If you have cash to invest this month, I highly recommend these five below. Here they are, in no particular order:
Taiwan-based Silicon Motion Technology (NASDAQ:SIMO) has its hand in lots of hot markets and is a big player in flash memory storage — flash memory cards, USB flash drives, card readers and solid-state hard drives. In fact, most of the NAND flash and next-generation flash products on the market — whether produced by Samsung (PINK:SSNLF), SanDisk (NASDAQ:SNDK), Toshiba, Micron (NASDAQ:MU) or Intel (NASDAQ:INTC) — are supported by Silicon Motion controllers. Silicon Motion also produces multimedia chips including embedded graphics processors, image processors and TV tuners. Lastly, it has been increasingly focused on controllers for smartphones, tablets and notebook PCs, as well as wireless transceivers for 4G LTE smartphones and tablets.
In the third quarter, Silicon Motion’s sales rose 25% to $63.2 million compared with $50.5 million in the second quarter. Looking forward, the analyst community is expecting annual fourth-quarter sales growth of 51% and 88.9% earnings growth. In the past three months, the analyst community has revised their consensus earnings estimate 32% higher — a phenomenon that typically precedes blowout earnings surprises.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Questor Pharmaceuticals (NASDAQ:QCOR) likes a challenge. As a specialist of difficult-to-treat central nervous system disorders, the company has been particularly successful with its multiple sclerosis treatment, H.P. Acthar Gel. The company also makes Doral, which is used for the treatment of insomnia. In the massive biotechnology industry, Questcor is top-notch in terms of earnings per share growth and return on equity.
For the fourth quarter, the analyst community is expecting 127.4% annual sales growth and 265.7% earnings growth of 38 cents per share. In the past three months, the analyst community has revised their consensus earnings estimate 32.6% higher. Typically, such positive analyst earnings revisions precede future earnings surprises.
Top 5 Emerging Growth Stocks to Buy for January in 2012 -Hansen Natural (NASDAQ:HANS) is the mastermind behind Monster, a dominant energy drink in the U.S. Looking at a can of Monster Energy drink, the flashy staple of sleep-deprived college students, one wouldn’t think that the company’s humble beginnings stem back to just one father and three sons working with a juicer in Southern California. In fact, although Hansen sells supercharged drinks like Monster and Java Monster, most of its drink roster is actually very wholesome. For example, it has 30 real fruit and spice soda flavors, a number of immune system-boosting drinks, vitamin waters and an array of teas and lemonades.
In recent quarters, Hansen Natural has reported “monster” sales and profit growth. Third-quarter sales jumped 24% from $381.5 million last year to $474.7 million this quarter. Over the same period, net income also rose 24% to $82.4 million, or 88 cents per share. Plus, speculation is heating up that Monster might be an acquisition target by Red Bull or one of the major soft drink companies. With Red Bull’s recent decision to pull out of NASCAR as a sponsor, a “monster” acquisition might be just what the energy drink maker needs to capture additional U.S. market share.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Spectrum Pharmaceuticals Inc. (NASDAQ:SPPI) is familiar pharmaceutical company I once discussed in the Top 5 Emerging Growth Stocks for December. Spectrum specializes in oncology — the treatment of cancer — and currently has two cancer treatments on the market: Fusilev, a treatment for advanced colon cancer, and Zevalin, a treatment for a type of lymphoma.
But what really excites me about this company is what it has in its pipeline: Spectrum has more than 10 drugs in either late-stage development or development! This includes Apaziquone, a treatment for bladder cancer, Belinostat, another lymphoma treatment and Ozarelix, a treatment of prostate cancer. This is a midsize biotechnology company already at the top of the industry — in terms of return on equity — and is about to experience blowout growth.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Jazz Pharmaceuticals Inc. (NASDAQ:JAZZ) has two flagship drugs — Xyrem, the only narcolepsy treatment approved by the World Anti-Doping Agency, and Luvox CR, its obsessive compulsive disorder treatment. But there are a number of exciting developments on the near horizon, including Jazz’s massive buyout of Dublin-based Azur Pharma Ltd., which should close within the next couple of weeks, and the company’s subsequent moving of its headquarters to Dublin. After the move, Jazz will be able to take advantage of Ireland’s competitive tax rate.
The company’s sales climbed 63.3% and earnings surged 115.6% in the third quarter, and for the fourth quarter, the analyst community is expecting 54% annual sales growth and 70.5% earnings growth. Jazz Pharmaceuticals is flush with cash and recently prepaid $33 million in long-term debt, and I’m excited to see how developments play out in the company’s next earnings release. Also, despite those who might think that Jazz Pharma’s bullish run looks tapped out, I remain optimistic.
3 Small-Cap Stocks to Buys for January in 2012
First up this month, I have CVD Equipment (NASDAQ:CVV), a manufacturer of the gear behind tomorrow’s futuristic nanotechnologies, including solar cells, electronic components, carbon nanotubes, LEDS and smart material coatings.
But what really has the company in investor headlines lately is its involvement with graphene, the thinnest and toughest material ever produced. Graphene is a one-atom-thick layer of carbon. Academics have recently figured out how to manipulate the way the material conducts electricity, a breakthrough that opens the door to its use in computers, since graphene conducts electricity 30 times faster than silicon — approaching the speed of light!
Graphene is an extraordinary material — in 2010, Andre Geim and Konstantin Novoselov won the Nobel Prize in Physics for their groundbreaking experiments with it, and there are a lot of companies, universities and industries researching it. It’s too soon to tell which of these players will be the big winner, so I want to go straight to the source and invest in the equipment that all of these players need for their research.
With the excitement about graphene and its possible uses, it’s no surprise that CVD’s order backlog has soared this year, climbing 141% in the third quarter. Sales in the third quarter rose 119.3%, to $8.8 million, compared with $4 million year-on-year. During the same period, CVD Equipment’s earnings surged 566.7%, to $1.2 million — $0.20 per share. The analyst community was expecting earnings of $0.11 per share, so the company posted a whopping 81.8% earnings surprise.
For the fourth quarter, the analyst community is expecting 66.7% annual sales growth and 87.5% earnings growth. In the past three months, analysts have revised their consensus earnings estimate 30.6% higher. Of course, such positive analyst earnings revisions usually precede tremendous future earnings surprises.
3 Small-Cap Stocks to Buys for January in 2012 - Mitcham Industries (NASDAQ:MIND) is a high-tech provider of seismic equipment to the energy industry, enabling the next generation of oil-and-gas exploration.
Oil companies are increasingly finding it difficult to extract gas from traditional deposits and are being forced to look at alternative sources and methods of extraction. With viable alternative energy sources still a ways off, Mitcham’s products are going to become integral to the maintenance of our energy status quo.
The company leases seismic equipment to energy companies that allows them to get a picture of what’s happening below ground. Mitcham also manufactures and sells seismic gear under the well-known Seamap brand name.
Mitcham’s manufacturing-and-leasing business model provides superior margins compared with other segments of the seismic industry. In the third quarter, sales rose 40%, to $28 million, compared with $20 million in the same quarter a year ago. During the same period, earnings soared 642.9%, to $6.8 million, or $0.52 per share. The analyst community was expecting earnings of $0.22 per share, so the company posted a whopping 136.4% earnings surprise.
In the third quarter, Mitcham says, there was strong demand from Latin America and companies tapping the gas-holding shale formations of the U.S. Looking forward, Mitcham predicts strong results in Russia and Canada this winter. In addition, the company says it’s encouraged by the number of inquiries and orders for long-term work. For the fourth quarter, the analyst community is expecting 47.8% annual sales growth and 135.9% earnings growth.
3 Small-Cap Stocks to Buys for January in 2012 - Plains All American Pipeline (NYSE:PAA) is cashing in big time on the transportation and storage of crude oil, refined products and natural gas in the U.S. and Canada. And in December, the company announced five asset-rich strategic acquisitions totaling $2.3 billion.
Its blockbuster deal was snapping up British Petroleum’s (NYSE:BP) natural-gas liquids business in Canada for $1.67 billion in cash, which will expand Plains All American’s Canadian footprint and provide the capacity to increase its U.S. operations. The location of the BP pipelines and plants allows for processing of gas from new U.S. formations, including the Bakken formation in North Dakota and the Marcellus formation in Pennsylvania. In total, the acquisition includes about 2,500 miles of pipelines, 21 million barrels of LNG capacity and seven gas-processing plants. The deal is expected to close in the first half of this year.
The company also announced four “bolt-on” acquisitions for about $620 million, including a South Texas crude-oil and condensate-gathering system, a Canadian trucking operation, a multiple-product storage facility in Yorktown, Va., and a pipeline in the Permian Basin.
Plains All American has an extremely attractive 5.4% dividend, and as a Master Limited Partnership, it can allow for pass-through income, eliminating the “double taxation” that is generally applied to corporations. Looking forward to the fourth quarter, the analyst community is expecting annual sales growth of 38.3% and earnings growth of 59.3%. In the past three months, the analyst community has revised its consensus earnings estimate 20.6% higher.
3 Small-Cap Stocks to Buys for January in 2012 -
But what really has the company in investor headlines lately is its involvement with graphene, the thinnest and toughest material ever produced. Graphene is a one-atom-thick layer of carbon. Academics have recently figured out how to manipulate the way the material conducts electricity, a breakthrough that opens the door to its use in computers, since graphene conducts electricity 30 times faster than silicon — approaching the speed of light!
Graphene is an extraordinary material — in 2010, Andre Geim and Konstantin Novoselov won the Nobel Prize in Physics for their groundbreaking experiments with it, and there are a lot of companies, universities and industries researching it. It’s too soon to tell which of these players will be the big winner, so I want to go straight to the source and invest in the equipment that all of these players need for their research.
With the excitement about graphene and its possible uses, it’s no surprise that CVD’s order backlog has soared this year, climbing 141% in the third quarter. Sales in the third quarter rose 119.3%, to $8.8 million, compared with $4 million year-on-year. During the same period, CVD Equipment’s earnings surged 566.7%, to $1.2 million — $0.20 per share. The analyst community was expecting earnings of $0.11 per share, so the company posted a whopping 81.8% earnings surprise.
For the fourth quarter, the analyst community is expecting 66.7% annual sales growth and 87.5% earnings growth. In the past three months, analysts have revised their consensus earnings estimate 30.6% higher. Of course, such positive analyst earnings revisions usually precede tremendous future earnings surprises.
3 Small-Cap Stocks to Buys for January in 2012 - Mitcham Industries (NASDAQ:MIND) is a high-tech provider of seismic equipment to the energy industry, enabling the next generation of oil-and-gas exploration.
Oil companies are increasingly finding it difficult to extract gas from traditional deposits and are being forced to look at alternative sources and methods of extraction. With viable alternative energy sources still a ways off, Mitcham’s products are going to become integral to the maintenance of our energy status quo.
The company leases seismic equipment to energy companies that allows them to get a picture of what’s happening below ground. Mitcham also manufactures and sells seismic gear under the well-known Seamap brand name.
Mitcham’s manufacturing-and-leasing business model provides superior margins compared with other segments of the seismic industry. In the third quarter, sales rose 40%, to $28 million, compared with $20 million in the same quarter a year ago. During the same period, earnings soared 642.9%, to $6.8 million, or $0.52 per share. The analyst community was expecting earnings of $0.22 per share, so the company posted a whopping 136.4% earnings surprise.
In the third quarter, Mitcham says, there was strong demand from Latin America and companies tapping the gas-holding shale formations of the U.S. Looking forward, Mitcham predicts strong results in Russia and Canada this winter. In addition, the company says it’s encouraged by the number of inquiries and orders for long-term work. For the fourth quarter, the analyst community is expecting 47.8% annual sales growth and 135.9% earnings growth.
3 Small-Cap Stocks to Buys for January in 2012 - Plains All American Pipeline (NYSE:PAA) is cashing in big time on the transportation and storage of crude oil, refined products and natural gas in the U.S. and Canada. And in December, the company announced five asset-rich strategic acquisitions totaling $2.3 billion.
Its blockbuster deal was snapping up British Petroleum’s (NYSE:BP) natural-gas liquids business in Canada for $1.67 billion in cash, which will expand Plains All American’s Canadian footprint and provide the capacity to increase its U.S. operations. The location of the BP pipelines and plants allows for processing of gas from new U.S. formations, including the Bakken formation in North Dakota and the Marcellus formation in Pennsylvania. In total, the acquisition includes about 2,500 miles of pipelines, 21 million barrels of LNG capacity and seven gas-processing plants. The deal is expected to close in the first half of this year.
The company also announced four “bolt-on” acquisitions for about $620 million, including a South Texas crude-oil and condensate-gathering system, a Canadian trucking operation, a multiple-product storage facility in Yorktown, Va., and a pipeline in the Permian Basin.
Plains All American has an extremely attractive 5.4% dividend, and as a Master Limited Partnership, it can allow for pass-through income, eliminating the “double taxation” that is generally applied to corporations. Looking forward to the fourth quarter, the analyst community is expecting annual sales growth of 38.3% and earnings growth of 59.3%. In the past three months, the analyst community has revised its consensus earnings estimate 20.6% higher.
3 Small-Cap Stocks to Buys for January in 2012 -
3 Forgotten Stocks Worth Reconnecting With in 2012
It’s always worth a look when a one-time growth stock falls into value territory, and the market volatility of the past year has left its share of former high-fliers stranded well below their recent highs. Three such stocks are Monsanto (NYSE:MON), Teva Pharmaceuticals (NASDAQ:TEVA) and Ericsson (NASDAQ:ERIC). Once favorites of the press and institutional money managers alike, these stocks have quietly maintained steady fundamentals even as their valuations have come down. This disconnect presents an opportunity for longer-term investors.
3 Forgotten Stocks Worth Reconnecting With in 2012 - Monsanto
Monsanto is a case in point. The stock of this global agribusiness giant delivered a 22-bagger for investors from mid-2002 through mid-2008 — a period that saw its P/E surge from the mid-teens into the 50s. During this interval, the market became enamored with the “story” of the company capitalizing on rising global agricultural production through its genetically enhanced seeds. But Monsanto’s market value has been cut in half since its 2008 heyday thanks to rising competition, price pressures and slowing sales for its signature Roundup product. The result: a stock whose valuation no longer captures its earnings power.
According to the USDA, the average net cash income for U.S.-based farm businesses rose 17% in 2011 and is on track for another increase for 2012. Notably, the latest survey of farmer confidence showed continued strength, which obviously is a positive for suppliers such as Monsanto. The company has a strong product pipeline — including drought-tolerant corn, expected to launch in 2013 — that provides a solid foundation for earnings in the years ahead. It also should be noted that Monsanto, whose products help boost crop yields, still is in a prime position to benefit from the long-term imbalance created by the rising demand for agricultural products and the static supply of arable land. As a kicker, the stock yields a 1.7% dividend.
Despite these positives, the stock is trading at a discount to its five-year averages for all key valuation measures: P/E, price-to-book, price-to-sales and PEG. The chart also is potentially favorable with the possibility of a breakout if the stock rises above $77. Monsanto reports earnings Thursday.
3 Forgotten Stocks Worth Reconnecting With in 2012 - Teva Pharmaceuticals
Israel-based Teva, the world’s largest maker of generic drugs, rewarded investors with a total return of over 1,000% from 1999-2009. The stock has been left in the dust in the past two years, however — from its April 2010 high near $65, Teva is off nearly 40% even as the broader pharmaceutical sector has gained ground. Teva has been hit by concerns about rising competition and the potential loss of exclusivity on a key drug, but the stock is beginning to look like a value at these levels.
The IMS Institute for Health Care Infomatics is calling for the market share of branded drugs (which stood at 70% in 2005) to drop from 64% in 2010 to 53% in 2015 as the use of generics increases. In addition, a number of brand-name drugs are losing exclusivity in 2012, to the tune of a total sales volume of $28 billion. Both of these trends work in Teva’s favor.
Although Teva is a profitable company with important long-term trends working in its favor — analysts are looking for 13% EPS growth in 2012 — the stock has been left for dead. Among the numbers investors should take into account: The trailing P/E, at 12, is less than half the five-year average of 24.6. (The forward P/E is even more attractive at 7.2.) Price-to-book stands at 1.6 versus the five-year average of 2.4, while price-to-sales is at 2.1 versus 3.3. What’s more, Teva yields 1.7%, and management recently announced a buyback program worth $3 billion. With numbers like these, it looks like it finally might be time for this fallen angel to start playing catchup with its industry peers.
3 Forgotten Stocks Worth Reconnecting With in 2012 - Ericsson
By now, the broadband theme is well-known: Rising smartphone and tablet usage is creating a surge in demand for broadband capacity, and telecom operators’ ability to meet this fast-growing capacity is limited. But what seems to have been lost on investors is that Ericsson — the market-share leader in providing the equipment and services that will help operators meet demand in the years ahead — still is one of the companies that is positioned to capitalize on this trend.
Nevertheless, the growth-stock darling of the 1990s now is a value play, with a forward P/E of 10.8 (and 8.6 net of cash), a trailing price-to-sales ratio of 0.98 (versus a five-year average of 1.3%), $6.7 billion in cash and a dividend yield of 3.6%. The stock was off 11% in 2011.
It might require patience for the market to pick up on the potential value here, but a look at the total picture reveals meaningful upside potential and limited downside risk from this level.
The bottom line: All three of these somewhat-forgotten market leaders have the potential to provide market-beating returns in the year ahead, even if the broader investment environment remains challenging.
3 Forgotten Stocks Worth Reconnecting With in 2012 - Monsanto
Monsanto is a case in point. The stock of this global agribusiness giant delivered a 22-bagger for investors from mid-2002 through mid-2008 — a period that saw its P/E surge from the mid-teens into the 50s. During this interval, the market became enamored with the “story” of the company capitalizing on rising global agricultural production through its genetically enhanced seeds. But Monsanto’s market value has been cut in half since its 2008 heyday thanks to rising competition, price pressures and slowing sales for its signature Roundup product. The result: a stock whose valuation no longer captures its earnings power.
According to the USDA, the average net cash income for U.S.-based farm businesses rose 17% in 2011 and is on track for another increase for 2012. Notably, the latest survey of farmer confidence showed continued strength, which obviously is a positive for suppliers such as Monsanto. The company has a strong product pipeline — including drought-tolerant corn, expected to launch in 2013 — that provides a solid foundation for earnings in the years ahead. It also should be noted that Monsanto, whose products help boost crop yields, still is in a prime position to benefit from the long-term imbalance created by the rising demand for agricultural products and the static supply of arable land. As a kicker, the stock yields a 1.7% dividend.
Despite these positives, the stock is trading at a discount to its five-year averages for all key valuation measures: P/E, price-to-book, price-to-sales and PEG. The chart also is potentially favorable with the possibility of a breakout if the stock rises above $77. Monsanto reports earnings Thursday.
3 Forgotten Stocks Worth Reconnecting With in 2012 - Teva Pharmaceuticals
Israel-based Teva, the world’s largest maker of generic drugs, rewarded investors with a total return of over 1,000% from 1999-2009. The stock has been left in the dust in the past two years, however — from its April 2010 high near $65, Teva is off nearly 40% even as the broader pharmaceutical sector has gained ground. Teva has been hit by concerns about rising competition and the potential loss of exclusivity on a key drug, but the stock is beginning to look like a value at these levels.
The IMS Institute for Health Care Infomatics is calling for the market share of branded drugs (which stood at 70% in 2005) to drop from 64% in 2010 to 53% in 2015 as the use of generics increases. In addition, a number of brand-name drugs are losing exclusivity in 2012, to the tune of a total sales volume of $28 billion. Both of these trends work in Teva’s favor.
Although Teva is a profitable company with important long-term trends working in its favor — analysts are looking for 13% EPS growth in 2012 — the stock has been left for dead. Among the numbers investors should take into account: The trailing P/E, at 12, is less than half the five-year average of 24.6. (The forward P/E is even more attractive at 7.2.) Price-to-book stands at 1.6 versus the five-year average of 2.4, while price-to-sales is at 2.1 versus 3.3. What’s more, Teva yields 1.7%, and management recently announced a buyback program worth $3 billion. With numbers like these, it looks like it finally might be time for this fallen angel to start playing catchup with its industry peers.
3 Forgotten Stocks Worth Reconnecting With in 2012 - Ericsson
By now, the broadband theme is well-known: Rising smartphone and tablet usage is creating a surge in demand for broadband capacity, and telecom operators’ ability to meet this fast-growing capacity is limited. But what seems to have been lost on investors is that Ericsson — the market-share leader in providing the equipment and services that will help operators meet demand in the years ahead — still is one of the companies that is positioned to capitalize on this trend.
Nevertheless, the growth-stock darling of the 1990s now is a value play, with a forward P/E of 10.8 (and 8.6 net of cash), a trailing price-to-sales ratio of 0.98 (versus a five-year average of 1.3%), $6.7 billion in cash and a dividend yield of 3.6%. The stock was off 11% in 2011.
It might require patience for the market to pick up on the potential value here, but a look at the total picture reveals meaningful upside potential and limited downside risk from this level.
The bottom line: All three of these somewhat-forgotten market leaders have the potential to provide market-beating returns in the year ahead, even if the broader investment environment remains challenging.
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