The Best Stocks to Buy Right NOW

The Best Stocks to Buy Right NOW Alcoa (NYSE:AA) stock is set to soar today after strong first-quarter earnings. But stock market investors should know that the surprise profit in the Alcoa earnings report bodes well not just for this pick, but for the whole of earnings season.
Specifically, Alcoa’s first-quarter net earnings hit $94 million, or 9 cents a share. Excluding special items, AA earnings hit 10 cents a share. No dramatic totals there, but the profit is noteworthy considering Wall Street was expecting Alcoa to actually post a loss of about 3 cents per share.
Why should you care? Well, for two reasons:

1. Alcoa is a proxy in many ways for the global manufacturing sector. After big losses, job cuts and a brutal slide in stock price, AA now appears to be on the mend.
2. Alcoa is a psychological torch bearer each earnings season, and this impressive showing will help shape a broader narrative of continued corporate earnings growth in the face of lingering uncertainties.

A distant third would be, of course, because success in AA stock proves I actually know what I am talking about. I did, after all, pick it as my single best buy-and-hold investment for all 2012 in the InvestorPlace.com “10 Best Stocks for 2012” contest. (Disclosure: I am long AA and have been since December. Read my original recommendation here.)

Alcoa Is a Proxy for Manufacturing

Good Alcoa earnings are a good thing for manufacturers, suppliers and a host of other companies. Base metals are not speculative like gold, but very much utilitarian and very much tied to general business and consumer activity.
It was no surprise that Alcoa flopped in dramatic fashion during the Great Recession, seeing its share price plummet from about $43 in 2008 to almost as $5 in early 2009. The losses were brutal, and the company slashed 13,500 jobs, or 13% of its workforce, in one fell swoop. Demand slumped, supply drove down prices and revenue lurched more than 30% lower from 2008 to 2009.
But now? Fundamentals have been improving, and Alcoa is soundly back on profitable ground. Fiscal 2012 revenue could top fiscal 2008 numbers if all goes well, and a restructuring has beaten back debts and made the company more agile. The surprise profits in this report are just more recent proof after Alcoa posted strong earnings on Jan. 9.
All in all, the company has seen nine straight quarters of year-over-year revenue growth.
The optimism Alcoa investors should feel after this report is obvious, but what’s almost as important is what these numbers mean for other supply-chain stocks — whether they be direct comparisons like base metal and materials stocks that include The Best Stocks to Buy Right NOW Norsk Hydro (PINK:NHYDY), The Best Stocks to Buy Right NOW Rio Tinto (NYSE:RIO) and The Best Stocks to Buy Right NOW U.S. Steel (NYSE:X) or a true end-product manufacturer.
Yes, times have been tough, and manufacturing-related stocks remain a fraction of their previous might, but wise restructuring is starting to pay off. Not only are companies like Alcoa profitable again, but they’re profitable in a period of weak demand and price pressure. Imagine what the next few years will hold if a recovery gains momentum.
It sure was painful to watch Alcoa suffer a sharp decline in 2011 amid sovereign debt fears and economic uncertainty gripping the globe in the summer months. But that sell-off wasn’t the final word. Earnings and revenue continue to mend despite the fact that Alcoa shares remain almost 50% off 52-week highs.
In short, Alcoa is signaling the opportunity in “unsexy” materials and manufacturing stocks. These stocks remain big values, especially ones that fell hard but are finally starting to get their feet back under them — like Alcoa.

The Best Stocks to Buy Right NOW Alcoa Is an Earnings Standard Bearer

Much fuss is made about how Alcoa “kicks off” earnings season every quarter. I mean honestly — can’t financial journalists come up with a different phrase, or do we have to have the same damn headline every 90 days?
Ninety percent of the correlation between Alcoa and a broader earnings season narrative is bunk. However, that’s not to say there isn’t a correlation to be made sometimes — as long as we admit the link is due to broader economic trends, not some magical “earnings mojo” exuded by Alcoa’s filing.
Here’s the gist of this quarter’s narrative, filtered through Alcoa: Investors, who have been fretting over very real macro concerns, will once again be reminded of the simple truth that corporate profits are marching upwards nicely once more.
This could very well be the 10th straight quarter of year-over-year earnings growth for the S&P 500.
Sure, things aren’t as happy as they were in the go-go 2000s — when funny money artificially created jobs, houses, consumer spending and a host of other imaginary economic engines. But unemployment is at a three-year low.
And from a pure investor-centric perspective, the IPO market has heated up again, and the markets were challenging levels not seen since 2007’s peak before the recent multi-day slide.
Of course, Alcoa could be an outlier, and other ugly earning reports could reshape the narrative in the days ahead. But judging by the past few earnings seasons that have seen big profit and sales increases despite lingering uncertainty, it’s more likely that Alcoa is an example than an exception.

3 Oil Stocks Worth To Invest in 2012

What can we say, other than:  It’s about time!  After defying gravity for weeks, and ignoring numerous warning signs I’ve pointed out on this page, stocks have gotten rapped on the knuckles over the past few sessions.  The Dow plunged 214 points on Tuesday, wiping out all its gains dating back to February 3.
There’s a lesson in that, too.  As a little gem of Wall Street wisdom puts it, “Stocks take the stairs up, but the elevator down.”  The market chewed through 41 sessions to win the ground it has just given back over the past five.  Far better to sell a few days—even a few weeks—early, than a few days too late.
But we’re not doing any selling now.  That would be slamming the barn door shut after the horse had already bolted.
As of this afternoon’s close, stocks are deeply oversold on a short-term basis.  Trading volume in declining NYSE stocks has swamped that in advancers by a 2:1 margin over the past 10 days.
Yes, it’s possible for the ratio to go to even greater extremes.  (We saw 3:1 during the panic last August.)   Chances are, though, we’re close to a tradable bottom.  I look for the market to bounce back to the area of its April 2 highs by late this month.
Still, I advise you to buy judiciously and selectively at this point.  While a few market sectors offer excellent value at current levels, many others are still overpriced.  It will probably take another summer thunderstorm (similar to those of 2010 and 2011) to wash out the excess and give us a strong market-wide buy signal.
What should you be accumulating now?  Oils.  Oils.  Oils.  Did I make myself clear?  Oils.
The emerging economies of the world are devouring more and more oil each year. More automobiles are now sold in China than in the United States.  Hundreds of millions of people in China, India and Brazil are never going to ride bicycles to work again.
In other words, while there may be violent short-term swings in the price of crude, the long-term trend, in “real” (inflation-adjusted) dollars, points in only one direction: up.  Well-managed oil producers that keep a handle on their operating costs will continue to reap enormous profits.
I’ve been loading up on 3 Oil Stocks Worth To Invest in 2012 Royal Dutch Shell (NYSE:RDS.B) in recent days.  Starting with the June payment, Shell will increase its dividend to 86 cents per share quarterly.  That works out to a yield of just over 5% at today’s closing price.
In this risky, scary world, it’s almost impossible to nail down a 5% yield on a business as safe (pretty much inflation-proof and recession-proof) as Shell.  I plan to make RDS.B one of my “monster” stock positions, eventually rivaling 3 Oil Stocks Worth To Invest in 2012 McDonald’s (NYSE:MCD) in size.
I’m also building a large stake in France’s 3 Oil Stocks Worth To Invest in 2012 Total (NYSE:TOT).  News from the company’s Elgin platform in the North Sea is mildly encouraging; the gas flare has gone out, substantially reducing the risk of an explosion.  Current yield: 6.2%.
By the way, I understand that if you own TOT in a (taxable) individual or joint account, the French government imposes only a 15% withholding tax on your dividends.  Unfortunately, I own the stock in a trust account, so—for some reason known only to lawyers—I have to pay 25% tax.  In the end, though, I expect that the capital gains I earn from TOT will dwarf any dividend slippage from the withholding tax.
Besides Royal Dutch and Total, I’m bulking up on 3 Oil Stocks Worth To Invest in 2012 Occidental Petroleum (NYSE:OXY), too—the third oil stock in our model portfolio.  OXY features a more modest dividend yield (only 2.4% at last glance).
However, this outfit is one of the world’s most efficient finders and producers of crude, with an astounding 27.7% net profit margin (after taxes) in 2011.  If it’s long-term growth you’re after, very few large-cap oils are likely to match OXY.
From here, I think the stock can generate a total return (dividends plus capital appreciation) of 30% in the next 12 months, and a double over the next three to four years.

4 Best Companies to Invest in 2012

Size isn’t everything, but it sure is fun.”
The phrase might sound like a glib remark from a late-night Showtime movie, but it’s also an apt way of summing up some of the ludicrous numbers that get thrown around on Wall Street.
The most recent example: On Tuesday, 4 Best Companies to Invest in 2012 Apple (NASDAQ:AAPL) briefly reached a brain-tickling market capitalization — a measure of public opinion of a company’s worth calculated by multiplying outstanding shares times share price — of $600 billion.
Needless to say, that means Apple is worth a lot of money. In fact, by market cap, it’s the most valuable company in the world. And when you’re the world’s most valuable company, laughable comparisons come along with the territory. For instance, Barron’s Brendan Conway points out that Apple is bigger than the entire S&P SmallCap 600. David Gilbert at International Business Times notes that Apple is bigger than, among other things, the National Football League and Poland’s GDP.
Of course, another way to examine Apple’s giant bucket of commas and zeroes — as well as those for other blue-chip titans — is alongside its own Wall Street counterparts. And that’s when you start to get a concept of how truly enormous these valuations are.
For instance …
Apple is worth more than the major U.S. carriers that have helped shill and provide phone and data service for the company’s hit iPhone and iPad.
4 Best Companies to Invest in 2012 AT&T (NYSE:T), 4 Best Companies to Invest in 2012 Verizon (NYSE:VZ) and Sprint (NYSE:S), which are responsible for more than 250 million wireless subscribers in the U.S., combine for a total market cap of about $290 billion, or roughly half Apple’s worth. More astoundingly, Apple’s market cap is three times that of AT&T, about six times greater than Verizon and a whopping 73 times greater than Sprint.
Even when you toss in China’s iPhone-licensed carriers — China Unicom (NYSE:CHU, $39.6B) and China Telecom (NYSE:CHA, $43.2B) — you still come up a couple hundred billion dollars short. In fact, the roughly $226 billion difference would be more than enough to buy America’s largest bank by assets, JPMorgan (NYSE:JPM, $164.9B), and a little-known coffee outfit called 4 Best Companies to Invest in 2012 Starbucks (NASDAQ:SBUX, $42.9B).
Of course, Apple isn’t the only company with a mind-bending market cap.
Integrated oil giant Exxon Mobil (NYSE:XOM) is the country’s No. 2 company by market cap at about $390 billion and now the world’s No. 2 oil producer after being nudged from the top spot by PetroChina (NYSE:PTR). Gargantuan, thy name is Exxon.
In fact, Exxon’s business is so sizable that it tops the combined market cap (roughly $300 billion) of the 45 oil equipment and services companies in the Dow Jones U.S. Oil Equipment & Services Index Fund (NYSE:IEZ), which includes standard-bearers like Schlumberger (NYSE:SLB, $89.5B), National-Oilwell Varco (NYSE:NOV, $32.5B), 4 Best Companies to Invest in 2012 Halliburton (NYSE:HAL, $29.5B) and 4 Best Companies to Invest in 2012 Baker Hughes (NYSE:BHI, $17.3B).
Priceline.com (NASDAQ:PCLN) is an online travel company that deals in all sorts of reservations, from hotels and airline tickets to car rentals and cruises — and numerous packages in between. And at $38 billion, PCLN’s market cap might not come close to Apple or Exxon, but it’s still pretty clear that Priceline is big business.
How big? Well, for one, it’s far greater than the combined market caps of the four major U.S. airline carriers.
Delta Air Lines (NYSE:DAL), $8.7 billion
United Continental (NYSE:UAL), $7 billion
Southwest (NYSE:LUV), $6.35 billion
4 Best Companies to Invest in 2012 US Airways (NYSE:LCC), $1.25 billion
Total: $23.3 billion
In other words, these carriers total about $15 billion less than PCLN — an even more impressive thought considering that Priceline’s large sum revolves around all of 3,400 employees, versus almost a quarter-million across DAL, UAL, LUV and LCC. And even if you threw in 4 Best Companies to Invest in 2012 Alaska Airlines (NYSE:ALK, $2.5B), pre-bankruptcy AMR (PINK:AAMRQ, est. $1.5B) and JetBlue (NASDAQ:JBLU, $1.35B), Priceline still would be worth more by market cap.
Lastly, there’s Coca-Cola (NYSE:KO). Coca-Cola is the world’s top beverage company and offers more than 500 ways to quench your thirst. And at $164 billion, its market cap is greater than most of the brands that peddle its wares. That includes supermarkets 4 Best Companies to Invest in 2012 Whole Foods (NASDAQ:WFM, $15B), Kroger (NYSE:KR, $13.6B), Safeway (NYSE:SWY, $5.9B), The Fresh Market (NASDAQ:TFM, $2.3B) and Harris Teeter (NASDAQ:HTSI, $1.8B) …
… and dollar-store outfits 4 Best Companies to Invest in 2012 Dollar General (NYSE:DG, $15.5B), Dollar Tree (NASDAQ:DLTR, $11B) and Family Dollar (NYSE:FDO, $7.4B)…
… and even super-retailers 4 Best Companies to Invest in 2012 Costco (NASDAQ:COST, $37.6B) and Target (NYSE:TGT, $38B).
In fact, about the only retailer dealing in food that you can’t lump in is Wal-Mart (NYSE:WMT), which at a market cap of $205 billion also dwarfs the field, as well as Coke.

Top 6 Stocks to Buy for May in 2012

Stocks have been rising since the bottom made in October 2011, and this year the Dow has gained 8.14%, the S&P 500 is up 12%, the Nasdaq is up 18.67%, and the Russell 2000 has gained just under 5%. In a market where second-half gains in earnings are in question and volume and breadth suggest that a consolidation is due, where can you find reasonably valued stocks?
Stocks in the building sector, especially apartment construction, should grow, and health care companies should benefit with or without “Obama Care.” And, despite the current administration’s resistance to fossil-fuel programs, the assumption is that the Keystone XL pipeline will eventually be built.
The bull market is still in its infancy, and the public has mostly been absent, put off by a “wall of worry” that appears to be growing, and that is a positive for stocks. Plus, the Fed will continue to pump money into the market.
This month’s stock picks are generally focused on stocks that will benefit from the economic engines that drive the market.
Here are your top stocks to buy for April:

Top Stock to Buy in 2012 #1 – AvalonBay Communities (AVB)

Real estate investment trust (REIT) AvalonBay Communities (NYSE:AVB) specializes in upscale apartment communities. An improving U.S. economy with high apartment occupancy levels should result in higher rental rates for AVB, and new development activities will be an important driver of earnings in 2012. Funds from operations (FFO) per share in 2012 is forecast at $5.30, up from $4.57 in 2011. AVB has a dividend yield of 2.83%, and it is expected to increase.
On March 30, the stock broke from a multiple top with a trading objective of $150. But longer-term investors should consider AVB as a cornerstone REIT with an objective of $175.

Top Stock to Buy in 2012 #2 – DENTSPLY International (XRAY)

DENTSPLY International (NASDAQ:XRAY), the world’s largest dental products maker, should benefit from demographic trends and a rising demand for dental services in underdeveloped nations. S&P forecasts earnings of $2.30 in 2012 and $2.60 in 2013.
The stock executed a golden cross early in February, and is very close to breaking out from a complex of tops at around $40. If successful, XRAY could run to $48. Buy now with a stop-loss at $37.50.

Top Stock to Buy in 2012 #3 – Ford Motor Co. (F)

Ford Motor Co. (NYSE:F), the second largest producer of cars and trucks in the United States, also has automobile financing and insurance operations. Analysts expect Ford to increase revenues this year chiefly from operations in the United States, China, and most European countries.
After some weakness in the first half of the year, improved profits are expected in the second half of 2012, and 2013 revenues are expected to rise 9.7%. Earnings this year should fall to $1.46, but rise to $1.71 in 2013. The first-half decline should already be factored into the price of the stock. And these estimates may be very conservative in that the average life of cars “on the street” is currently over 10 years. Increased consumer appreciation of Ford’s product quality and confidence in its management should also raise demand for the stock.
Technically Ford broke its bear market resistance line in January, jumping from $10 in December to $13 in late January. It has been consolidating since then between $12 and $13, but just flashed a buy signal from its stochastic. A break from $13 should result in a quick run to $14 to $15. Longer-term investors should benefit from much higher prices and an increase in its dividend yield, now at 1.62%.

Top Stock to Buy in 2012 #4 – Southwest Airlines (LUV)

Southwest Airlines (NYSE:LUV) is our “bottom fisher’s choice” for this month. The stock fell from over $14 in October 2010 to almost $7 in October 2011. But a turnaround appears to be occurring with the acquisition of AirTran, which resulted in an immediate 20% growth.
Earnings are estimated at 70 cents in 2012 versus 43 cents in 2011. The airline is known for the high quality of its management and enjoys an excellent reputation among customers.
Although technically still in a bear market, LUV has a solid base at $8 and recently flashed a buy signal from the stochastic and our internal indicator, the Collins-Bollinger Reversal (CBR). The trading target for LUV is $9 to $9.50, but long-term investors have an opportunity to buy this stock for a possible double or more.

Top Stock to Buy in 2012 #5 – TransCanada Corporation (TRP)

TransCanada Corporation (NYSE:TRP) is an energy infrastructure company that focuses mainly on natural gas and oil pipelines. It is the primary developer and manager of the Keystone pipeline system, and it is the company that manages non-regulated facilities in Alberta, Canada.
In January, the U.S. State Department rejected TRP’s application to build Keystone XL, an extension that would carry heavy crude from the Alberta oil sands and Bakken Shale to Gulf of Mexico refiners. Earnings for 2012 and 2013 are expected to be $2.35 and $2.70, respectively, but could be higher if the overall Keystone XL project is approved. President Obama has already approved the southern half of the line from Cushing, Okla., to the Gulf, saving months of delays. If the entire line were to be approved, the company’s earnings would improve significantly.
Technically the stock is in a bull channel with prices hugging the 50-day moving average. TRP’s overall price objective is $50-plus, depending on the political swings in the fall. Buy under $42.

Top Stock to Buy in 2012 #6 – United Health Group (UNH)

UnitedHealth Group (NYSE:UNH), a diversified health and well-being company, provides health care programs, retirement plans, has a life sciences group, and provides health plans to physicians, clinical services, etc.
Credit Suisse analysts say, “We continue to view United as the best-positioned large-cap managed care plan for where we see the best growth prospects… especially in the shift to Bundled Payments under Medicare.”
They look for earnings of $4.85 this year compared to $4.73 in 2011, and an increase to $5.60 in 2013. UNH has a dividend yield of 1.17%.
Technically the stock consolidated in a broad nine-month cup, then broke from that cup in February at $54. From mid-February until recently, it consolidated between $54 and $55. Last week, it broke from $56 to $58.10. The trading target for UNH is $65. Longer term, Credit Suisse is predicting an annual target of $72.

Top 5 Stock To Buys for May in 2012

As mentioned last month, we’ve achieved some stability in regards to which stocks remain the crème de la crème. This month, we are keeping three of our previous month’s Top 5 stocks, swapping out two, and adding five new names to our Top Stocks list.
First, our swap-out names:
Top 5 Stock To Buys for May in 2012 Alexion Pharmaceuticals (NASDAQ:ALXN), and Top 5 Stock To Buys for May in 2012 McDonald’s (NYSE:MCD). Both of these stocks are still A-rated buys, and they are  held in high regard, but I’m substituting in two other consumer-driven stocks that have even better top- and bottom-line prospects. With consumer confidence and spending on the rise, you’ll want to get a piece of these companies that have stunning track records of accelerating sales growth.
Now let’s move to our additions:
As the leading auto parts chain in the U.S., AutoZone (NYSE:AZO) is known for helping its customers “Get in the Zone.” And lately, more and more people have been going to AutoZone to keep their cars running longer. This trend is most clearly shown in AutoZone’s quarterly same-store sales results, which have been steadily increasing over the past few quarters.
In the most recent quarter, the company’s same-store sales grew 5.9%, which accelerated from the prior quarter’s 4.6% gain. Another thing I love about this stock is that it has a solid history of share repurchase programs. A few weeks ago, management announced that the company is buying back an additional $750 million in its stock. The company is clearly committed to returning value to its shareholders.
Top 5 Stock To Buys for May in 2012 #1 Dollar General Corporation (NYSE:DG) is another retailer that has benefited from the recent wave of frugality that has hit the U.S. With just under 10,000 stores nationwide, the company offers a wide range of discount goods for $10 or less. I’m keeping both Dollar General and Dollar Tree on the Top 5 because they both serve two complementary but different functions as bargain retailers.
As it stands, Dollar General boasts better earnings growth (the second-best in the industry, in fact), while Dollar Tree has a better track record with its sales growth. Dollar General is also larger and has a slightly lower Price/Earnings ratio.
Top 5 Stock To Buys for May in 2012 #2 Dollar Tree (NASDAQ:DLTR) is slightly smaller than Dollar General, but with over 4,000 stores across the United States, it is the most successful single-price-point retailer in the nation. Towards the end of February, the company reported strong sales and earnings growth for the fourth quarter. Compared with the same quarter last year, net income climbed 16% to $187.9 million, or $1.60 per share, which was largely in line with the $1.59 per-share Street estimate. Over the same period, net sales climbed 13% to $1.95 billion, slightly topping the consensus sales estimate of $1.93 billion.
Similar to AutoZone, this company’s same-store sales have been accelerating as well. In fact, in the third quarter, Dollar Tree grew same-store sales by 4.8%, and then pulled off an astounding 7.3% same-store sales growth in the fourth quarter!
Top 5 Stock To Buys for May in 2012 #3 Lorillard (NYSE:LO) is one of four tobacco stocks we liket, and it was added last issue because it is a smaller and more agile company than any of the Big 3. And, in keeping with the rest of the tobacco industry, the company recently upped its dividend payment by 19.2% to $1.55 per share! This means that LO’s dividend yield now weighs in at 4.8%. This is lower than Altria Group Inc.‘s (NYSE:MO) 5.5% yield, and Top 5 Stock To Buys for May in 2012 #5 Reynolds American Inc.‘s (NYSE:RAI) 5.4% yield, but higher than Philip Morris International Inc.‘s (NYSE:PM) 3.6% yield.
With over 1,000 stores in the U.S., Top 5 Stock To Buys for May in 2012 #4 Ross Stores (NASDAQ:ROST) is the second-largest off-price apparel retailer in the country. The company recently released its same-store sales results for February, and the results were stunning. Last month, the fashion bargain chain grew same-store sales by 9%, which positively trounced the 4.6% consensus estimate and represents a significant uptick from its 5% growth in January.
Recently, thanks to a combination of higher merchandise gross margin and lower shortage costs, Ross Stores announced strong operating results for the fourth quarter. Compared with the same quarter last year, sales climbed 12% to $2.4 billion, and net earnings jumped 19% to $192 million, or $0.85 per share. These are solid results, as the retailer was able to accelerate earnings despite difficult year-over-year comparisons. Ross Stores continues to be a top off-price apparel retailer due to its ability to offer unbeatable brand-name bargains while maintaining lower store inventories. And the great thing is that the best is still yet to come.
Historically, March and April represents a strong sales season for Ross Stores, and management is hopeful that the company will continue to improve in the coming months.