown conclusively that there is one asset class that thrives above all others under these hostile conditions: commodities. A depreciating dollar is a sure-fire recipe for rising commodity prices. And when inflation is on the rampage, investors always like the reassurance of owning hard assets.

" Instead of watching prices for things like steel and gasoline rise all around you, why not convert your dollars into these commodities directly and enjoy the ride?

"Even if the Fed does manage to keep inflation in check, we believe that good old supply-and-demand fundamentals favor rising prices anyway.

"With the global economy getting back on track and emerging powers like China swallowing mountains of raw materials, the short-circuited commodities rally will have juice once again.

"Investors have a dizzying array of options here, but our favorite is Market Vectors Hard Assets. The fund is invested in six commodity sub-sectors.with top billing going to the energy sector, where integrated oil & gas giants, o?shore drillers and equipment/service providers soak up about 40% of the fund's assets.

"Elsewhere, shareholders will have a large stake in agricultural firms, ample exposure to gold and silver producers, along with aluminum, nickel, iron ore and other critical industrial metals. Rounding out the portfolio are holdings linked to coal, steel, uranium and even forest products.

"Whether it's to protect purchasing power against the ominous threat of currency debasement or a simple bet on stronger economic expansion, both point to a continued run-up in commodity prices -- and the shares of producers that bring us these goods."


Best Nu Stock Quote 2012: Harmonic (HLIT)

by Elisea Frishberg, contributing editor The MoneyMan Market Report

TV, cable and satellite systems all over the world are making huge investments to providing high definition programming.

As a result, Harmonic (HLIT) could easily turn out to be one of the world's biggest winners for 2012; the company makes encoders, advanced fiber optic and digital delivery systems.

And as domestic satellite systems and emerging cable systems embrace these HLIT products, revenues are growing fast, while profits are literally exploding. The best part of this story is that the markets are still pricing HLIT based on last year's shaky economy.

Harmonic has made a number of acquisitions of video technology over the past several years; it bought Entone's VOD business for $45 million in 2006, and purchased Rhozet's transcoding technology in 2007.

However, Omneon is the largest of its recent deals, and we expect the impact on Harmonic's profitability in the next two years to be huge.

Omneon sells storage and networking equipment for media companies to enhance their distribution of high end TV products and services.

Omneon already had an impressive customer base, including the BBC, BSkyB, CBS, Comcast, Discovery Communications, Echostar, NBC Universal, News Corporation, Televisa, Turner Broadcasting and Viacom. Together, Harmonic says the two companies have 2,000 customers across more than 100 countries.

With a market cap below $1 billion and dependence on the continuation of global growth for the next few years, I would put this in the class of aggressive investments. However, we expect continuation of the global growth cycle, combined with accelerating U.S. results.

Accordingly, we believe that HLIT's stock price has not yet caught up with its very impressive growth prospects. As the skepticism about economic growth subsides, so will the multiples a"orded Harmonic, Inc. expand.

Rapidly developing middle classes around the world is leading to increasing interest in TV distribution systems such as cable providers.

Overall, the company is in exactly the right place at the right time. In our view, this underappreciated stock is on track be one of the top performers for 2012.


Best Nu Stock Quote 2012: iShares Silver (SLV)


"2012 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, 2012, 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 2012 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.”


Best Nu Stock Quote 2012: Marvell Technology Group

by Paul McWilliams, editor Next Inning

Marvell Technology Group (MRVL) clearly fits the bill of a stock that is currently unloved by Wall Street. As a matter of a fact, there's not much at all that Wall Street likes about the company. Nevertheless, I would choose this as one of my favorite stocks for the coming year.

Nearly half of Marvell's revenue comes from the hard disk drive (HDD) industry, and even though it has gained market share, Wall Street believes the HDD sector will be wiped out by solid state drive (SSD) technology.

We'll set aside for now that Marvell is also a leader in SSD controllers, which it just so happens to sell for more than it does its industry leading HDD controllers.

As I see it, Wall Street has penned the HDD obituary far in advance of when we should plan to attend the funeral.

The short story for Marvell comes in two intersecting pieces. First, Marvell is one of only three semiconductor companies in the world that has an Architectural License from ARM Holdings (ARMH). This means Marvell can tweak the internal design of the ARM core processor to optimize it for targeted applications.

It has done this very eectively in the past to dominate the HDD controller market, and the company has more recently taken a new approach to design highly integrated smartphone chips that are intended to materially drive down the total cost for smartphones, and thereby radically increase their presence in emerging markets.

China is, of course, the first target, and I believe we'll see a ?urry of new Marvell-powered smartphones released there in 2012.

Intersecting with Marvell's expertise with ARM core processors, which you'll find in some shape or form in roughly 95% of the chips Marvell ships, is Marvell's integration talent.

Few, if any, competitors can match Marvell when it comes to mixed-signal integration (integrating analog and digital functions on a single chip)."" "

While integration skills have always been important for semiconductor companies, we are now at a tipping point where the companies that are very good at it will have an opportunity to accelerate growth. I believe that tipping point will occur sometime between now and 2015, and when it does, Marvell's growth curve has the potential to ride a very favorable wave. That said, my price target range for 2012 is somewhere in the high-$20s to very low $30s.



Best Nu Stock Quote 2012: Kinder Morgan (KMP)


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 Nu Stock Quote 2012: NovaGold Resources

by Stephen Leeb, editor The Complete Investor

NovaGold Resources (NG) -- my top pick for 2012 -- is an up-and-coming mining outfit that owns a pair of world-class deposits.

It has partnered with a couple of industry heavyweights to develop these projects, and it has the backing of some of the savviest investors around, giving it the wherewithal that will enable the company to transition from junior explorer to mid-tier producer in a few short years.

The company's Galore Creek property in northwestern British Columbia is a copper/gold deposit it is developing in a 50-50 partnership with Teck Resources. The property's measured reserves include 8.9 billion pounds of copper, 7.3 million ounces of gold and 123 million ounces of silver -- as well as commercial quantities of lead and zinc.

NovaGold is in the process of acquiring Copper Canyon Resources, whose property adjacent to Galore Creek will add substantially to those reserve figures.

And the property's resource base is likely to prove to be even greater once additional exploration e"orts are conducted.

NovaGold is working with Barrick Gold in a similar arrangement to bring Donlin Creek in Alaska, one of the largest undeveloped gold deposits in the world, on line.

With 33.6 million ounces of proven and probable gold reserves, once operational the open-pit Donlin Creek mine is expected to produce more than a million ounces of the Midas metal annually

Both mines are several years from commercial production and both with require investments in the billions, in addition to huge technical hurdles to overcome. Yet that has not deterred some of the best hedge managers around from taking large stakes in NovaGold, these notable investors include John Paulson, George Soros and Tom Kaplan Adding to its attractiveness, while many gold companies are turning to politically unstable countries around the world in search of new ore bodies, developing NovaGold's U.S. and Canadian assets requires no such risk.

Indeed, the company has strong support for its projects from State and Provincial governments as well as local native associations who are eager to see economic development and job creation for their populations.

This stock has been an outstanding performer in the last two years but it literally has the potential to rise another 10-fold in the coming yearsif it's not acquired by a larger competitor first.

With an excellent team running the show we think the company will successfully conquer the challenges it faces and reward shareholders immensely in the process.


Best Nu Stock Quote 2012: Monsanto (MON)


"Monsanto (NYSE: MON) is my top investment idea for 2012," says Sy Harding, an advisor well-known for his seasonal timing strategies.

In his Street Smart Report, he observes, "Monsanto is the world’s leading provider of biotech-advanced seeds and agricultural products for growers; seeds for corn, soybeans, cotton, fruit, and vegetables, which are produced by its genomics division.

"Monsanto experiences high grower demand for such seeds, which are genetically engineered to provide increased crop yields, increased quality, insect and disease resistance, and drought tolerance.

"The company recently introduced two new products, SmartStax for corn, and Round- up Ready-2-Yield soybeans, which are potential drivers for significant growth going forward.

"The company said it expects to plant 8 to 10 million acres of Roundup Ready-2-Yield soybeans in 2012, along with a more than 4 million acre launch of SmartStax seed corn, both significantly higher than earlier projections for the new products.

"The company has also introduced two versions of a lower cost genetic corn seed, VT Double Pro, and VT Triple Pro.

"The goal of those products is to let growers test the advantages of farming with genetically engineered seeds without having to move all the way to the higher-priced SmartStax seeds.

"The lower price products were introduced in anticipation that the growers will be so impressed with their extra yield, quality, and profits that they will move up to SmartStax the following year.

"he company invests roughly 10% of revenues back into research and development of new products, and has also demonstrated an ability to make meaningful acquisitions, which in recent years have included DeKalb, Asgrow, and DeltaPine, which add to its technology and product base, while at the same time eliminating some competitors.

"The company has received import approval for its Roundup Ready-to-Yield soybeans in China, which potentially will result in demand from growers in South America, who export large quantities of soybeans to China.

"The risks include that consumers are not completely sold on genetically altered foods, and growers will only grow from biotech-advanced seeds that percentage of their crops that they know they can sell. And of course Monsanto’s sales are influenced seasonally by weather and commodity grain prices.

"We believe higher prices lie ahead for MON. Our upside target is $100 a share. We suggest a trailing 'mental' protective stop at $69.40."



Best Nu Stock Quote 2012: Range Resources

by Geoffrey Seiler, editor Bullmarket.com

We have selected Range Resources (RRC), which is on our recommended buy list, as our top investment idea for 2012.

The natural gas producer recently posted a loss of 5 cents per share, versus a loss of 19 cents, a year ago. Adjusted EPS was 12 cents, topping the 10-cent consensus.

Cash ?ow from operating activities totaled $138.4 million, while cash how from operations before changes in working capital fell -18% to $140.8 million. Revenues rose 11% to $227.0 million. Natural gas, NGL and oil sales climbed 9% to $219.6 million, while natural gas, NGL and oil sales including all cash-settled derivatives declined -4% to $245.4 million.

As previously announced prior to earnings, Q3 production volumes rose 15%, and 7% sequentially, to an average of 503 Mmcfe net per day. Production was 77% natural gas and 23% natural gas liquids (NGLs) and oil.

The company said the growth came from its e"orts in the liquids-rich portion of the Marcellus Shale play in Pennsylvania, as well as the Midcontinent and Permian Basin regions.

The company drilled 78 net wells and 5 net recompletions in the quarter with a 99% success rate.

Realized oil, gas and NGL prices, after adjusting for realized cash-settled hedges and cash-settled derivatives, averaged $4.97 per mcfe for the third quarter.

This was generally below analyst estimates, and lower than the $6.35 per mcfe last year and $5.07 per mcfe for Q2.

On the hedging front, the company has 335,000 Mmbtu per day of natural gas production hedged at an average ?oor price of $5.56 and an average cap of $7.20. Meanwhile, it increased its hedge position for both 2011 and 2012. For 2012, Range has now hedged its natural gas position to 408,200 Mmbtu per day at an average ?oor price of $5.56 and an average cap of $6.48.

For 2012, Range has increased its natural gas hedges to 119,641 Mmbtu per day at an average ?oor of $5.50 and an average cap of $6.25.

In conjunction with its earnings announcement, Range also announced that it was putting up its Barnett Shale assets for sales. The assets include 53,000 acres with 360 producing wells that average approximately 120-130 Mmcfe per day. "Divesting of our Barnett Shale properties re?ects Range's strategy of focusing on per-share growth," CEO John Pinkerton said in statement. While a sale of our Barnett Shale properties will provide substantial capital, it will not inhibit our per-share production and reserve growth outlook. We currently anticipate that we can grow production and reserves in 2012 on both an absolute and per-share basis, despite losing the production and reserves associated with the planned sale."

BMO Capital analyst Dan McSpirit believes a sale could gross around $1.6 billion based on recent asset sales in the area.



Best Nu Stock Quote 2012: Peabody Energy (BTU)


"Peabody Energy (NYSE: BTU), the world’s largest coal producer, is my  top pick for the coming year," says Hannah Choe.

The contributing analyst with Personal Finance explains, "Demand for coal, particularly from the Pacific Rim, China and India, is rebounding as the global economy recovers.

"The company reported better-than-expected third quarter earnings, primarily because of a lower costs associated with US operations, increased volumes of metallurgical coal, and strong trading results.

"Net income and revenue were down 71% and 12%, respectively, hurt mainly by lower US demand. But despite a di?cult economic environment, Peabody expanded US margins and shipped record volumes of coal in the third quarter.

"Although demand from Japan and South Korea hasn’t bounced back as strongly as it has in the early stages of prior recoveries, China has more than made up for this shortfall, emerging as a top coal importer.

"In the first nine months of 2012, Chinese imports of thermal and coking coal rose 167% and 400%, respectively. And India will rely heavily on coal imports over the next five to six years to feed its rising domestic consumption of electricity.

"Peabody CEO Greg Boyce anticipates that China will grow by 8% and India will grow by 6% in 2012, with even more impressive rates in 2012.

"As a result, management projects markets for metallurgical and thermal coal to have a 7.5% compound annual growth rate in the next five-plus years as demand for steel and coal-fueled electricity rise.

"As of mid-October, Peabody committed 3.3 million tons of coal for China deliveries in 2012, more than 1.7 million tons coming from its Australian operations. This demand from Asia should push Australia’s coal sales to 21 million to 23 million tons this year.

"Peabody’s US sales declined, in part due to recession pressures; cooler weather and rising use of natural gas also crimped results. This combination of trends has led

management to adjust 2012 product projects 15 million tons below 2008 levels.

"Although US numbers are weak, third quarter sales from Peabody’s Australia operations climbed 30 percent from the second quarter, driven by surging demand in China and India.

"The Australia unit projects sales of growth of 15% for 2012 over 2011 levels;Peabody actually plans to double exports from Australia over the next five years.

"As part of its shift in focus to Asia, Peabody established a trading hub in Singapore and a new business center in Indonesia during the third quarter. Based on emerging Asia’s rapid turnaround, Peabody forecasts higher prices for thermal and coking coal in 2012.

"Green energy is gaining popularity but coal remains king-half of the electricity generated in the US comes from it, and emerging markets want it, too. Global coal use
is still expected to grow by 55% by 2025, and Peabody Energy is well positioned to profit."



Best Nu Stock Quote 2012: Seadrill

by Elliott Gue, editor The Energy Strategist

Seadrill (SDRL) is the best-placed contract driller in my coverage universe. The company doesn't produce or explore for oil and natural gas; rather, it is in the business of owning drilling rigs that are leased out to major producers for a daily fee known as a day rate.

There are three major reasons to buy Seadrill. First, the company has the youngest and most advanced ?eet of drilling rigs of any of the major contractors.

Second, Seadrill's rigs are primarily booked under long-term contracts at attractive rates for several years into the future, providing a guaranteed backlog of cash how regardless of the path of commodity prices.

And finally, Seadrill has a policy of paying out sizeable quarterly dividends supported by its backlog of rig contracts.

In the most recent quarter, Seadrill paid $0.65 per share, equivalent to an annualized yield of approximately 8 percent at the current price.

I see the company boosting its payout to around $0.75 per quarter by the fourth quarter of 2012; given strong investor preference for income-paying stocks, a growing dividend will continue to drive further upside in the stock.

Seadrill owns a feet of sixteen deepwater drilling rigs including ten semi-submersibles and six drillships.

The average operating Seadrill rig is less than five years old and that only includes the 13 rigs currently working on contracts.

The remaining 10 rigs in the feet were all built between 2008 and 2010 and are of the most modern and capable design.

All are ultra-deepwater rigs able to drill in waters more than 10,000 feet deep and are powerful enough to complete wells more than 6 miles in length.

Deepwater operations are only going to get more complex in coming years; as a result, producers need the most advanced, state-of-the-art rigs In addition to its deepwater feet, Seadrill also owns around 20 shallow-water jackup rigs and 17 tender rigs that are used to ferry people and equipment and to support o"shore drilling operations.

Seadrill has a backlog of over $8.5 billion in contracts covering its deepwater rigs, $2 billion covering its jack-ups and $1.5 billion for tender rigs.

Since these revenues are essentially guaranteed under long-term deals signed with major oil and gas producers, this represents a highly visible stream of cash?ow over the next few years.

With a ?eet that's ideal for the current market, a growing 8 percent yield and opportunities to grow via new rig construction, the stock rates a buy under $38.



Best Nu Stock Quote 2012: Standard Chartered (SCBFF)


Yiannis Mostrous is a leading expert on Asian Stocks. For his top pick last year, advisor choseStandard Chartered (London: STAN, OTC: SCBFF) as  his top pick.

The stock has risen 110% since his original recommend -- and remains  his top pick for 2012 as well. Here's the latest from his The Silk Road Investor.

"Standard Charter is an international bank focused on consumer and corporate banking and treasury activities.

"Though based in London, the bank gives exposure to emerging markets in Asia, the Middle East and Africa. Asia makes up 59% of the firm’s profits with Hong King as its biggest single concentration of customers.

"The economies in Asia are rebounding faster than those in the west, increasing competitor activity amongst international and local banks.

"The banks strategy is to continue to develop its consumer banking franchises while maximizing profitability in its historically strong wholesale operations.

"For the January-November period, the firm reached record income and pretax profit highs, driven by growth in the corporate banking business.

"Standard Chartered has a relatively low loan-to-deposit ratio of 75%, giving the bank the luxury of relying less on borrowed funds and more on its increasingly strong, less costly deposits for expansion.

"Valuations are attractive; share price per trailing earnings is 14.3, trading at 1.5 times tangible book value. The firm maintains a strong balance sheet and a healthy liquidity position."


Best Nu Stock Quote 2012: Yongye International

by Jim Trippon, editor Global Profits Alert

Yongye International (YONG) is a leading developer, manufacturer, and distributor of plant and animal nutrient products in the People's Republic of China.

Its plant nutrient product can significantly increase the plant's output and nutritional value and improve its taste.

As a result of receiving greater value in the marketplace, Yongye says its product helps increase farmers' incomes and improves their living standards. Directly addressing the need for greater e#ciency and more environmentally friendly require?

ments in the agricultural sector, Yongye's products dramatically increase the quality of crops and yields, and improve the health of livestock, according to the firm. The company is striking for its valuation with a bargain basement PEG ratio of only 0.15 Yongye has impressive financials with gross margins above 57 percent and a profit margin of 24.86 percent. Earnings per share are expected to climb 43 percent next year.

While the company has only been in operation a short amount of time, its predecessor, Inner Mongolia Yongye Company, had over 15 years' operational history which it has passed on to Yongye.

From this experience, Yongye International says it aims to inherit its predecessor com?pany's managerial experience and corporate culture to continue emulating its long-term success.

Learn more about this financial newsletter at Jim Trippon's Global Profits Alert.


Best Nu Stock Quote 2012: Verenium (VRNM)


"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."