Budding optimism this week for solutions to the European debt crisis ground to a halt Thursday as the head of the European Central Bank gave a pessimistic outlook for tomorrow’s Brussels meeting, killing the market’s three-day climb and sending bank shareholders to the exits.
While the ECB dropped interest rates to an all-time low 1% and said it would open up three-year loans to euro zone banks, negative comments about the low possibility of lending to the International Monetary Fund — which then would lend the money to euro zone members in a form of quantitative easing — soured the markets. The Dow Jones tumbled nearly 200 points by day’s end.
European financials like Royal Bank of Scotland (NYSE:RBS, -7.93%) and Deutsche Bank (NYSE:DB, -7.76%) were torched, as was U.S.-based Morgan Stanley (NYSE:MS, -8.42%), which is thought to have significant exposure to a European debt crisis. The fallout also trickled down to national banking giants Citigroup (NYSE:C, -6.97%), JPMorgan Chase (NYSE:JPM, -5.24%) and Bank of America (NYSE:BAC, -5.09%).
Electric vehicle maker Tesla Motors (NASDAQ:TSLA) had more than enough problems without the general market sentiment Thursday, with TSLA stock plunging almost 10% to $30.89 after Morgan Stanley’s Adam Jonas hacked his price target by 37% and downgraded Tesla to underweight. Jonas expressed satisfaction with Tesla’s performance, with the pessimism instead focused toward the entire electric vehicle industry.
On the opposite side of the spectrum, Affymax (NASDAQ:AFFY) — whose stock suffered through a roller-coaster ride earlier this week hinging on the fate of its experimental anemia medicine, peginesatide — spiked Thursday on news that advisers to the Food and Drug Administration would back its drug.
During the day, Affymax stock almost reached $8.50, its highest point since June 2010, when AFFY shares took a 70% hit after the company’s trial anemia drug — then called Hematide — was reported to have greater cardiovascular risks than an existing Amgen (NASDAQ:AMGN) product. Affymax stock finished Thursday at $7.99, up 36%.
Three Up
* DemandTec (NASDAQ:DMAN): Up 55.99% ($4.72) to $13.15.
* Coinstar (NASDAQ:CSTR): Up 7.84% ($3.45) to $47.45.
* Sodastream International (NASDAQ:SODA): Up 2.36% (83 cents) to ($35.96).
Three Down
* Melco Crown Entertainment (NASDAQ:MPEL): Down 6.7% (65 cents) to $9.05.
* Nokia (NYSE:NOK): Down 6.19% (33 cents) to $5.
* Juniper Networks (NASDAQ:JNPR): Down 5.91% ($1.26) to $20.05.
As of this writing, Kyle Woodley did not hold a position in any of the aforementioned stocks. Check out our list of previous IP Market Recaps.
The Most Profitable Companies Invest In America 2012
Looking for the best buys on the market right now? We may have the investing answer you’ve been waiting for.All stock prices are driven by profit projections, and a handful of American companies just posted impressive 2010 profits. Firms with a clear vision of how to increase value for shareholders could be a terrific buy right now. But companies without a good game plan will likely see their stock prices fall as they fritter away their earnings.
The hardest part? Learning to separate the former from the latter. Here’s a list of the most profitable companies in America, along with our prediction of which direction the stock is heading.
The Most Profitable Companies To Invest In NO.17: Citigroup (NYSE: C) – $10.6 Billion
For many years, Citigroup (NYSE: C) was the most profitable banking firm in the United States. But a series of foolish moves allowed JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) to surpass them.
To get back to the head of the pack, Citigroup is repositioning itself as a key player in fast-growing emerging economies. Indeed, Citigroup now derives more than half its revenue from abroad.
Although the bank’s turnaround is not yet complete, the story should become a lot cleaner with each passing quarter, and eventually, investors should embrace the bank as a way to hedge against a falling dollar and as a way to have greater exposure to more dynamic economies elsewhere.
The Most Profitable Companies To Invest In NO.16: ConocoPhillips (NYSE: COP) – $11.4 Billion
Despite low profit margins, ConocoPhillips (NYSE: COP) has strengths in many areas: solid stock price performance, attractive valuation levels, robust revenue growth and compelling net income growth.
And if you think oil will continue to be expensive in the future, ConocoPhilips could be the ultimate value stock. The current dividend yield is 3.4% and management has a reputation for allocating capital to shareholders in the form of dividend increases and share buybacks — all good news for investors.
Photo courtesy of wikipedia.commons.org.
The Most Profitable Companies To Invest In NO.15: Intel (Nasdaq: INTC) – $11.5 Billion
If you own a smartphone, you are an indirect customer of Intel (Nasdaq: INTC). Though they don’t manufacture or sell any smartphone components, Intel makes processors that help data center servers keep up with the demand, and the smartphone boom has been nothing but good for the company.
In addition to its profit-generating ability, Intel also has huge cash hoards. Using its cash to acquire fast-growing firms can be an effective way to boost its own growth, so look for Intel to get in on the market’s M&A activity in the coming months.
Photo courtesy of Flickr- Josh Bancroft.
The Most Profitable Companies Invest In NO.14: General Electric (NYSE: GE) – $11.6 Billion
It’s 2010 profit results are all well and good, but the historical numbers show that General Electric (NYSE: GE) has lost its way and needs a turnaround to return to the growth heyday it experienced while under the fearless leadership of Jack Welch.
GE Capital, GE’s massive finance arm, was a major profit driver under Welch, but it nearly ruined the company during the financial crisis. Back in 2007, GE Capital accounted for 55% of net income. That share fell to 13% in 2009.
Current CEO Jeffrey Immelt has a goal to limit GE Capital to no more than 40% of profits going forward, though it only recovered to 28% of profits in 2010, so it has some way to reach that level. GE will inevitably turn around its operations at some point, but there is no need for investors to wait for the company to find its way.
Photo courtesy of Flickr- Matt Millard.
The Most Profitable Companies Invest In NO.13: Coca-Cola (NYSE: KO) – $11.8 Billion
The world’s biggest soft drink maker, Coca-Cola (NYSE: KO), recently posted strong first quarter results, with a comparable net income of $6.4 million. With a powerful global distribution network, Coca-Cola products are currently sold in more than 200 countries and boast 500 different beverage brands. In the coming years, more than $20 billion will be spent to expand into emerging markets like Africa, Russia, Mexico and China.
Helping drive growth is the recent acquisition of Coca-Cola Enterprises, the company’s largest bottling unit in North America. It will now be cheaper for the company to produce and bottle smaller scale products — like the 100-calorie Coke can — to cater to calorie-conscious consumers.
Through the acquisition, Coke expects to improve business operations by better controlling product distribution so it can more quickly respond to changing market demand. As a result, Coke expects to save more than $350 million a year for the next four years. These savings should mean good news for shareholders.
Photo courtesy of Flickr: Kyle May.
The Most Profitable Companies Invest In NO.12: Wells Fargo (NYSE: WFC) – $12.4 Billion
One thing has been clear about Wells Fargo (NYSE: WFC): the San Francisco-based bank seems to have adroitly sidestepped a great deal of the potholes besetting the banking sector the past few years. It hasn’t been immune to the powerful forces of a down economy, but at least its management hasn’t been pilloried by the press (like Bank of America (NYSE: BAC) and Goldman Sachs (NYSE: GS)), and it didn’t make life-threatening bad investments that led to government handouts (like Citigroup).
Restrictions put in place when the TARP program was in effect have limited the annual dividend, but banking analysts think the payout ratio will eventually rebound to 30%, implying a $1.08 dividend based on 2012 profit forecasts. As the economy improves, the dividend could move even higher, creating the impetus for a dividend yield above 4% when measured against today’s stock price.
And it certainly doesn’t hurt to have Warren Buffett as your co-investor. Buffett’s continued bullishness on the bank should be heartening to even the most bank-ophobic investors.
Photo courtesy of Flickr — Neubie.
The Most Profitable Companies Invest In NO.11: Procter & Gamble (NYSE: PG) – $12.7 Billion
After selling Pringles, Procter & Gamble (NYSE: PG) is officially out of the foods game. They are currently taking active steps to distance themselves from competition by expanding their health care brands into overseas markets, mainly in China and India.
P&G is also taking advantage of the rise in e-commerce popularity, recently entering the e-commerce market with an e-store. This new strategy has seen significant penetration in North America and Asia, where they are able to extend their reach into under-served, emerging markets.
Photo courtesy of Flickr – Brandon C.
The Most Profitable Companies Invest In NO.10: Berkshire Hathaway (NYSE: BRK) – $13.0 Billion
Warren Buffett has relayed numerous times that future growth rates at Berkshire Hathaway (NYSE: BRK-A) will fall below historical growth trends, but he still thinks there is potential for investors to earn above-average returns by investing in the stock. Just take the past two years as an example — book value grew 19.8% in 2009 and 13% in 2010.
This suggests Berkshire is still able to compound wealth at a double-digit rate going forward. And regardless of growth rates, the company is so well-managed that it’s difficult to imagine it even being unable to generate large profits for shareholders.
Last year, Berkshire hired money manager Todd Combs to help reshape the company’s $63.2 billion equity portfolio. Combs didn’t wait long to make his first big move, as Berkshire recently reported a stake in MasterCard, Inc. (NYSE: MA), valued at $54.4 million.
Photo courtesy of wikipedia.commons.org.
The Most Profitable Companies Invest In NO.9: Johnson & Johnson (NYSE: JNJ) – $13.3 Billion
Johnson & Johnson (NYSE: JNJ) has increased its dividends for the past 48 straight years, at an average rate of about 13.4% per year since 2000. If you purchased 200 shares of JNJ in 1980 (an investment of $14,600) and never added new money but just reinvested all the dividends, the position would be worth $1.15 million today. That’s a 7,868% return.
In other words, it’s like buying a house in 1980 for $146,000 that today is worth about $11.5 million. Home values didn’t appreciate anywhere near that much. That’s the power of growing dividends.
Photo courtesy of Flickr – aldinegirl87.
The Most Profitable Companies Invest In NO.8: Apple (Nasdaq: AAPL) – $14.0 Billion
There is only one large U.S. corporation that can truly be called a growth stock: Apple (Nasdaq: AAPL). The company’s performance was impressive enough that net income rose from $8.2 billion in 2009 to $14 billion in 2010.
What’s more impressive is the road ahead. Merrill Lynch predicts Apple will earn $34 billion by 2013, putting it at a close second behind ExxonMobil for the claim of America’s most profitable company.
Photo courtesy of Flickr — Bacr Aptemob.
The Most Profitable Companies Invest In NO.7: Int’l Business Machines (NYSE: IBM) – $14.8 Billion
Int’l Business Machines (NYSE: IBM), affectionately referred to as Big Blue, is a titan in the technology industry. The company generated almost $100 billion in revenue last year and is about as diversified a technology company as can be found, spanning software, services, hardware and financing.
IBM’s presense abroad makes it fantastic play in a weak dollar environment — just over one-third of sales stem from the United States, with the rest being generated in Europe, Asia and the rest of the world.
Photo courtesy of Flickr — Patrick H~.
The Most Profitable Companies Invest In NO.6: Wal-Mart Stores Inc. (NYSE: WMT) – $16.4 Billion
Despite falling same-store sales in the U.S. for two consecutive years, Wal-Mart (NYSE: WMT) posted a profit in both 2010 and Q1 of 2011. Their average U.S. shopper spent more per visit in Q1 of 2011, and their U.S. same-store sales of groceries and health and wellness items has increased for two consecutive quarters.
Wal-Mart’s domestic foot traffic is down, but international sales are soaring. Their profits have come largely from an 11.5% increase in international sales, offsetting the impact of the domestic slump with strong gains in all countries except Japan.
Wal-Mart is a well-run company that has historically provided long-term value to its stockholders, so don’t be discouraged by the domestic sales slump, they are still turning profits.
Photo courtesy of Flickr — Walmart Stores.
The Most Profitable Companies Invest In NO.5: JPMorgan Chase (NYSE: JPM) – $17.4 Billion
The entire banking sector is still wheezing back to life, so the next few years could represent a return to traditional banking profit margins. Notably, analysts’ forecasts anticipate subdued lending activity in 2011 and 2012 and, more than likely, bank profits will be meaningfully higher again in 2013 and beyond, granted the economy is truly healthy (and the housing market gets out of the sickbed).
Therefore, the opportunity to buy shares of banks like JP Morgan Chase (NYSE: JPM) while they trade for less than 10 times 2012 profits looks quite appealing. Trouble is, some investors are convinced that we haven’t seen the end of the mortgage crisis. So buying these bank stocks today certainly carries some short-term risk that more funds will need to be set aside to cover future liabilities.
Photo courtesy of David R. Tribble.
The Most Profitable Companies Invest In NO.4: Microsoft (Nasdaq: MSFT) – $18.8 Billion
There are some who believe that Microsoft’s (Nasdaq: MSFT) best years are behind it and the company is riding into the sunset. While Microsoft is no longer synonomous with tech’s tomorrow (see Google, Facebook and Apple), there is no denying that company is still a cash cow.
Microsoft just announced its acquisition of Skype in a deal valued at $8.5 billion. Microsoft plans on intregrating its technology with the XBox console, Kinect device and its Windows Phone platform. This may be the deal that yields the strategic benefits Microsoft needs to stop following the leaders in the industry, and start leading again.
Photo courtesy of Flickr — Robert Scoble.
The Most Profitable Companies Invest In NO.3: Chevron (NYSE: CVX) – $19.0 Billion
Chevron (NYSE: CVK) is a top-five oil firm, given its vast reserves of oil and natural gas. Growth during the past decade has been stellar, as sales have improved 15.5% and earnings by 17.5% on average each year in the past decade. Growth is projected to continue apace, with the earnings consensus for this year at $12.12 a share, or nearly 30% above last year’s levels.
At the current price, Chevron offers the solid combination of a low earnings multiple, a decent dividend yield of 2.7% and strong projected growth. And nearly 60% of last year’s stales stemmed from overseas, giving the company exposure to faster-growing regions outside of the United States.
Photo courtesy of Flickr — Jonathan McIntosh.
The Most Profitable Companies Invest In NO.2: AT&T (NYSE: T) – $19.9 Billion
AT&T (NYSE: T) posted a $19.9 billion 2010 net income, and $1 billion of that money is being invested in the cloud computing business in 2011. This will help AT&T achieve tremendous efficiencies and flexibility in cloud-based environments in order to provide applications for any type of device.
AT&T also just acquired T-Mobile for $39 billion, which helps the company vastly expand its broadband network and possibly position itself as market leader in the U.S. wireless industry.
Photo courtesy of Flickr — Chris Young.
The Most Profitable Companies Invest In NO.1: Exxon Mobil (NYSE: XOM) – $30.5 Billion
There’s no debate over how Exxon Mobil (NYSE: XOM) will use its prodigious profits. The energy giant has spent eight years buying back stock, and there’s no indication that it will stop now. Exxon Mobil has bought back two billion shares since 2002, leading to a 29% reduction in its share count.
Assuming Exxon Mobil will once again focus on stock buybacks, the share count may drop from the current 4.8 billion to just four billion by the middle of 2013. For a company with $30 billion in annual income, the shrinking share count could mean record profits per share.
The hardest part? Learning to separate the former from the latter. Here’s a list of the most profitable companies in America, along with our prediction of which direction the stock is heading.
The Most Profitable Companies To Invest In NO.17: Citigroup (NYSE: C) – $10.6 Billion
For many years, Citigroup (NYSE: C) was the most profitable banking firm in the United States. But a series of foolish moves allowed JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) to surpass them.
To get back to the head of the pack, Citigroup is repositioning itself as a key player in fast-growing emerging economies. Indeed, Citigroup now derives more than half its revenue from abroad.
Although the bank’s turnaround is not yet complete, the story should become a lot cleaner with each passing quarter, and eventually, investors should embrace the bank as a way to hedge against a falling dollar and as a way to have greater exposure to more dynamic economies elsewhere.
The Most Profitable Companies To Invest In NO.16: ConocoPhillips (NYSE: COP) – $11.4 Billion
Despite low profit margins, ConocoPhillips (NYSE: COP) has strengths in many areas: solid stock price performance, attractive valuation levels, robust revenue growth and compelling net income growth.
And if you think oil will continue to be expensive in the future, ConocoPhilips could be the ultimate value stock. The current dividend yield is 3.4% and management has a reputation for allocating capital to shareholders in the form of dividend increases and share buybacks — all good news for investors.
Photo courtesy of wikipedia.commons.org.
The Most Profitable Companies To Invest In NO.15: Intel (Nasdaq: INTC) – $11.5 Billion
If you own a smartphone, you are an indirect customer of Intel (Nasdaq: INTC). Though they don’t manufacture or sell any smartphone components, Intel makes processors that help data center servers keep up with the demand, and the smartphone boom has been nothing but good for the company.
In addition to its profit-generating ability, Intel also has huge cash hoards. Using its cash to acquire fast-growing firms can be an effective way to boost its own growth, so look for Intel to get in on the market’s M&A activity in the coming months.
Photo courtesy of Flickr- Josh Bancroft.
The Most Profitable Companies Invest In NO.14: General Electric (NYSE: GE) – $11.6 Billion
It’s 2010 profit results are all well and good, but the historical numbers show that General Electric (NYSE: GE) has lost its way and needs a turnaround to return to the growth heyday it experienced while under the fearless leadership of Jack Welch.
GE Capital, GE’s massive finance arm, was a major profit driver under Welch, but it nearly ruined the company during the financial crisis. Back in 2007, GE Capital accounted for 55% of net income. That share fell to 13% in 2009.
Current CEO Jeffrey Immelt has a goal to limit GE Capital to no more than 40% of profits going forward, though it only recovered to 28% of profits in 2010, so it has some way to reach that level. GE will inevitably turn around its operations at some point, but there is no need for investors to wait for the company to find its way.
Photo courtesy of Flickr- Matt Millard.
The Most Profitable Companies Invest In NO.13: Coca-Cola (NYSE: KO) – $11.8 Billion
The world’s biggest soft drink maker, Coca-Cola (NYSE: KO), recently posted strong first quarter results, with a comparable net income of $6.4 million. With a powerful global distribution network, Coca-Cola products are currently sold in more than 200 countries and boast 500 different beverage brands. In the coming years, more than $20 billion will be spent to expand into emerging markets like Africa, Russia, Mexico and China.
Helping drive growth is the recent acquisition of Coca-Cola Enterprises, the company’s largest bottling unit in North America. It will now be cheaper for the company to produce and bottle smaller scale products — like the 100-calorie Coke can — to cater to calorie-conscious consumers.
Through the acquisition, Coke expects to improve business operations by better controlling product distribution so it can more quickly respond to changing market demand. As a result, Coke expects to save more than $350 million a year for the next four years. These savings should mean good news for shareholders.
Photo courtesy of Flickr: Kyle May.
The Most Profitable Companies Invest In NO.12: Wells Fargo (NYSE: WFC) – $12.4 Billion
One thing has been clear about Wells Fargo (NYSE: WFC): the San Francisco-based bank seems to have adroitly sidestepped a great deal of the potholes besetting the banking sector the past few years. It hasn’t been immune to the powerful forces of a down economy, but at least its management hasn’t been pilloried by the press (like Bank of America (NYSE: BAC) and Goldman Sachs (NYSE: GS)), and it didn’t make life-threatening bad investments that led to government handouts (like Citigroup).
Restrictions put in place when the TARP program was in effect have limited the annual dividend, but banking analysts think the payout ratio will eventually rebound to 30%, implying a $1.08 dividend based on 2012 profit forecasts. As the economy improves, the dividend could move even higher, creating the impetus for a dividend yield above 4% when measured against today’s stock price.
And it certainly doesn’t hurt to have Warren Buffett as your co-investor. Buffett’s continued bullishness on the bank should be heartening to even the most bank-ophobic investors.
Photo courtesy of Flickr — Neubie.
The Most Profitable Companies Invest In NO.11: Procter & Gamble (NYSE: PG) – $12.7 Billion
After selling Pringles, Procter & Gamble (NYSE: PG) is officially out of the foods game. They are currently taking active steps to distance themselves from competition by expanding their health care brands into overseas markets, mainly in China and India.
P&G is also taking advantage of the rise in e-commerce popularity, recently entering the e-commerce market with an e-store. This new strategy has seen significant penetration in North America and Asia, where they are able to extend their reach into under-served, emerging markets.
Photo courtesy of Flickr – Brandon C.
The Most Profitable Companies Invest In NO.10: Berkshire Hathaway (NYSE: BRK) – $13.0 Billion
Warren Buffett has relayed numerous times that future growth rates at Berkshire Hathaway (NYSE: BRK-A) will fall below historical growth trends, but he still thinks there is potential for investors to earn above-average returns by investing in the stock. Just take the past two years as an example — book value grew 19.8% in 2009 and 13% in 2010.
This suggests Berkshire is still able to compound wealth at a double-digit rate going forward. And regardless of growth rates, the company is so well-managed that it’s difficult to imagine it even being unable to generate large profits for shareholders.
Last year, Berkshire hired money manager Todd Combs to help reshape the company’s $63.2 billion equity portfolio. Combs didn’t wait long to make his first big move, as Berkshire recently reported a stake in MasterCard, Inc. (NYSE: MA), valued at $54.4 million.
Photo courtesy of wikipedia.commons.org.
The Most Profitable Companies Invest In NO.9: Johnson & Johnson (NYSE: JNJ) – $13.3 Billion
Johnson & Johnson (NYSE: JNJ) has increased its dividends for the past 48 straight years, at an average rate of about 13.4% per year since 2000. If you purchased 200 shares of JNJ in 1980 (an investment of $14,600) and never added new money but just reinvested all the dividends, the position would be worth $1.15 million today. That’s a 7,868% return.
In other words, it’s like buying a house in 1980 for $146,000 that today is worth about $11.5 million. Home values didn’t appreciate anywhere near that much. That’s the power of growing dividends.
Photo courtesy of Flickr – aldinegirl87.
The Most Profitable Companies Invest In NO.8: Apple (Nasdaq: AAPL) – $14.0 Billion
There is only one large U.S. corporation that can truly be called a growth stock: Apple (Nasdaq: AAPL). The company’s performance was impressive enough that net income rose from $8.2 billion in 2009 to $14 billion in 2010.
What’s more impressive is the road ahead. Merrill Lynch predicts Apple will earn $34 billion by 2013, putting it at a close second behind ExxonMobil for the claim of America’s most profitable company.
Photo courtesy of Flickr — Bacr Aptemob.
The Most Profitable Companies Invest In NO.7: Int’l Business Machines (NYSE: IBM) – $14.8 Billion
Int’l Business Machines (NYSE: IBM), affectionately referred to as Big Blue, is a titan in the technology industry. The company generated almost $100 billion in revenue last year and is about as diversified a technology company as can be found, spanning software, services, hardware and financing.
IBM’s presense abroad makes it fantastic play in a weak dollar environment — just over one-third of sales stem from the United States, with the rest being generated in Europe, Asia and the rest of the world.
Photo courtesy of Flickr — Patrick H~.
The Most Profitable Companies Invest In NO.6: Wal-Mart Stores Inc. (NYSE: WMT) – $16.4 Billion
Despite falling same-store sales in the U.S. for two consecutive years, Wal-Mart (NYSE: WMT) posted a profit in both 2010 and Q1 of 2011. Their average U.S. shopper spent more per visit in Q1 of 2011, and their U.S. same-store sales of groceries and health and wellness items has increased for two consecutive quarters.
Wal-Mart’s domestic foot traffic is down, but international sales are soaring. Their profits have come largely from an 11.5% increase in international sales, offsetting the impact of the domestic slump with strong gains in all countries except Japan.
Wal-Mart is a well-run company that has historically provided long-term value to its stockholders, so don’t be discouraged by the domestic sales slump, they are still turning profits.
Photo courtesy of Flickr — Walmart Stores.
The Most Profitable Companies Invest In NO.5: JPMorgan Chase (NYSE: JPM) – $17.4 Billion
The entire banking sector is still wheezing back to life, so the next few years could represent a return to traditional banking profit margins. Notably, analysts’ forecasts anticipate subdued lending activity in 2011 and 2012 and, more than likely, bank profits will be meaningfully higher again in 2013 and beyond, granted the economy is truly healthy (and the housing market gets out of the sickbed).
Therefore, the opportunity to buy shares of banks like JP Morgan Chase (NYSE: JPM) while they trade for less than 10 times 2012 profits looks quite appealing. Trouble is, some investors are convinced that we haven’t seen the end of the mortgage crisis. So buying these bank stocks today certainly carries some short-term risk that more funds will need to be set aside to cover future liabilities.
Photo courtesy of David R. Tribble.
The Most Profitable Companies Invest In NO.4: Microsoft (Nasdaq: MSFT) – $18.8 Billion
There are some who believe that Microsoft’s (Nasdaq: MSFT) best years are behind it and the company is riding into the sunset. While Microsoft is no longer synonomous with tech’s tomorrow (see Google, Facebook and Apple), there is no denying that company is still a cash cow.
Microsoft just announced its acquisition of Skype in a deal valued at $8.5 billion. Microsoft plans on intregrating its technology with the XBox console, Kinect device and its Windows Phone platform. This may be the deal that yields the strategic benefits Microsoft needs to stop following the leaders in the industry, and start leading again.
Photo courtesy of Flickr — Robert Scoble.
The Most Profitable Companies Invest In NO.3: Chevron (NYSE: CVX) – $19.0 Billion
Chevron (NYSE: CVK) is a top-five oil firm, given its vast reserves of oil and natural gas. Growth during the past decade has been stellar, as sales have improved 15.5% and earnings by 17.5% on average each year in the past decade. Growth is projected to continue apace, with the earnings consensus for this year at $12.12 a share, or nearly 30% above last year’s levels.
At the current price, Chevron offers the solid combination of a low earnings multiple, a decent dividend yield of 2.7% and strong projected growth. And nearly 60% of last year’s stales stemmed from overseas, giving the company exposure to faster-growing regions outside of the United States.
Photo courtesy of Flickr — Jonathan McIntosh.
The Most Profitable Companies Invest In NO.2: AT&T (NYSE: T) – $19.9 Billion
AT&T (NYSE: T) posted a $19.9 billion 2010 net income, and $1 billion of that money is being invested in the cloud computing business in 2011. This will help AT&T achieve tremendous efficiencies and flexibility in cloud-based environments in order to provide applications for any type of device.
AT&T also just acquired T-Mobile for $39 billion, which helps the company vastly expand its broadband network and possibly position itself as market leader in the U.S. wireless industry.
Photo courtesy of Flickr — Chris Young.
The Most Profitable Companies Invest In NO.1: Exxon Mobil (NYSE: XOM) – $30.5 Billion
There’s no debate over how Exxon Mobil (NYSE: XOM) will use its prodigious profits. The energy giant has spent eight years buying back stock, and there’s no indication that it will stop now. Exxon Mobil has bought back two billion shares since 2002, leading to a 29% reduction in its share count.
Assuming Exxon Mobil will once again focus on stock buybacks, the share count may drop from the current 4.8 billion to just four billion by the middle of 2013. For a company with $30 billion in annual income, the shrinking share count could mean record profits per share.
2012 best 5 Cruise and Car Stocks to Sell
Are you thinking about taking a cruise anytime soon? How about buying a new car?
No? Well, not surprisingly, many investors are feeling the same way. In this economy, people are scaling back and saving up. That new car is being eschewed for auto maintenance, and that Disney cruise with the family is being sidelined for a road trip to your Aunt Mary’s. Although the auto industry isn’t as bad as it was during the bailouts, companies like Ford (NYSE:F) and General Motors (NYSE:GM) haven’t exactly been bastions of growth and excitement, save for Ford’s late-to-the-party, lower-than-average dividend payout.
I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. This week, I’ve got five automotive and international cruise line stocks to sell.
Here they are, in alphabetical order. Each one of these stocks gets a “D” or “F” according to my research, meaning it is a “sell” or “strong sell.”
Carnival (NYSE:CCL) is an international cruise company. In the last 12 months, CCL shareholders have watched the stock slip 29%. CCL stock gets a “D” for operating margin growth and a “D” for cash flow. For more information, view my complete analysis of CCL stock.
Ford (NYSE:F) is likely the most well-known American automaker. Year-to-date, F stock is down 37% compared to a gain of 4% for the Dow Jones Industrials. F stock gets a “D” for operating margin growth and a “D” for earnings growth in my Portfolio Grader tool. For more information, view my complete analysis of F stock.
General Motors (NYSE:GM) is another giant global automotive maker. Since the start of 2011, GM stock has lost a staggering 45% compared to gains by the broader markets. GM stock gets an “F” for earnings growth, an “F” for earnings momentum and a “D” for its ability to exceed the consensus earnings estimates on Wall Street in my Portfolio Grader tool. For more information, view my complete analysis of GM stock.
Johnson Controls (NYSE:JCI) provides a variety of products, including automotive interiors and energy-saving products for buildings. JCI has suffered a loss of 22%, year-to-date. JCI stocks gets a “D” for operating margin growth, a “D” for its ability to exceed the consensus earnings estimates on Wall Street and a “D” for the magnitude in which earnings projections have increased over the past month in my Portfolio Grader tool. For more information, view my complete analysis of JCI stock.
Royal Caribbean (NYSE:RCL) is the second large cruise line that makes the list. Since the start of 2011, RCL is down 48% compared to gains by the broader markets. RCL stock gets an “F” for cash flow in my Portfolio Grader tool. For more information, view my complete analysis of RCL stock.
Get more analysis of these picks and other publicly traded stocks with Louis Navellier’s Portfolio Grader tool, a 100% free stock-rating tool that measures both quantitative buying pressure and eight fundamental factors.
No? Well, not surprisingly, many investors are feeling the same way. In this economy, people are scaling back and saving up. That new car is being eschewed for auto maintenance, and that Disney cruise with the family is being sidelined for a road trip to your Aunt Mary’s. Although the auto industry isn’t as bad as it was during the bailouts, companies like Ford (NYSE:F) and General Motors (NYSE:GM) haven’t exactly been bastions of growth and excitement, save for Ford’s late-to-the-party, lower-than-average dividend payout.
I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. This week, I’ve got five automotive and international cruise line stocks to sell.
Here they are, in alphabetical order. Each one of these stocks gets a “D” or “F” according to my research, meaning it is a “sell” or “strong sell.”
Carnival (NYSE:CCL) is an international cruise company. In the last 12 months, CCL shareholders have watched the stock slip 29%. CCL stock gets a “D” for operating margin growth and a “D” for cash flow. For more information, view my complete analysis of CCL stock.
Ford (NYSE:F) is likely the most well-known American automaker. Year-to-date, F stock is down 37% compared to a gain of 4% for the Dow Jones Industrials. F stock gets a “D” for operating margin growth and a “D” for earnings growth in my Portfolio Grader tool. For more information, view my complete analysis of F stock.
General Motors (NYSE:GM) is another giant global automotive maker. Since the start of 2011, GM stock has lost a staggering 45% compared to gains by the broader markets. GM stock gets an “F” for earnings growth, an “F” for earnings momentum and a “D” for its ability to exceed the consensus earnings estimates on Wall Street in my Portfolio Grader tool. For more information, view my complete analysis of GM stock.
Johnson Controls (NYSE:JCI) provides a variety of products, including automotive interiors and energy-saving products for buildings. JCI has suffered a loss of 22%, year-to-date. JCI stocks gets a “D” for operating margin growth, a “D” for its ability to exceed the consensus earnings estimates on Wall Street and a “D” for the magnitude in which earnings projections have increased over the past month in my Portfolio Grader tool. For more information, view my complete analysis of JCI stock.
Royal Caribbean (NYSE:RCL) is the second large cruise line that makes the list. Since the start of 2011, RCL is down 48% compared to gains by the broader markets. RCL stock gets an “F” for cash flow in my Portfolio Grader tool. For more information, view my complete analysis of RCL stock.
Get more analysis of these picks and other publicly traded stocks with Louis Navellier’s Portfolio Grader tool, a 100% free stock-rating tool that measures both quantitative buying pressure and eight fundamental factors.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012
Below is a list of what I believe are the best values among dividend-paying stocks heading into 2012, ranked from 1 to 100. The rankings were locked in after the market closed on December 17, 2010, and counted down on this site over the last ten weekdays of the year.
It’s important to realize that these aren’t the 100 stocks I think are most likely to bring home explosive returns during 2012, because I don’t invest with that short of a window in mind. They represent the 100 companies I think are the most attractively-priced for long-term returns as we close the book on 2010.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 1. Vale S.A. (VALE)
Even after rising during the final days of 2010, shares of VALE still trade below 8x future earnings. Dividend has tripled since its 2007 valley, and has plenty of room to grow thanks to a forward payout ratio of just 11% and a top line on pace to nearly double this year.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 2. Tower Group, Inc. (TWGP)
Tower’s revenue and dividend rate have both quintupled since 2006, and neither seem to be losing momentum. Trades at a slight discount to book value and just 7.5x future earnings.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 3. CNOOC Limited (CEO)
Trades at 11x future earnings and carries very little risk thanks to a huge regulatory advantage. Has the exclusive right to share in the production of China’s offshore resources when discovered by a foreign firm, shielding CNOOC from local exploration costs.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 4. Knightsbridge Tankers Limited (VLCCF)
Dividend has recovered nicely from 2009′s cut, and is now paying nearly 9% as shares have failed to properly react to improved prospects. Company secured a $175 million credit facility in 2010 that will enable the purchase of a ninth vessel without raising additional equity.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 5. Life Partners Holdings, Inc. (LPHI)
Looked like it was finally heading toward a proper valuation before a string of bad press held shares down. With zero debt, a 5.3% dividend yield, and a forward earnings multiple of just 7.4, an investment in this unconventional business possesses a huge margin of safety.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 6. Diamond Offshore Drilling, Inc. (DO)
Diamond Offshore has supplemented its modest regular dividend with 15 special payouts since 2006, returning an incredible total of $27.13 per share to stockholders over that span (or 41% of its current share price).
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 7. Jinpan International Limited (JST)
The Chinese manufacturer split its shares and tossed shareholders a 17% dividend hike this year, with little reaction from the market. Will close 2010 with a yield of 1.3%, much better than the 0.49% it opened the year with.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 8. Amtrust Financial Services (AFSI)
Shares deservedly surged over the second half of the year (+46%), but still trade at just 1.5x book value and 7x expected 2012 earnings. Dividend has quadrupled since 2006, yet forward payout ratio remains at just 13%.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 9. Annaly Capital Management, inc. (NLY)
By far the best value for your REIT-buying dollar. That is, if you’re looking for a REIT that managed to improve its dividend every year through the recession, currently yields 14%, and will set you back less than 7x next year’s earnings.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 10. Fifth Street Finance Corp. (FSC)
The most attractively-priced BDC has only been public since 2008, but it sports an under-leveraged balance sheet, a 10% dividend yield, and trades at only a slight premium to its tangible book value.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 11. Lincoln Education Services Corporation (LINC)
Lincoln instantly became the best dividend-paying value in the for-profit education industry when it declared its first payout in November. Yields 6.4% and trades at 7x next year’s conservative earnings consensus.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 12. Chevron Corporation (CVX)
The best value among the integrated energy giants trades at just 9x next year’s earnings, compared to 10.6 for ConocoPhillips and 11.3 for ExxonMobil.
13. BHP Billiton Limited (BHP)
The Australian mining giant is diversified enough to weather the volatile commodity markets, and rich enough to acquire growth while returning an increasingly-substantial amount of cash to shareholders.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 14. PartnerRe Ltd. (PRE)
Trades at a 20% discount to book value, and the international reinsurer has raised its dividend every year since 1994 – increasing its rate by a total of 450% during that span.
15. Seadrill Limited (SDRL)
The offshore driller has achieved double-digit top line growth every year since going public in 2005, and is currently on pace to triple its 2006 revenue.
16. Intel Corporation (INTC)
A flat year leaves Intel shares with a dividend yield (3.43%) well above its five-year average (2.30%), thanks to the giant chipmaker’s biggest dividend hike since 2006.
17. Alliance Resources Partners, L.P. (ARLP)
Trades at 9x future earnings, yields 5%, has tripled its dividend rate since 2003, and raised its payout for 11 straight quarters.
18. Acme United Corporation (ACU)
An income investor’s dream: Stock is undervalued (1.2x book, 9.4x future earnings), current yield is solid (2.4%), payout ratio remains low (23%), and commitment to dividend growth is clear (boosted rate by an average of 16% annually since 2005).
19. CF Industries Holdings, Inc. (CF)
With revenue and earnings on pace to beat last year’s figures by 50% and the fertilizer company’s forward payout ratio now below 4%, it’s about time for another monster dividend hike from CF, which quintupled its payout in 2008.
20. Suncor Energy Inc. (SU)
Added earning power from Petro-Canada acquisition enabled Suncor to double its dividend without pushing its forward payout ratio over the 20% threshold.
21. Marathon Oil Corporation (MRO)
Despite an expected 23% jump in revenue, Marathon barely traded above book value in 2010. Its year-end price/book ratio (1.18), compares favorably to those of competitors Chevron (1.80), ConocoPhillips (1.44), and ExxonMobil (2.57).
22. VSE Corporation (VSEC)
If you know of any other companies with seven straight years of double-digit dividend growth, seven straight years of double-digit earnings growth, and a forward payout ratio under 5%, please fill me in.
23. TICC Capital Corp. (TICC)
If you’re looking for exposure to the tech industry but don’t want to sacrifice yield, TICC is worth looking into. The tech-focused BDC trades at just a 38% premium to tangible book value, carries no debt, and sports an 8.6% dividend yield.
24. National Presto Industries Inc. (NPK)
The do-it-all manufacturer (Skillets! Ammunition! Diapers!) currently carries a dividend rate seven times the amount paid to NPK shareholders in 2003. Revenue momentum, diversification, and overall financial efficiency should support continued dividend growth.
25. National Interstate Corporation (NATL)
With a forward payout ratio of just 16% despite getting annual raises that have averaged 19% since 2006, this dividend is primed for continued growth.
26. Archer Daniels Midland Company (ADM)
Shares scuffled enough this year to keep their forward earnings multiple under 10 and their yield above 2%, two figures you don’t expect when researching a company that’s quintupled its revenue over the last decade and raised its dividend for 35 consecutive years.
27. Compania de Minas Buenaventura SA (BVN)
Buenaventura offers exposure to both gold and silver, as well as zinc and lead. The Peruvian mining company has low production costs, very little debt, upward dividend momentum, and has quadrupled its top line since 2003.
28. Guess?, Inc. (GES)
Since 2007, my #1 apparel value has managed to boost its dividend (+150%) and revenue (+40%) at impressive rates, recession or not. I can’t wait to see what happens when the economy isn’t terrible.
29. Huaneng Power International, Inc. (HNP)
China’s largest independent electricity producer pays a 5.8% dividend (based on this year’s payout), has fantastic growth momentum (and even better growth prospects), and trades at just a 5% premium to its book value.
30. Textainer Group Holdings Limited (TGH)
The promising young dividend received three more increases in 2010, giving it a total of six since TGH went public three years ago. The stock now yields 3.8%.
31. Novartis AG (NVS)
Even with shares up 11% in December, Novartis remains my #1 pharmaceutical value heading into 2012. The company has given shareholders a double-digit raise in four consecutive years, averaging a 22% annual increase over that span.
32. Analog Devices, Inc. (ADI)
The analog chipmaker has recovered nicely from last year’s revenue decline, pushing its top line up by nearly 50% in 2010 thanks to a bounce in semiconductor demand and the revival of the auto industry. ADI has more than quintupled its dividend rate since 2003.
33. Merck & Co., Inc. (MRK)
Dividend growth has been non-existent for way too long. But revenue, expansion prospects, and margins are all looking up following the Schering-Plough acquisition, all of which should contribute to solving the flat dividend issue sooner than later.
34. Microchip Technology Inc. (MCHP)
Microchip carries by far the highest dividend yield (4.01%) among the many great chipmakers on this list, and continues to give shareholders a slight raise every quarter.
35. Ensco plc (ESV)
The offshore driller has a clean balance sheet, fantastic margins, and trades at a solid valuation. But most importantly, Ensco gave shareholders a 1300% raise in 2010, pushing its yield into relevancy (2.7%).
36. Yamana Gold Inc. (AUY)
It took a late-year plateau in the price of the precious metal and a few aggressive dividend developments, but I did manage to squeeze one gold play onto this list.
37. NewMarket Corporation (NEU)
NewMarket has increased its dividend rate by a staggering 252% since 2006. With solid revenue momentum and a forward payout ratio of just 13%, that fantastic dividend growth should continue.
38. Main Street Capital Corporation (MAIN)
Since its late-2007 IPO, Main Street has doubled both its revenue and shareholder equity. The stock trades at just 13x next year’s earnings with an 8.5% dividend yield.
39. China Mobile Ltd. (CHL)
Holds the world’s largest subscriber base and a dominant market position in China, where mobile penetration is still relatively low (60-65%). Trades at less than 11x earnings, which should only rise as CHL uses its scale to swallow up low-cost growth in rural areas.
40. Atlantic Tele-Network, Inc. (ATNI)
A late-year overreaction to disappointing 3Q results — coupled with a 13th consecutive year of dividend growth — has pushed ATNI’s dividend yield up to 2.4%. That’s well above the 1.59% it was paying coming into 2010.
41. Texas Instruments Incorporated (TXN)
Since holding its dividend rate flat from 1996 until 2004, TI has now increased it sixfold. The company also authorized the repurchase of $27.5 billion in stock over that same period, with nearly $20 billion completed before the stock began its recent surge (+40% since August).
42. Prospect Capital Corporation (PSEC)
The energy-focused BDC has achieved at least double-digit revenue growth every year since its 2004 IPO, carries zero debt, yields 11%, and trades right at tangible book value.
43. Sanderson Farms, Inc. (SAFM)
My top-ranked packaged food company sports a forward payout ratio of just 18% despite averaging 20% annual dividend growth since 2001.
44. Murphy Oil Corporation (MUR)
Murphy’s recent exploration success could allow it to blow its previous growth figures out of the water. Which is pretty impressive, considering the company has boosted its revenue by double-digits in seven of the last eight years.
45. Corning Incorporated (GLW)
Corning’s top line is making a nice recovery following a 2009 decline. The company is increasingly dependent on its display technology business, which isn’t necessarily a bad thing for the time being.
46. Pfizer Inc. (PFE)
Pfizer already has the widest economic moat in the pharmaceutical space. And depending on what it does with that $20 billion war chest, that economic moat will either get wider or get much wider.
47. UnitedHealth Group Inc. (UNH)
United finally made the leap to dividend relevance when it shifted from an annual payout of $0.03 per share to a quarterly dividend of $0.125 per share – a modest 1567% increase.
48. American Eagle Outfitters (AEO)
Shares of AEO fell about 15% this year despite the company’s 10% dividend hike, pushing the stock’s dividend yield over the 3% threshold heading into 2012.
49. Republic Bancorp, Inc. KY (RBCAA)
Even with its stock up 15% for the year and an inevitable decline in its important tax-loan segment on the horizon, Republic Bancorp remains the finest value among regional bank holding companies.
50. Cypress Sharpridge Investments, Inc. (CYS)
Cypress trades right around its tangible book value, where it carries the highest dividend yield (18%) on this list. (Be sure to factor December’s 14 million share offering into your research.)
51. Omega Healthcare Investors, Inc. (OHI)
The healthcare facility REIT yields 6.7% and is one of the few real estate companies to maintain strong dividend and earnings growth through the recession, yet it trades at just 11x next year’s earnings.
52. L-3 Communications Holdings, Inc. (LLL)
Dividend has received annual boosts averaging 27% since 2004, and yet forward payout ratio sits under 20%. L-3 will need that buffer to keep growing its dividend in the face of defense spending cuts, however.
53. The Andersons, Inc. (ANDE)
The diversified agriculture and transportation company seems to have recovered nicely from its 2009 revenue hiccup. The Andersons increased its dividend for the 14th consecutive year by handing shareholders a 22% raise in December.
54. Harris Corporation (HRS)
Harris has increased its dividend rate tenfold since 2002, but kept its forward payout ratio under 20% by tripling its revenue over the same period.
55. Advance America, Cash Advance Centers (AEA)
The largest payday loan generator in the country has pristine valuation metrics, including a forward P/E ratio of just 6, but regulatory concerns make it the ultimate risk/reward play. Investors will be paid handsomely (4.6% dividend yield) to stick it out.
56. The Buckle, Inc. (BKE)
Counting the monster year-end special dividends that have become an annual tradition, The Buckle has grown its dividend output tenfold since 2006.
57. Greif, Inc. (GEF)
Blows away its fellow container manufacturers in most metrics, but especially price/book (2.2) and debt/equity (0.8) ratios. Seven consecutive years of healthy dividend hikes have produced a 478% increase to Greif’s dividend rate and a 2.7% yield.
58. MCG Capital Corporation (MCGC)
Currently sporting an 8% yield, with a solid dividend hike likely looming. MCG has a 77% forward payout ratio in an industry required to return 90% of its taxable earnings to shareholders.
59. Xilinx, Inc. (XLNX)
Even after sharply downgrading its revenue outlook in December, Xilinx remains a solid value. Apparently I’m not the only one who sees it that way, as shares of XLNX actually went up in the days following the announcement.
60. DeVry Inc. (DV)
Even with their late-year push, shares of DV lost 15% of their value in 2010. They now sit below 10x the conservative 2012 earnings estimates laid out by regulation-wary analysts.
61. Microsoft Corporation (MSFT)
Unlike the Zune, Mr. Sofee’s successful transition to a dependable income investment (six straight years of double-digit dividend growth) should not be ignored.
62. RPC, Inc. (RES)
The oil and gas services company recovered nicely from last year’s dividend cut by raising its payout twice in 2010, exceeding earnings expectations, and splitting its stock.
63. Strayer Education, Inc. (STRA)
By far my most controversial pick of 2010, I recommended Strayer at $132 in October and I still think it has plenty of juice as it hovers around $160 today – more than $100 short of its 52-week high.
64. Nucor Corporation (NUE)
Since 2005 alone, the steel giant has raised its dividend rate by 383% and paid an additional $4.785 per share in special payouts.
65. PennantPark Investment Corp. (PNNT)
The last time shares of PNNT traded this high was 2007, when the company was generating half as much revenue and wasn’t even profitable.
66. ConocoPhillips (COP)
Recent acquisitions were poorly-timed, resulting in a rough couple of years for the energy giant. On the bright side, the stock barely trades at 10x next year’s earnings, and sports a dividend yield (3.30%) that blows away its five-year average (2.70%).
67. Sunoco Logistics Partners L.P. (SXL)
The success SXL has achieved since being spun-off from Sunoco in 2002 could be hard to replicate moving forward, but anything close would just be gravy on top of that solid 5.7% dividend yield.
68. Eli Lilly & Co. (LLY)
Facing a steep patent cliff, the company opted not to raise its dividend in 2010 for the first time in 42 years. Here’s to hoping they use the capital to juice their earnings in one way (R&D) or another (M&A).
69. Occidental Petroleum Corporation (OXY)
Ten dividend increases — including seven of at least 10% — since 2003 have boosted the company’s payout by a total of 268%. Yet it still maintains a payout ratio under 30%.
70. Triangle Capital Corporation (TCAP)
Shares of TCAP continue to establish new highs as the year comes to a close, yet they still sport a 9% yield thanks to the BDC’s aggressive dividend growth (nine raises for a total increase of 180% since 2007).
71. PPL Corporation (PPL)
The energy and utility holding company delivers electricity to customers from Montana to England, pays a dividend yield of more than 5%, and has raised its payout in nine consecutive years.
72. Meadbowbrook Insurance Group, Inc. (MIG)
Priced at less than book value and under 10x next year’s earnings, Meadowbrook is an excellent value with strong dividend growth prospects.
73. MFA Financial, Inc. (MFA)
My only complaint about this mortgage-centric REIT is the inconsistency of its dividend, which has upward momentum but tends to meander slightly from quarter to quarter. That still produces a yield in the 10-12% range, however.
74. AFLAC Incorporated (AFL)
Shareholders continue to benefit from Aflac’s competitive pricing, achieved by offering its products at the workplace rather than targeting individuals. The company has tripled its payout since 2003, and given shareholders a raise in 28 consecutive years.
75. Dynex Capital (DX)
Very comparable to MFA Financial. You’ll pay a higher earnings multiple to get a little less yield (10%), but the dividends are more consistent and a little better covered.
76. KLA-Tencor Corporation (KLAC)
Current yield (2.53%) isn’t nearly as attractive as it was before the stock rose 40% over the second half of the year. But the company has more than doubled its dividend since 2006, and is on pace to double its revenue this year, so don’t expect that return to lag for long.
77. Maiden Holdings, Ltd. (MHLD)
The reinsurance provider is trading at a 24% discount to book value and less than 7x next year’s earnings, and carries a 3.5% dividend yield to boot.
78. Canadian Natural Resource Ltd. (CNQ)
Revenue is bouncing back nicely from its 2009 drop, and the board of directors isn’t being stingy with the returns, doubling the dividend rate in May.
79. Exxon Mobil Corporation (XOM)
Exxon’s first year of sub-5% dividend growth since 2002 is an anomaly, not an issue. The company still possesses a low forward payout ratio (27%), and its yield (2.4%) sits well above its five year average (1.9%).
80. Global Partners LP (GLP)
Has averaged a 24% return on equity since going public in 2005, allowing the company to push the limits of its payout ratio in favor of a fat 7% dividend yield.
81. American Equity Investment Life Holding (AEL)
The fixed annuity and life insurance underwriter has given shareholders a double-digit raise every year since initiating its dividend in 2003, and currently trades at a healthy discount to tangible book value.
82. CenturyLink, Inc. (CTL)
Qwest merger should be completed early in 2012, which will undoubtedly push payout ratio into more manageable territory, buoying the current 6% dividend yield.
83. Stryker Corporation (SYK)
My #1 medical equipment/supplies value heading into 2012. Has better revenue momentum and payout ratio than Medtronic, which should keep its streak of 11 straight years with double-digit dividend growth rolling.
84. ACE Limited (ACE)
This insurance/reinsurance company has managed to push its yield above 2% through 18 consecutive years of dividend growth, all while keeping its forward payout ratio under 18%. And it’s currently trading at less than book value and just 8x future earnings.
85. Magna International Inc. (MGA)
A huge beneficiary of the auto rebound, Magna seems to have fully recovered from its dividend suspension. Stock is constantly threatening its all-time high, yet still trades at just 1.6x book value and 11x future earnings.
86. CapLease, Inc. (LSE)
It may be a while before the office space REIT achieves a dividend rate in the ballpark of its 2009 peak. But the current 4.4% yield isn’t too shabby in the meantime, especially coming from a stock that will only set you back about 8x future earnings.
87. Montpelier Re Holdings Ltd. (MRH)
Montpelier has averaged a 25% annual return on shareholder equity since its 2002 IPO. The stock is currently trading at a 20% discount to tangible book value, with a 2% dividend yield
88. Capital One Financial Corp. (COF)
Capital One was one of the many financial companies to slash its dividend during the crisis, and yet its payout is still nearly double its stable 1995-2007 level. Trades at a much steeper discount to book value than similar institutions.
89. Bunge Limited (BG)
Has increased its dividend by an annual average of 11% since it began returning cash to shareholders, and that shouldn’t slow down any time soon. Earnings have much greater momentum, keeping forward payout ratio below 20%.
90. Applied Materials, Inc. (AMAT)
This young payout produces a 2% yield, with plenty of upside. Currently pays just 21% of future earnings to shareholders, despite more than doubling dividend rate since 2005 inception.
91. Walgreen Company (WAG)
A solid value with a payout in danger of plateauing: dividend rate has grown more than twice as fast as sales over the last six years, which obviously can’t continue forever.
92. Walter Energy, Inc. (WLT)
The coal producer’s breakout 2010 (revenue is on pace to grow by 70%) will support its aggressive dividend growth, possibly even pushing it into meaningful territory. The company has doubled its dividend rate since 2008, but still holds a forward payout ratio under 5%
93. Westwood Holdings Group, Inc. (WHG)
Even without counting the special dividends sprinkled in from time to time, WHG has improved its dividend rate by an average of 70% annually since 2003. But you’ll pay for the growth, as the stock currently commands the highest earnings multiple (23.7) among the 100 on this list.
94. Thor Industries, Inc. (THO)
Shares took a double-digit tumble following Thor’s disappointing Q1 earnings report. which proved to be a quality buying opportunity, as the stock has since recovered to its pre-earnings level. A lot hinges on the success of the Heartland RV acquisition, so watch closely.
95. Vodafone Group Plc (VOD)
Net of fees, the mobile communications giant has more than quadrupled its dividend since 2003, pushing the stock’s yield to nearly 5%. Acquiring shares of VOD will currently cost you less than book value, and a little under 10x future earnings.
96. CME Group, Inc. (CME)
After giving shareholders a raise of at least 30% in each of its first five years as a dividend-paying company, CME held its payout flat through the recession. Can it regain its momentum? Taking a chance will barely cost you book value.
97. Medtronic, Inc. (MDT)
Shareholders should be thrilled if the next two decades are even half as good as the last two, which produced average annual dividend growth of 20%. Oh, and the stock went up more than 1200% as well.
98. Best Buy Co., Inc. (BBY)
Shares plunged more than 18% following the electronics retailer’s final earnings report of 2010, and now trade at less than 10x future earnings. The dividend has doubled since its 2003 inception, and is primed for more growth with a forward payout ratio of just 16%.
99. AstraZeneca plc (AZN)
Priced at just 7x future earnings amid a struggle to win FDA approval for Brilinta, the ultra-efficient AZN will be paying its shareholders a well-covered 5% dividend yield while they wait for their shares to bounce back.
100. Franklin Resources, Inc. (BEN)
The investment management company may not feature an impressive yield (0.87%), but it’s not for a lack of trying. With 30 consecutive years of dividend growth, including a quadrupling of its payout over the last decade, BEN is a classic low-yield, high-growth dividend play.
It’s important to realize that these aren’t the 100 stocks I think are most likely to bring home explosive returns during 2012, because I don’t invest with that short of a window in mind. They represent the 100 companies I think are the most attractively-priced for long-term returns as we close the book on 2010.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 1. Vale S.A. (VALE)
Even after rising during the final days of 2010, shares of VALE still trade below 8x future earnings. Dividend has tripled since its 2007 valley, and has plenty of room to grow thanks to a forward payout ratio of just 11% and a top line on pace to nearly double this year.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 2. Tower Group, Inc. (TWGP)
Tower’s revenue and dividend rate have both quintupled since 2006, and neither seem to be losing momentum. Trades at a slight discount to book value and just 7.5x future earnings.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 3. CNOOC Limited (CEO)
Trades at 11x future earnings and carries very little risk thanks to a huge regulatory advantage. Has the exclusive right to share in the production of China’s offshore resources when discovered by a foreign firm, shielding CNOOC from local exploration costs.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 4. Knightsbridge Tankers Limited (VLCCF)
Dividend has recovered nicely from 2009′s cut, and is now paying nearly 9% as shares have failed to properly react to improved prospects. Company secured a $175 million credit facility in 2010 that will enable the purchase of a ninth vessel without raising additional equity.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 5. Life Partners Holdings, Inc. (LPHI)
Looked like it was finally heading toward a proper valuation before a string of bad press held shares down. With zero debt, a 5.3% dividend yield, and a forward earnings multiple of just 7.4, an investment in this unconventional business possesses a huge margin of safety.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 6. Diamond Offshore Drilling, Inc. (DO)
Diamond Offshore has supplemented its modest regular dividend with 15 special payouts since 2006, returning an incredible total of $27.13 per share to stockholders over that span (or 41% of its current share price).
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 7. Jinpan International Limited (JST)
The Chinese manufacturer split its shares and tossed shareholders a 17% dividend hike this year, with little reaction from the market. Will close 2010 with a yield of 1.3%, much better than the 0.49% it opened the year with.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 8. Amtrust Financial Services (AFSI)
Shares deservedly surged over the second half of the year (+46%), but still trade at just 1.5x book value and 7x expected 2012 earnings. Dividend has quadrupled since 2006, yet forward payout ratio remains at just 13%.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 9. Annaly Capital Management, inc. (NLY)
By far the best value for your REIT-buying dollar. That is, if you’re looking for a REIT that managed to improve its dividend every year through the recession, currently yields 14%, and will set you back less than 7x next year’s earnings.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 10. Fifth Street Finance Corp. (FSC)
The most attractively-priced BDC has only been public since 2008, but it sports an under-leveraged balance sheet, a 10% dividend yield, and trades at only a slight premium to its tangible book value.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 11. Lincoln Education Services Corporation (LINC)
Lincoln instantly became the best dividend-paying value in the for-profit education industry when it declared its first payout in November. Yields 6.4% and trades at 7x next year’s conservative earnings consensus.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 12. Chevron Corporation (CVX)
The best value among the integrated energy giants trades at just 9x next year’s earnings, compared to 10.6 for ConocoPhillips and 11.3 for ExxonMobil.
13. BHP Billiton Limited (BHP)
The Australian mining giant is diversified enough to weather the volatile commodity markets, and rich enough to acquire growth while returning an increasingly-substantial amount of cash to shareholders.
The 100 Best Values Among Dividend-Paying Stocks to invest 2012 14. PartnerRe Ltd. (PRE)
Trades at a 20% discount to book value, and the international reinsurer has raised its dividend every year since 1994 – increasing its rate by a total of 450% during that span.
15. Seadrill Limited (SDRL)
The offshore driller has achieved double-digit top line growth every year since going public in 2005, and is currently on pace to triple its 2006 revenue.
16. Intel Corporation (INTC)
A flat year leaves Intel shares with a dividend yield (3.43%) well above its five-year average (2.30%), thanks to the giant chipmaker’s biggest dividend hike since 2006.
17. Alliance Resources Partners, L.P. (ARLP)
Trades at 9x future earnings, yields 5%, has tripled its dividend rate since 2003, and raised its payout for 11 straight quarters.
18. Acme United Corporation (ACU)
An income investor’s dream: Stock is undervalued (1.2x book, 9.4x future earnings), current yield is solid (2.4%), payout ratio remains low (23%), and commitment to dividend growth is clear (boosted rate by an average of 16% annually since 2005).
19. CF Industries Holdings, Inc. (CF)
With revenue and earnings on pace to beat last year’s figures by 50% and the fertilizer company’s forward payout ratio now below 4%, it’s about time for another monster dividend hike from CF, which quintupled its payout in 2008.
20. Suncor Energy Inc. (SU)
Added earning power from Petro-Canada acquisition enabled Suncor to double its dividend without pushing its forward payout ratio over the 20% threshold.
21. Marathon Oil Corporation (MRO)
Despite an expected 23% jump in revenue, Marathon barely traded above book value in 2010. Its year-end price/book ratio (1.18), compares favorably to those of competitors Chevron (1.80), ConocoPhillips (1.44), and ExxonMobil (2.57).
22. VSE Corporation (VSEC)
If you know of any other companies with seven straight years of double-digit dividend growth, seven straight years of double-digit earnings growth, and a forward payout ratio under 5%, please fill me in.
23. TICC Capital Corp. (TICC)
If you’re looking for exposure to the tech industry but don’t want to sacrifice yield, TICC is worth looking into. The tech-focused BDC trades at just a 38% premium to tangible book value, carries no debt, and sports an 8.6% dividend yield.
24. National Presto Industries Inc. (NPK)
The do-it-all manufacturer (Skillets! Ammunition! Diapers!) currently carries a dividend rate seven times the amount paid to NPK shareholders in 2003. Revenue momentum, diversification, and overall financial efficiency should support continued dividend growth.
25. National Interstate Corporation (NATL)
With a forward payout ratio of just 16% despite getting annual raises that have averaged 19% since 2006, this dividend is primed for continued growth.
26. Archer Daniels Midland Company (ADM)
Shares scuffled enough this year to keep their forward earnings multiple under 10 and their yield above 2%, two figures you don’t expect when researching a company that’s quintupled its revenue over the last decade and raised its dividend for 35 consecutive years.
27. Compania de Minas Buenaventura SA (BVN)
Buenaventura offers exposure to both gold and silver, as well as zinc and lead. The Peruvian mining company has low production costs, very little debt, upward dividend momentum, and has quadrupled its top line since 2003.
28. Guess?, Inc. (GES)
Since 2007, my #1 apparel value has managed to boost its dividend (+150%) and revenue (+40%) at impressive rates, recession or not. I can’t wait to see what happens when the economy isn’t terrible.
29. Huaneng Power International, Inc. (HNP)
China’s largest independent electricity producer pays a 5.8% dividend (based on this year’s payout), has fantastic growth momentum (and even better growth prospects), and trades at just a 5% premium to its book value.
30. Textainer Group Holdings Limited (TGH)
The promising young dividend received three more increases in 2010, giving it a total of six since TGH went public three years ago. The stock now yields 3.8%.
31. Novartis AG (NVS)
Even with shares up 11% in December, Novartis remains my #1 pharmaceutical value heading into 2012. The company has given shareholders a double-digit raise in four consecutive years, averaging a 22% annual increase over that span.
32. Analog Devices, Inc. (ADI)
The analog chipmaker has recovered nicely from last year’s revenue decline, pushing its top line up by nearly 50% in 2010 thanks to a bounce in semiconductor demand and the revival of the auto industry. ADI has more than quintupled its dividend rate since 2003.
33. Merck & Co., Inc. (MRK)
Dividend growth has been non-existent for way too long. But revenue, expansion prospects, and margins are all looking up following the Schering-Plough acquisition, all of which should contribute to solving the flat dividend issue sooner than later.
34. Microchip Technology Inc. (MCHP)
Microchip carries by far the highest dividend yield (4.01%) among the many great chipmakers on this list, and continues to give shareholders a slight raise every quarter.
35. Ensco plc (ESV)
The offshore driller has a clean balance sheet, fantastic margins, and trades at a solid valuation. But most importantly, Ensco gave shareholders a 1300% raise in 2010, pushing its yield into relevancy (2.7%).
36. Yamana Gold Inc. (AUY)
It took a late-year plateau in the price of the precious metal and a few aggressive dividend developments, but I did manage to squeeze one gold play onto this list.
37. NewMarket Corporation (NEU)
NewMarket has increased its dividend rate by a staggering 252% since 2006. With solid revenue momentum and a forward payout ratio of just 13%, that fantastic dividend growth should continue.
38. Main Street Capital Corporation (MAIN)
Since its late-2007 IPO, Main Street has doubled both its revenue and shareholder equity. The stock trades at just 13x next year’s earnings with an 8.5% dividend yield.
39. China Mobile Ltd. (CHL)
Holds the world’s largest subscriber base and a dominant market position in China, where mobile penetration is still relatively low (60-65%). Trades at less than 11x earnings, which should only rise as CHL uses its scale to swallow up low-cost growth in rural areas.
40. Atlantic Tele-Network, Inc. (ATNI)
A late-year overreaction to disappointing 3Q results — coupled with a 13th consecutive year of dividend growth — has pushed ATNI’s dividend yield up to 2.4%. That’s well above the 1.59% it was paying coming into 2010.
41. Texas Instruments Incorporated (TXN)
Since holding its dividend rate flat from 1996 until 2004, TI has now increased it sixfold. The company also authorized the repurchase of $27.5 billion in stock over that same period, with nearly $20 billion completed before the stock began its recent surge (+40% since August).
42. Prospect Capital Corporation (PSEC)
The energy-focused BDC has achieved at least double-digit revenue growth every year since its 2004 IPO, carries zero debt, yields 11%, and trades right at tangible book value.
43. Sanderson Farms, Inc. (SAFM)
My top-ranked packaged food company sports a forward payout ratio of just 18% despite averaging 20% annual dividend growth since 2001.
44. Murphy Oil Corporation (MUR)
Murphy’s recent exploration success could allow it to blow its previous growth figures out of the water. Which is pretty impressive, considering the company has boosted its revenue by double-digits in seven of the last eight years.
45. Corning Incorporated (GLW)
Corning’s top line is making a nice recovery following a 2009 decline. The company is increasingly dependent on its display technology business, which isn’t necessarily a bad thing for the time being.
46. Pfizer Inc. (PFE)
Pfizer already has the widest economic moat in the pharmaceutical space. And depending on what it does with that $20 billion war chest, that economic moat will either get wider or get much wider.
47. UnitedHealth Group Inc. (UNH)
United finally made the leap to dividend relevance when it shifted from an annual payout of $0.03 per share to a quarterly dividend of $0.125 per share – a modest 1567% increase.
48. American Eagle Outfitters (AEO)
Shares of AEO fell about 15% this year despite the company’s 10% dividend hike, pushing the stock’s dividend yield over the 3% threshold heading into 2012.
49. Republic Bancorp, Inc. KY (RBCAA)
Even with its stock up 15% for the year and an inevitable decline in its important tax-loan segment on the horizon, Republic Bancorp remains the finest value among regional bank holding companies.
50. Cypress Sharpridge Investments, Inc. (CYS)
Cypress trades right around its tangible book value, where it carries the highest dividend yield (18%) on this list. (Be sure to factor December’s 14 million share offering into your research.)
51. Omega Healthcare Investors, Inc. (OHI)
The healthcare facility REIT yields 6.7% and is one of the few real estate companies to maintain strong dividend and earnings growth through the recession, yet it trades at just 11x next year’s earnings.
52. L-3 Communications Holdings, Inc. (LLL)
Dividend has received annual boosts averaging 27% since 2004, and yet forward payout ratio sits under 20%. L-3 will need that buffer to keep growing its dividend in the face of defense spending cuts, however.
53. The Andersons, Inc. (ANDE)
The diversified agriculture and transportation company seems to have recovered nicely from its 2009 revenue hiccup. The Andersons increased its dividend for the 14th consecutive year by handing shareholders a 22% raise in December.
54. Harris Corporation (HRS)
Harris has increased its dividend rate tenfold since 2002, but kept its forward payout ratio under 20% by tripling its revenue over the same period.
55. Advance America, Cash Advance Centers (AEA)
The largest payday loan generator in the country has pristine valuation metrics, including a forward P/E ratio of just 6, but regulatory concerns make it the ultimate risk/reward play. Investors will be paid handsomely (4.6% dividend yield) to stick it out.
56. The Buckle, Inc. (BKE)
Counting the monster year-end special dividends that have become an annual tradition, The Buckle has grown its dividend output tenfold since 2006.
57. Greif, Inc. (GEF)
Blows away its fellow container manufacturers in most metrics, but especially price/book (2.2) and debt/equity (0.8) ratios. Seven consecutive years of healthy dividend hikes have produced a 478% increase to Greif’s dividend rate and a 2.7% yield.
58. MCG Capital Corporation (MCGC)
Currently sporting an 8% yield, with a solid dividend hike likely looming. MCG has a 77% forward payout ratio in an industry required to return 90% of its taxable earnings to shareholders.
59. Xilinx, Inc. (XLNX)
Even after sharply downgrading its revenue outlook in December, Xilinx remains a solid value. Apparently I’m not the only one who sees it that way, as shares of XLNX actually went up in the days following the announcement.
60. DeVry Inc. (DV)
Even with their late-year push, shares of DV lost 15% of their value in 2010. They now sit below 10x the conservative 2012 earnings estimates laid out by regulation-wary analysts.
61. Microsoft Corporation (MSFT)
Unlike the Zune, Mr. Sofee’s successful transition to a dependable income investment (six straight years of double-digit dividend growth) should not be ignored.
62. RPC, Inc. (RES)
The oil and gas services company recovered nicely from last year’s dividend cut by raising its payout twice in 2010, exceeding earnings expectations, and splitting its stock.
63. Strayer Education, Inc. (STRA)
By far my most controversial pick of 2010, I recommended Strayer at $132 in October and I still think it has plenty of juice as it hovers around $160 today – more than $100 short of its 52-week high.
64. Nucor Corporation (NUE)
Since 2005 alone, the steel giant has raised its dividend rate by 383% and paid an additional $4.785 per share in special payouts.
65. PennantPark Investment Corp. (PNNT)
The last time shares of PNNT traded this high was 2007, when the company was generating half as much revenue and wasn’t even profitable.
66. ConocoPhillips (COP)
Recent acquisitions were poorly-timed, resulting in a rough couple of years for the energy giant. On the bright side, the stock barely trades at 10x next year’s earnings, and sports a dividend yield (3.30%) that blows away its five-year average (2.70%).
67. Sunoco Logistics Partners L.P. (SXL)
The success SXL has achieved since being spun-off from Sunoco in 2002 could be hard to replicate moving forward, but anything close would just be gravy on top of that solid 5.7% dividend yield.
68. Eli Lilly & Co. (LLY)
Facing a steep patent cliff, the company opted not to raise its dividend in 2010 for the first time in 42 years. Here’s to hoping they use the capital to juice their earnings in one way (R&D) or another (M&A).
69. Occidental Petroleum Corporation (OXY)
Ten dividend increases — including seven of at least 10% — since 2003 have boosted the company’s payout by a total of 268%. Yet it still maintains a payout ratio under 30%.
70. Triangle Capital Corporation (TCAP)
Shares of TCAP continue to establish new highs as the year comes to a close, yet they still sport a 9% yield thanks to the BDC’s aggressive dividend growth (nine raises for a total increase of 180% since 2007).
71. PPL Corporation (PPL)
The energy and utility holding company delivers electricity to customers from Montana to England, pays a dividend yield of more than 5%, and has raised its payout in nine consecutive years.
72. Meadbowbrook Insurance Group, Inc. (MIG)
Priced at less than book value and under 10x next year’s earnings, Meadowbrook is an excellent value with strong dividend growth prospects.
73. MFA Financial, Inc. (MFA)
My only complaint about this mortgage-centric REIT is the inconsistency of its dividend, which has upward momentum but tends to meander slightly from quarter to quarter. That still produces a yield in the 10-12% range, however.
74. AFLAC Incorporated (AFL)
Shareholders continue to benefit from Aflac’s competitive pricing, achieved by offering its products at the workplace rather than targeting individuals. The company has tripled its payout since 2003, and given shareholders a raise in 28 consecutive years.
75. Dynex Capital (DX)
Very comparable to MFA Financial. You’ll pay a higher earnings multiple to get a little less yield (10%), but the dividends are more consistent and a little better covered.
76. KLA-Tencor Corporation (KLAC)
Current yield (2.53%) isn’t nearly as attractive as it was before the stock rose 40% over the second half of the year. But the company has more than doubled its dividend since 2006, and is on pace to double its revenue this year, so don’t expect that return to lag for long.
77. Maiden Holdings, Ltd. (MHLD)
The reinsurance provider is trading at a 24% discount to book value and less than 7x next year’s earnings, and carries a 3.5% dividend yield to boot.
78. Canadian Natural Resource Ltd. (CNQ)
Revenue is bouncing back nicely from its 2009 drop, and the board of directors isn’t being stingy with the returns, doubling the dividend rate in May.
79. Exxon Mobil Corporation (XOM)
Exxon’s first year of sub-5% dividend growth since 2002 is an anomaly, not an issue. The company still possesses a low forward payout ratio (27%), and its yield (2.4%) sits well above its five year average (1.9%).
80. Global Partners LP (GLP)
Has averaged a 24% return on equity since going public in 2005, allowing the company to push the limits of its payout ratio in favor of a fat 7% dividend yield.
81. American Equity Investment Life Holding (AEL)
The fixed annuity and life insurance underwriter has given shareholders a double-digit raise every year since initiating its dividend in 2003, and currently trades at a healthy discount to tangible book value.
82. CenturyLink, Inc. (CTL)
Qwest merger should be completed early in 2012, which will undoubtedly push payout ratio into more manageable territory, buoying the current 6% dividend yield.
83. Stryker Corporation (SYK)
My #1 medical equipment/supplies value heading into 2012. Has better revenue momentum and payout ratio than Medtronic, which should keep its streak of 11 straight years with double-digit dividend growth rolling.
84. ACE Limited (ACE)
This insurance/reinsurance company has managed to push its yield above 2% through 18 consecutive years of dividend growth, all while keeping its forward payout ratio under 18%. And it’s currently trading at less than book value and just 8x future earnings.
85. Magna International Inc. (MGA)
A huge beneficiary of the auto rebound, Magna seems to have fully recovered from its dividend suspension. Stock is constantly threatening its all-time high, yet still trades at just 1.6x book value and 11x future earnings.
86. CapLease, Inc. (LSE)
It may be a while before the office space REIT achieves a dividend rate in the ballpark of its 2009 peak. But the current 4.4% yield isn’t too shabby in the meantime, especially coming from a stock that will only set you back about 8x future earnings.
87. Montpelier Re Holdings Ltd. (MRH)
Montpelier has averaged a 25% annual return on shareholder equity since its 2002 IPO. The stock is currently trading at a 20% discount to tangible book value, with a 2% dividend yield
88. Capital One Financial Corp. (COF)
Capital One was one of the many financial companies to slash its dividend during the crisis, and yet its payout is still nearly double its stable 1995-2007 level. Trades at a much steeper discount to book value than similar institutions.
89. Bunge Limited (BG)
Has increased its dividend by an annual average of 11% since it began returning cash to shareholders, and that shouldn’t slow down any time soon. Earnings have much greater momentum, keeping forward payout ratio below 20%.
90. Applied Materials, Inc. (AMAT)
This young payout produces a 2% yield, with plenty of upside. Currently pays just 21% of future earnings to shareholders, despite more than doubling dividend rate since 2005 inception.
91. Walgreen Company (WAG)
A solid value with a payout in danger of plateauing: dividend rate has grown more than twice as fast as sales over the last six years, which obviously can’t continue forever.
92. Walter Energy, Inc. (WLT)
The coal producer’s breakout 2010 (revenue is on pace to grow by 70%) will support its aggressive dividend growth, possibly even pushing it into meaningful territory. The company has doubled its dividend rate since 2008, but still holds a forward payout ratio under 5%
93. Westwood Holdings Group, Inc. (WHG)
Even without counting the special dividends sprinkled in from time to time, WHG has improved its dividend rate by an average of 70% annually since 2003. But you’ll pay for the growth, as the stock currently commands the highest earnings multiple (23.7) among the 100 on this list.
94. Thor Industries, Inc. (THO)
Shares took a double-digit tumble following Thor’s disappointing Q1 earnings report. which proved to be a quality buying opportunity, as the stock has since recovered to its pre-earnings level. A lot hinges on the success of the Heartland RV acquisition, so watch closely.
95. Vodafone Group Plc (VOD)
Net of fees, the mobile communications giant has more than quadrupled its dividend since 2003, pushing the stock’s yield to nearly 5%. Acquiring shares of VOD will currently cost you less than book value, and a little under 10x future earnings.
96. CME Group, Inc. (CME)
After giving shareholders a raise of at least 30% in each of its first five years as a dividend-paying company, CME held its payout flat through the recession. Can it regain its momentum? Taking a chance will barely cost you book value.
97. Medtronic, Inc. (MDT)
Shareholders should be thrilled if the next two decades are even half as good as the last two, which produced average annual dividend growth of 20%. Oh, and the stock went up more than 1200% as well.
98. Best Buy Co., Inc. (BBY)
Shares plunged more than 18% following the electronics retailer’s final earnings report of 2010, and now trade at less than 10x future earnings. The dividend has doubled since its 2003 inception, and is primed for more growth with a forward payout ratio of just 16%.
99. AstraZeneca plc (AZN)
Priced at just 7x future earnings amid a struggle to win FDA approval for Brilinta, the ultra-efficient AZN will be paying its shareholders a well-covered 5% dividend yield while they wait for their shares to bounce back.
100. Franklin Resources, Inc. (BEN)
The investment management company may not feature an impressive yield (0.87%), but it’s not for a lack of trying. With 30 consecutive years of dividend growth, including a quadrupling of its payout over the last decade, BEN is a classic low-yield, high-growth dividend play.
The top 5 Oil Stocks to invest in 2012
Below is a list of my latest oil stock picks for 2012. These 2012 Oil Stock Picks are my favor stocks to buy and some of the stocks I will be trading personally. Last year, one of my top oil stock picks was Brigham Exploration (BEXP). BEXP stock went from $15 to $27 from July to December of 2012 and was one of my biggest stock gainers of the year. I feel 2012 will be a good year for stocks and the overall stock market. Oil in 2012 should hit $110-$120 which would make the oil stocks rally even higher.
Key Areas of Oil Exploration in 2012 – Eagle Ford Shale – Niobrara Shale – Bakken Shale – Permian Basin – Oil Discoveries are still going on in these fields and in 2012, more Oil Discoveries will be made. Keep an eye on the Chainman Shale – Cabot Oil & Gas (COG) mentioned in late 2012 that they are drilling for oil in the Chainman Shale. We also have Venoco (VQ) drilling the Monterey Shale in California. With that, here is a list of my best oil stock picks for 2012
#1 Top Oil Stock Pick 2012 – Oil Stocks – Hyperdynamics Corporation (HDY) – While Hyperdynamics (HDY) is my top stock pick of 2012, it is a risky one. The company has no revenues and does not make any money but could be sitting on a very large pool of oil off the coast of Africa. Drilling for oil is expected to begin in December 2012. Hyperdynamics was headed into a downward spiral over the past couple years but changed the management team in 2012 who vowed to take the company in a new direction. Hyperdynamics has a very large prospective leased area off the coast of the Republic of Guinea. In November 2012, Hyperdynamics raised $30 million in a private placement from financial giant Blackrock (BLK) which will help in preperation costs to drill for oil in late 2012. Hyperdynamics did a few surveys and believe they could be sitting on billions of barrels of oil.
As for HDY stock in 2012, It is my top stock to buy and my best trading idea. I have been trading HDY since the stock was $1.60 in August 2012 and gave it a price target of $4 – $6 for 2012. HDY hit a high of $3.63 in October 2012 and continues to trade around $3.00 as we head into 2012. If everything goes as planned and the company does infact sit on top of a large oil pool, we could be looking at a $8-$10 stock by year end 2012 in my opinion. I gave it a target of $4 – $6 when the stock was hitting $2.60 just to be on the conservative side. Of coarse, if Hyperdynamics announces any delays or lesser oil reserves, all bets are off. Pullbacks below $2.50 should be a great buy if you are looking for an entry point. I currently own HDY stock for the long term and will buy more stock on pullbacks. If you have any questions or feel like discussing HDY stock, visit my HDY message forum thread.
#2 Top Oil Stock Pick for 2012 – Kodiak Oil & Gas (KOG) – Kodiak Oil & Gas was another huge stock gainer for me at the end of 2012. I bought KOG stock at $4.30 in mid November 2012 and sold between $5.00-$5.70 a month later. KOG went on to hit $6.69 a few weeks later. Kodiak Oil in Gas recently aquired additional acreage in the Bakken Shale. This acreage is in some of the best zones in the Bakken which includes the Three Forks Oil zone. When I originally bought KOG at $4.30, I placed a personal target of $8-$10 on it for 2012. I am sticking with this and feel the stock could even hit $12. A lot will depend on what oil does but ultimately the stock is going a lot higher. While I don’t own KOG right now, I plan to buy the stock on any major correction.
Key Areas of Oil Exploration in 2012 – Eagle Ford Shale – Niobrara Shale – Bakken Shale – Permian Basin – Oil Discoveries are still going on in these fields and in 2012, more Oil Discoveries will be made. Keep an eye on the Chainman Shale – Cabot Oil & Gas (COG) mentioned in late 2012 that they are drilling for oil in the Chainman Shale. We also have Venoco (VQ) drilling the Monterey Shale in California. With that, here is a list of my best oil stock picks for 2012
#1 Top Oil Stock Pick 2012 – Oil Stocks – Hyperdynamics Corporation (HDY) – While Hyperdynamics (HDY) is my top stock pick of 2012, it is a risky one. The company has no revenues and does not make any money but could be sitting on a very large pool of oil off the coast of Africa. Drilling for oil is expected to begin in December 2012. Hyperdynamics was headed into a downward spiral over the past couple years but changed the management team in 2012 who vowed to take the company in a new direction. Hyperdynamics has a very large prospective leased area off the coast of the Republic of Guinea. In November 2012, Hyperdynamics raised $30 million in a private placement from financial giant Blackrock (BLK) which will help in preperation costs to drill for oil in late 2012. Hyperdynamics did a few surveys and believe they could be sitting on billions of barrels of oil.
As for HDY stock in 2012, It is my top stock to buy and my best trading idea. I have been trading HDY since the stock was $1.60 in August 2012 and gave it a price target of $4 – $6 for 2012. HDY hit a high of $3.63 in October 2012 and continues to trade around $3.00 as we head into 2012. If everything goes as planned and the company does infact sit on top of a large oil pool, we could be looking at a $8-$10 stock by year end 2012 in my opinion. I gave it a target of $4 – $6 when the stock was hitting $2.60 just to be on the conservative side. Of coarse, if Hyperdynamics announces any delays or lesser oil reserves, all bets are off. Pullbacks below $2.50 should be a great buy if you are looking for an entry point. I currently own HDY stock for the long term and will buy more stock on pullbacks. If you have any questions or feel like discussing HDY stock, visit my HDY message forum thread.
#2 Top Oil Stock Pick for 2012 – Kodiak Oil & Gas (KOG) – Kodiak Oil & Gas was another huge stock gainer for me at the end of 2012. I bought KOG stock at $4.30 in mid November 2012 and sold between $5.00-$5.70 a month later. KOG went on to hit $6.69 a few weeks later. Kodiak Oil in Gas recently aquired additional acreage in the Bakken Shale. This acreage is in some of the best zones in the Bakken which includes the Three Forks Oil zone. When I originally bought KOG at $4.30, I placed a personal target of $8-$10 on it for 2012. I am sticking with this and feel the stock could even hit $12. A lot will depend on what oil does but ultimately the stock is going a lot higher. While I don’t own KOG right now, I plan to buy the stock on any major correction.
8 Tech Penny Stocks to invest in 2012
what to invest in 2012, now we will show you as follow:
8 Tech Penny Stocks to Buy Now
Technology stocks have been on a tear lately, with the tech-heavy Nasdaq outperforming the Dow Jones Industrial Average 17% to 13% across the last six months. But it’s worth noting that many small-cap tech stocks have done much better than that, while blue chips like Microsoft (NASDAQ: MSFT), Cisco (NASDAQ: CSCO) and Google (NASDAQ: GOOG) have all underperformed.
You can see the power of the tech sector best in small, agile penny stocks that are surging recently. I of course don’t mean penny stock in a literal sense – as a rule, any micro-cap pink sheet or OTC investment that goes for only a few cents a share is a massive gamble. By “penny stock” I mean ultra low-priced companies, but ones that are larger than $100 million in market capitalization.
To help you share in the tech penny stock surge, consider these 8 investments and their recent gains:
Sirius XM Radio Inc: Year-to-date, stock of Sirius XM Radio Inc. (NASDAQ: SIRI) is up +13%. Sirius offers satellite radio content on music, sports and news in the United States for a subscription fee. In the last 12 months, SIRI has gained an impressive +112%, compared to much smaller gains by the broader markets.
ICO Global Communications: Mobile satellite service operator ICO Global Communications (NASDAQ: ICOG) has posted an impressive stock gain of +132% in the last 12 months. More recently, this penny stock is up +44% in the last 30 days alone. If bought at the right time, ICOG can be great for your portfolio, as it jumped +40% in one day in March. ICO Global is an example of how explosive tech penny stocks can be.
* Related Article: 10 Best Stocks for 2011
8×8 Inc: Known for its telecommunication services, 8×8 Inc. (NASDAQ: EGHT) has gained +19% year-to-date. Looking in the longer term, EGHT is up +86% in the last year. This quarter, analysts are predicting EGHT will posted EPS of four cents, up from two cents last year. But percentage-wise, that’s a 50% increase! This shows how just a small jump in earnings can really mean big things for a penny stock in the tech sector.
EMCORE Corp: Offering a wide range of semiconductor products, EMCORE Corp. (NASDAQ: EMKR) has experience a jump in stock price of +119% since the beginning of 2011. This stock has also jumped +73% since the beginning of February, and posted a quarterly revenue growth of +23% in its last income statement. This penny stock has a 52-week range of 71 cents to $3.25 – but just touched its high a month ago before the March contraction. There’s no reason EMKR stock can’t get back to those levels very soon.
* Related Articles: Dividend Stocks to Buy
Dot Hill Systems Corp: Provider of storage systems and enterprise server software, Dot Hill Systems Corp. (NASDAQ: HILL) is another penny stock worth keeping an eye on. Year-to-date, this tech stock has gained +70%, compared to a gain of just +7% for the Dow Jones. In the last 12 months, this stock has soared +101% as well.
Identive Group Inc: Focusing on identification-based technologies, Identive Group Inc. (NASDAQ: INVE) has watched its stock gain +7% year-to-date and +47% in the last 12 months. Shareholders of INVE can also point to the company’s quarterly revenue growth, which was reported as +111%, in its last income statement.
RAE Systems Inc: Known for providing wireless sensor networks that enable its customers worldwide to identify safety and security threats in real-time, RAE Systems Inc. (AMEX: RAE) has the potential to grow your portfolio in a hurry. Over the last year, this penny stock is up +115%. In September, RAE stock jumped +42% in just three days, showing the penny stock’s short term potential. Buy this penny stock as it trades just below its 52-week high of $1.88.
Mad Catz Interactive Inc: Known for its video game accessories, Mad Catz Interactive Inc. (AMEX: MCZ) has been the highest performing stock on this list. In the last year, MCZ is up an incredible +381%. The success has continued as of late, as this penny stock has gained +115%, year-to-date. A quarterly revenue growth of +91% and a quarterly earnings growth of +73%, only add to this stock’s impressive resume.
8 Tech Penny Stocks to Buy Now
Technology stocks have been on a tear lately, with the tech-heavy Nasdaq outperforming the Dow Jones Industrial Average 17% to 13% across the last six months. But it’s worth noting that many small-cap tech stocks have done much better than that, while blue chips like Microsoft (NASDAQ: MSFT), Cisco (NASDAQ: CSCO) and Google (NASDAQ: GOOG) have all underperformed.
You can see the power of the tech sector best in small, agile penny stocks that are surging recently. I of course don’t mean penny stock in a literal sense – as a rule, any micro-cap pink sheet or OTC investment that goes for only a few cents a share is a massive gamble. By “penny stock” I mean ultra low-priced companies, but ones that are larger than $100 million in market capitalization.
To help you share in the tech penny stock surge, consider these 8 investments and their recent gains:
Sirius XM Radio Inc: Year-to-date, stock of Sirius XM Radio Inc. (NASDAQ: SIRI) is up +13%. Sirius offers satellite radio content on music, sports and news in the United States for a subscription fee. In the last 12 months, SIRI has gained an impressive +112%, compared to much smaller gains by the broader markets.
ICO Global Communications: Mobile satellite service operator ICO Global Communications (NASDAQ: ICOG) has posted an impressive stock gain of +132% in the last 12 months. More recently, this penny stock is up +44% in the last 30 days alone. If bought at the right time, ICOG can be great for your portfolio, as it jumped +40% in one day in March. ICO Global is an example of how explosive tech penny stocks can be.
* Related Article: 10 Best Stocks for 2011
8×8 Inc: Known for its telecommunication services, 8×8 Inc. (NASDAQ: EGHT) has gained +19% year-to-date. Looking in the longer term, EGHT is up +86% in the last year. This quarter, analysts are predicting EGHT will posted EPS of four cents, up from two cents last year. But percentage-wise, that’s a 50% increase! This shows how just a small jump in earnings can really mean big things for a penny stock in the tech sector.
EMCORE Corp: Offering a wide range of semiconductor products, EMCORE Corp. (NASDAQ: EMKR) has experience a jump in stock price of +119% since the beginning of 2011. This stock has also jumped +73% since the beginning of February, and posted a quarterly revenue growth of +23% in its last income statement. This penny stock has a 52-week range of 71 cents to $3.25 – but just touched its high a month ago before the March contraction. There’s no reason EMKR stock can’t get back to those levels very soon.
* Related Articles: Dividend Stocks to Buy
Dot Hill Systems Corp: Provider of storage systems and enterprise server software, Dot Hill Systems Corp. (NASDAQ: HILL) is another penny stock worth keeping an eye on. Year-to-date, this tech stock has gained +70%, compared to a gain of just +7% for the Dow Jones. In the last 12 months, this stock has soared +101% as well.
Identive Group Inc: Focusing on identification-based technologies, Identive Group Inc. (NASDAQ: INVE) has watched its stock gain +7% year-to-date and +47% in the last 12 months. Shareholders of INVE can also point to the company’s quarterly revenue growth, which was reported as +111%, in its last income statement.
RAE Systems Inc: Known for providing wireless sensor networks that enable its customers worldwide to identify safety and security threats in real-time, RAE Systems Inc. (AMEX: RAE) has the potential to grow your portfolio in a hurry. Over the last year, this penny stock is up +115%. In September, RAE stock jumped +42% in just three days, showing the penny stock’s short term potential. Buy this penny stock as it trades just below its 52-week high of $1.88.
Mad Catz Interactive Inc: Known for its video game accessories, Mad Catz Interactive Inc. (AMEX: MCZ) has been the highest performing stock on this list. In the last year, MCZ is up an incredible +381%. The success has continued as of late, as this penny stock has gained +115%, year-to-date. A quarterly revenue growth of +91% and a quarterly earnings growth of +73%, only add to this stock’s impressive resume.
Top 10 Stocks NOT to Buy in 2011
It’s hard to believe, but the holiday season is upon us and there is only about a month and a half left in 2010. Because this is the busiest time of the year for investors like you, I thought I’d get out ahead of the New Year and I would give you 10 stocks that I think you should dump for 2011.
Some of these stocks have had a good run and some never really got anything going this year, but all are too risky if you’re looking to build a solid portfolio in 2011.
Let’s get right to this list of stocks you should sell or avoid as we close out 2010.
Some of these stocks have had a good run and some never really got anything going this year, but all are too risky if you’re looking to build a solid portfolio in 2011.
Let’s get right to this list of stocks you should sell or avoid as we close out 2010.
6 Stocks to Sell in November
Despite high unemployment, a shakyU.S.economy with talk of a double-dip recession, and more debt crises inEurope, stocks enjoyed one of the best Octobers on record. However, with earnings of most of the big movers of the S&P 500 now reported, the focus of investors is again turning toEurope, and the picture is not good.Greece’s problems remain,SpainandItalyalso have serious problems, andChina’s inflation rate caused their leaders to tighten credit, which could have a nasty impact on the West.
The names on this month’s list of stocks to sell are from sectors that would be negatively impacted by the continuing problems in Europe, along with another slowdown in theUnited States. andAsia. Banks and financial services are high on the list of those that would be hit again. But building industry stocks, especially those that have rallied recently, are also subject to heavy selling. And companies that have been beneficiaries of the early run for solar power are now paying the price of oversupply and competition.
Here is our list of stocks to sell in November:
The names on this month’s list of stocks to sell are from sectors that would be negatively impacted by the continuing problems in Europe, along with another slowdown in theUnited States. andAsia. Banks and financial services are high on the list of those that would be hit again. But building industry stocks, especially those that have rallied recently, are also subject to heavy selling. And companies that have been beneficiaries of the early run for solar power are now paying the price of oversupply and competition.
Here is our list of stocks to sell in November:
Best Cheap Stocks For 2011
This has been quite a winter.
From Arab states falling to Twitter revolutions, to U.S. states finally owning up to their own fiscal shortfalls, to natural disasters in New Zealand, Australia and now Japan, stock markets around the world have been swinging up and down in manic runs from hope to despair.
And one other thing is true: The markets hate uncertainty. That means, in our current circumstances, smart investors are looking for real assets — tangible commodities and resources that the world has to have to survive or hedge against uncertainty. In 2010, I picked silver miner Silver Wheaton (NYSE: SLW) as my top stock for the year. It doesn’t get much more tangible than silver, and with the metal’s run higher, the stock was up more than 150%.
This year, I’ve found a couple more standouts in the real asset sector.
This duo is a real asset play on the same megatrend that’s been building since the dawn of man: The world’s need for food…
On a per-capita basis, China has just a fraction of the available farmland as most other countries. And the gap is getting wider. Population is growing by around 10 million per year, while millions of acres of prime agricultural land are lost to soil erosion, urban construction, and heavy metals pollution.
This dire situation presents ongoing challenges for farmers — but unique opportunities for companies whose products can boost crop yields.
That’s where Yongye (Nasdaq: YONG) comes in. The firm is an emerging leader in the “green” agriculture movement, specializing in organic crop nutrients and animal feed supplements. The company has several advantages over the competition.
First, its chief marketing officer literally wrote the book on reaching out to rural farmers.
Second, its Shengmingsu brand’s liquid nutrient has proven to increase output by 22% and reduce harvest time by up to two weeks.
Finally, Yongye has been negotiating with independently owned supply stores to prominently display (and push) the Shengmingsu brand. The company has a year-end goal of 30,000 stores selling its product.
Ordinarily, you’d have to pay a rich premium for all this — but Yongye is trading at just five times forward earnings, a sharp discount to its expected 40%-plus growth rate. This stock could double in the next 12 months.
And prices are still rising at the wholesale level, which means more retail markups in the weeks and months ahead. According to the U.S. Department of Agriculture, producers fetched higher prices for corn, soybeans, eggs, milk and apples last month.
Some of the blame (or credit, depending on your perspective) belongs to the Fed‘s dollar debasement policies. By definition, a depreciating dollar boosts the prices of dollar-denominated agricultural commodities.
But old-fashioned supply/demand imbalances are also playing a major role. A bad Russian winter wheat harvest and subsequent export ban sent prices skyrocketing. Here in the United States, torrential rains in the Corn Belt have left supplies at the lowest levels in 15 years.
Growing demand and shrinking supplies intersect at rising prices. Corn futures have spiked more than 70% since June. Wheat prices have spiked 35% so far this year. Soybeans and sugar are the same story.
And, because beef, pork and dairy producers have to buy mountains of feed for their livestock, rising grain prices will likely spill into the meat aisle as well (there’s typically a six-month lag).
With all this in mind, I strongly recommend readers fight back against the relentless price hikes by converting a few dollars into bacon and cereal — or at least pork bellies and corn.
========================== Part 2 ==========================
Large pharmaceutical companies are facing a crisis. The industry spent a record $65 billion on research and development (R&D) in 2009, but approval rates for new drugs have fallen 44% during the past decade and continue to drop. Also in 2009, drugs launched in the previous five years accounted for only 7% of all sales, meaning that older drugs closer to patent expiration make up the vast majority of sales. The failure rate of drugs in the final stages of development has doubled in recent years.
Part of Glaxo’s shifting approach will be to outsource the initial stages of drug development. These earlier stages are the riskiest, as failure rates are high and are also costly, given the large number of compounds that must be tested. Finding the needle in a haystack is an understatement when it comes to bringing successful drugs to market. Other companies are following suit.The general belief is that Big Pharma will eventually outsource most of its drug development work to outsiders, be they university laboratories, smaller development-stage pharmaceutical and biotech startups, or companies known as contract research organizations (CROs).
Below is a list of the leading CROs…
Covance (NYSE: CVD) is the largest CRO in terms of sales and market capitalization, but not by a wide margin compared to Pharmaceutical Product Development Inc. (Nasdaq: PPDI). Charles River Labs (NYSE: CRL) and Parexel (Nasdaq: PRXL) are similar in terms of sales, while Icon plc (Nasdaq: ICLR), out of Ireland, is the smallest.
Here is an overview of the two that look most compelling to me from an investment standpoint.
Hands down, Icon has been the fastest growing of the CROs. In the past three, five, and 10-year periods, sales growth has averaged more than 20% annually, as has profit growth. 55% of its business stems from long-term contracts that are fixed in price, which provides a fair level of revenue stability. The company also counts the top 20 pharmaceutical companies in the world as clients and boasts more than 650 clients total.
Icon is one of the most globally diversified CROs and is also impressively profitable. The company posted operating margins of 11.2% and returns on invested capital (ROIC) in the mid-teens (see table above) in its latest fiscal year. The stock looks a bit expensive looking at the forward P/E and trailing free cash flow, but the company is using this year to invest in its business and expects profits to take a short-term dip, after which growth has a solid chance of returning to historical levels and generating impressive returns for investors.
Best Cheap Stocks For 2011: Pharmaceutical Product Development Inc. (Nasdaq: PPDI)
Pharmaceutical Product Development Inc., or PPDI for short, has been another consistent grower over time that is impressively profitable. The company has been around for more than 25 years, which makes it one of the oldest CRO firms, allowing it time to extend its services to 43 countries. It has strong capabilities in the earliest stages of drug development, such as Phase I clinical trials.
From Arab states falling to Twitter revolutions, to U.S. states finally owning up to their own fiscal shortfalls, to natural disasters in New Zealand, Australia and now Japan, stock markets around the world have been swinging up and down in manic runs from hope to despair.
And one other thing is true: The markets hate uncertainty. That means, in our current circumstances, smart investors are looking for real assets — tangible commodities and resources that the world has to have to survive or hedge against uncertainty. In 2010, I picked silver miner Silver Wheaton (NYSE: SLW) as my top stock for the year. It doesn’t get much more tangible than silver, and with the metal’s run higher, the stock was up more than 150%.
This year, I’ve found a couple more standouts in the real asset sector.
This duo is a real asset play on the same megatrend that’s been building since the dawn of man: The world’s need for food…
Best Cheap Stocks For 2011: Agricultural demand is growing
China, for instance, has a lot of mouths to feed — 1.3 billion at last count, or 15-20% of the world’s population. Unfortunately, it only has 7% of the planet’s arable land (and most of that is relatively unproductive).On a per-capita basis, China has just a fraction of the available farmland as most other countries. And the gap is getting wider. Population is growing by around 10 million per year, while millions of acres of prime agricultural land are lost to soil erosion, urban construction, and heavy metals pollution.
This dire situation presents ongoing challenges for farmers — but unique opportunities for companies whose products can boost crop yields.
That’s where Yongye (Nasdaq: YONG) comes in. The firm is an emerging leader in the “green” agriculture movement, specializing in organic crop nutrients and animal feed supplements. The company has several advantages over the competition.
First, its chief marketing officer literally wrote the book on reaching out to rural farmers.
Second, its Shengmingsu brand’s liquid nutrient has proven to increase output by 22% and reduce harvest time by up to two weeks.
Finally, Yongye has been negotiating with independently owned supply stores to prominently display (and push) the Shengmingsu brand. The company has a year-end goal of 30,000 stores selling its product.
Ordinarily, you’d have to pay a rich premium for all this — but Yongye is trading at just five times forward earnings, a sharp discount to its expected 40%-plus growth rate. This stock could double in the next 12 months.
Best Cheap Stocks For 2011: Prices for agricultural staples are rising
The bureaucrats can say all they want about benign inflation. Apparently, they haven’t been to a grocery store lately.And prices are still rising at the wholesale level, which means more retail markups in the weeks and months ahead. According to the U.S. Department of Agriculture, producers fetched higher prices for corn, soybeans, eggs, milk and apples last month.
Some of the blame (or credit, depending on your perspective) belongs to the Fed‘s dollar debasement policies. By definition, a depreciating dollar boosts the prices of dollar-denominated agricultural commodities.
But old-fashioned supply/demand imbalances are also playing a major role. A bad Russian winter wheat harvest and subsequent export ban sent prices skyrocketing. Here in the United States, torrential rains in the Corn Belt have left supplies at the lowest levels in 15 years.
Growing demand and shrinking supplies intersect at rising prices. Corn futures have spiked more than 70% since June. Wheat prices have spiked 35% so far this year. Soybeans and sugar are the same story.
And, because beef, pork and dairy producers have to buy mountains of feed for their livestock, rising grain prices will likely spill into the meat aisle as well (there’s typically a six-month lag).
With all this in mind, I strongly recommend readers fight back against the relentless price hikes by converting a few dollars into bacon and cereal — or at least pork bellies and corn.
========================== Part 2 ==========================
Large pharmaceutical companies are facing a crisis. The industry spent a record $65 billion on research and development (R&D) in 2009, but approval rates for new drugs have fallen 44% during the past decade and continue to drop. Also in 2009, drugs launched in the previous five years accounted for only 7% of all sales, meaning that older drugs closer to patent expiration make up the vast majority of sales. The failure rate of drugs in the final stages of development has doubled in recent years.
Best Cheap Stocks For 2011: PFE,GSK
These facts are sobering proof that productivity levels for bringing successful drugs to market have declined severely in recent years. It is leading to soul searching in the industry and large cutbacks in R&D expenditure. Pfizer (NYSE: PFE), one of the largest of the Big Pharma firms, is cutting R&D from 2010 levels of $9.4 billion to between $6.5 billion and $7 billion by 2012. European drug giant GlaxoSmithKline (NYSE: GSK) will cut spending by up to $4 billion and plans to radically change how it tries to bring new drugs to market. One industry source found it extremely troubling that the market sees R&D as destroying shareholder value.Part of Glaxo’s shifting approach will be to outsource the initial stages of drug development. These earlier stages are the riskiest, as failure rates are high and are also costly, given the large number of compounds that must be tested. Finding the needle in a haystack is an understatement when it comes to bringing successful drugs to market. Other companies are following suit.The general belief is that Big Pharma will eventually outsource most of its drug development work to outsiders, be they university laboratories, smaller development-stage pharmaceutical and biotech startups, or companies known as contract research organizations (CROs).
Below is a list of the leading CROs…
Covance (NYSE: CVD) is the largest CRO in terms of sales and market capitalization, but not by a wide margin compared to Pharmaceutical Product Development Inc. (Nasdaq: PPDI). Charles River Labs (NYSE: CRL) and Parexel (Nasdaq: PRXL) are similar in terms of sales, while Icon plc (Nasdaq: ICLR), out of Ireland, is the smallest.
Here is an overview of the two that look most compelling to me from an investment standpoint.
Best Cheap Stocks For 2011: Icon plc (Nasdaq: ICLR)
Hands down, Icon has been the fastest growing of the CROs. In the past three, five, and 10-year periods, sales growth has averaged more than 20% annually, as has profit growth. 55% of its business stems from long-term contracts that are fixed in price, which provides a fair level of revenue stability. The company also counts the top 20 pharmaceutical companies in the world as clients and boasts more than 650 clients total.
Icon is one of the most globally diversified CROs and is also impressively profitable. The company posted operating margins of 11.2% and returns on invested capital (ROIC) in the mid-teens (see table above) in its latest fiscal year. The stock looks a bit expensive looking at the forward P/E and trailing free cash flow, but the company is using this year to invest in its business and expects profits to take a short-term dip, after which growth has a solid chance of returning to historical levels and generating impressive returns for investors.
Best Cheap Stocks For 2011: Pharmaceutical Product Development Inc. (Nasdaq: PPDI)
Pharmaceutical Product Development Inc., or PPDI for short, has been another consistent grower over time that is impressively profitable. The company has been around for more than 25 years, which makes it one of the oldest CRO firms, allowing it time to extend its services to 43 countries. It has strong capabilities in the earliest stages of drug development, such as Phase I clinical trials.
Best Cheap Stocks For 2011: Merck (NYSE: MRK)
PPDI trades for one of the lowest free cash flow multiples and also boasts double-digit returns on invested capital. The company has a reputation for low client turnover, and counts Merck (NYSE: MRK) as a key strategic client. It is also the only CRO to pay a dividend, which demonstrates its confidence in generating stable and consistent profits. Its current dividend yield is 2.1% and should appeal to income-oriented investors.
Best Energy Stocks Pick For 2012
President Obama made a speech where he announced a goal of cutting oil imports by a third over the next decade. He included a pledge to have federal agencies buy only alt-fuel vehicles by 2015 and a promise to expand U.S. oil exploration and production.
Transitioning half the cars and trucks in the U.S. to natural gas transportation over the next 5 to 10 years could reduce foreign oil imports by 5 million barrels every day.
So natural gas is an obvious play. Renewable/alternative fuels are other good choices.
Here are my four best picks that could make investors a bundle from the President’s new policy:
Best Energy Stocks Pick For 2012#1—
Clean Energy Fuels (CLNE)
The company owns and/or supplies more than 200 natural gas fueling stations across the U.S. and Canada. It serves over 320 fleet customers operating over 20,000 natural gas vehicles. The customers can use Clean Energy’s fuel stations to tank up their vehicles with compressed natural gas (CNG) or liquefied natural gas (LNG).
Clean Energy Fuels also provides natural gas vehicle systems and conversions for taxis, limousines, vans, pick-up trucks, and shuttle buses through its BAF subsidiary in Texas. Clean Energy helps customers buy and finance natural gas vehicles and obtain government incentives.
The company buys CNG from local utilities and produces LNG at its two plants (in California and Texas) with a combined capacity of 260,000 gallons per day.
Clean Energy owns and operates an LNG liquefaction plant near Houston, Texas, which it calls the Pickens Plant, capable of producing up to 35 million gallons of LNG per year.
And investors who buy CLNE won’t be alone …
Founder and billionaire oilman T. Boone Pickens owns a sizeable chunk of Clean Energy.
Best Energy Stocks Pick For 2012 #2—
Westport Innovations (WPRT)
This company makes natural gas engines for forklifts, oilfield services engines, trucks and buses and automobiles. Its 50-50 joint venture Cummins Westport project builds natural gas vehicle engines for trucks and buses that could refill at the clean energy stations built by Clean Energy.
It made revenues of $154 million in the last year and isn’t close to profitability yet. But a concerted push toward natural-gas powered vehicles could change that.
WPRT is at the top of its 52-week range. So I’d wait for a pullback.
Best Energy Stocks Pick For 2012 #3—
Talisman Energy (TLM)
Talisman had 1.4 billion barrels of oil equivalent in reserves last year. It has material positions in three world-class, liquids-heavy shale plays in North America: The Marcellus shale (Pennsylvania), Montney shale (British Columbia) and Utica shale (Quebec). It is also expanding its Eagle Ford shale properties, in a 50-50 joint venture with Statoil.
The company also signed two $1.05 billion deals with Sasol of South Africa. This partnership is sketching out plans for a new multibillion-dollar facility near Edmonton that could process as much as a billion cubic feet of natural gas a day into 96,000 barrels of refined products through the Fischer-Tropsch process.
Fischer-Tropsch works by using heat and chemical catalysts to break down a substance like natural gas into its molecular basics and then rebuild those molecules into something else — such as diesel.
Why do that?
A barrel of oil contains roughly six times the energy content of a thousand cubic feet of gas. Since 6 thousand cubic feet of gas is worth about $24 (U.S.), and one barrel of oil is worth about $100, there is a tremendous profit margin if you can convert one to the other cost-effectively.
Best Energy Stocks Pick For 2012 #4—
PowerShares Wilderhill
Clean Energy Fund (PBW)
This is one of the largest alternative energy ETFs with over $500 million in assets. Large holdings include GT Solar, Yingli Green Energy, SunPower Corp., Trina Solar and more.
Transitioning half the cars and trucks in the U.S. to natural gas transportation over the next 5 to 10 years could reduce foreign oil imports by 5 million barrels every day.
So natural gas is an obvious play. Renewable/alternative fuels are other good choices.
Here are my four best picks that could make investors a bundle from the President’s new policy:
Best Energy Stocks Pick For 2012#1—
Clean Energy Fuels (CLNE)
The company owns and/or supplies more than 200 natural gas fueling stations across the U.S. and Canada. It serves over 320 fleet customers operating over 20,000 natural gas vehicles. The customers can use Clean Energy’s fuel stations to tank up their vehicles with compressed natural gas (CNG) or liquefied natural gas (LNG).
Clean Energy Fuels also provides natural gas vehicle systems and conversions for taxis, limousines, vans, pick-up trucks, and shuttle buses through its BAF subsidiary in Texas. Clean Energy helps customers buy and finance natural gas vehicles and obtain government incentives.
The company buys CNG from local utilities and produces LNG at its two plants (in California and Texas) with a combined capacity of 260,000 gallons per day.
Clean Energy owns and operates an LNG liquefaction plant near Houston, Texas, which it calls the Pickens Plant, capable of producing up to 35 million gallons of LNG per year.
And investors who buy CLNE won’t be alone …
Founder and billionaire oilman T. Boone Pickens owns a sizeable chunk of Clean Energy.
Best Energy Stocks Pick For 2012 #2—
Westport Innovations (WPRT)
This company makes natural gas engines for forklifts, oilfield services engines, trucks and buses and automobiles. Its 50-50 joint venture Cummins Westport project builds natural gas vehicle engines for trucks and buses that could refill at the clean energy stations built by Clean Energy.
It made revenues of $154 million in the last year and isn’t close to profitability yet. But a concerted push toward natural-gas powered vehicles could change that.
WPRT is at the top of its 52-week range. So I’d wait for a pullback.
Best Energy Stocks Pick For 2012 #3—
Talisman Energy (TLM)
Talisman had 1.4 billion barrels of oil equivalent in reserves last year. It has material positions in three world-class, liquids-heavy shale plays in North America: The Marcellus shale (Pennsylvania), Montney shale (British Columbia) and Utica shale (Quebec). It is also expanding its Eagle Ford shale properties, in a 50-50 joint venture with Statoil.
The company also signed two $1.05 billion deals with Sasol of South Africa. This partnership is sketching out plans for a new multibillion-dollar facility near Edmonton that could process as much as a billion cubic feet of natural gas a day into 96,000 barrels of refined products through the Fischer-Tropsch process.
Fischer-Tropsch works by using heat and chemical catalysts to break down a substance like natural gas into its molecular basics and then rebuild those molecules into something else — such as diesel.
Why do that?
A barrel of oil contains roughly six times the energy content of a thousand cubic feet of gas. Since 6 thousand cubic feet of gas is worth about $24 (U.S.), and one barrel of oil is worth about $100, there is a tremendous profit margin if you can convert one to the other cost-effectively.
Best Energy Stocks Pick For 2012 #4—
PowerShares Wilderhill
Clean Energy Fund (PBW)
This is one of the largest alternative energy ETFs with over $500 million in assets. Large holdings include GT Solar, Yingli Green Energy, SunPower Corp., Trina Solar and more.
Top Penny Stocks For 2012
There is no better place to find explosive growth than with low-priced penny stocks. I’m not talking about pink sheet stocks that are potentially nonexistent, or fraudulent names set to crash. I’m talking about real companies with real earnings — companies listed for more than one year on a major exchange like the AMEX, NYSE or Nasdaq, and that have a market cap in the ballpark of $100 million.
The returns can be even more powerful when you combine the power of technology stocks and penny stocks. Specifically, the software space is seeing lots of action, thanks to the mass acceptance of smartphones and personal computing devices.
These devices are quite powerful, but they still need programs to make them run. The best software companies are those that make users more productive. In this tough economy, those companies that help workers do more with less are poised to be the penny stocks that really move higher.
Top Penny Stocks For 2012: China Sky One Medical Inc. (CSKI)
China Sky One Medical, Inc., through its subsidiaries, engages in the development, manufacture, marketing, and sale of over-the-counter, branded nutritional supplements, and over-the-counter plant and herb-based pharmaceutical and medicinal products primarily in the People?s Republic of China. The company?s product line includes ointments, sprays, medicated skin patches, injections, capsules, suppositories, tablets, and granules. It offers compound camphor cream that is used for the treatment of various pathogens on the skin surface, such as mycete, trichopytic, staphylococcal bacteria aureus, bacillus coli, and candida albicans; Hemorrhoids ointment, which is made in soft ointment form and is effective in sterilizing and relieving hemorrhoid symptoms, including itching, distending pain, burning, and bleeding; Sumei slim patch, a natural treatment for weight loss; and pain relief patch used for various ailments, including fever, headache, heart dysentery, diarrhea, and stiffness and pain caused by hypertension. China Sky One also provides anti-hypertension patch that stimulates blood capillaries, improves circulation, and reduces blood pressure; QiXue asthma patch, which is designed for the treatment of chronic inflammation of the airways and lungs; Stomatitis spray used for the treatment of dental ulcers, pharyngitis, and faucitis; Naphazoline Hydrochloride eye drops for the temporary relief of eye redness associated with minor irritations; cardiac arrest early examination kit used for early stage diagnosis of myocardial infarction; and Naftopidil dispersible tablet designed to treat benign enlargement of the prostate among middle age males, as well as various wash fluids, tablets, liniments, syrups, capsules, granules, injections, aerosols, and oral liquids. The company sells its products through Chinese domestic pharmaceutical chains. China Sky One Medical, Inc. is headquartered in Harbin, the People?s Republic of China.
Top Penny Stocks For 2012: EarthLink Inc. (ELNK)
EarthLink, Inc. provides communications services to individual and business customers in the United States. It operates in two segments, Consumer Services and Business Services. The Consumer Services segment offers Internet access and related value-added services. It provides dial-up Internet and narrowband access, broadband access, and voice-over-Internet-protocol services, as well as value-added services that include products for protection, communication, and performance, such as security products, premium email only, home networking, email storage, and Internet call waiting. This segment offer its products and services primarily through its call centers, search engine marketing, affinity marketing partners, resellers, and marketing alliances. The Business Services segment offers integrated communications services, such as secure IP-based networks, virtual private networks, Internet access, local telephone and long distance services, enhanced services, access trunks, private line services, asynchronous transfer mode/frame relay services, and mobile data and voice services, as well as installation, managed network, remote access, and disaster recovery services. It also provides wholesale services comprising broadband transport services, including private line, Ethernet private line, and wavelength services; local communications and local dial tone communications services; live and automated operator, and directory assistance services; and dedicated Internet access services and direct connectivity. In addition, this segment leases server space and provides Web hosting services that enable customers to build and maintain an online presence, including domain names, storage, mailboxes, software tools to build Web sites, e-commerce applications, and 24/7 customer support. This segment offers its services through direct sales, and independent dealers and sales agents. The company was founded in 1994 and is headquartered in Atlanta, Georgia.
Advisors’ Opinion:
* Vatalyst2011-10-22Shares are trading at $6.50 at the time of writing, as against their 52-week trading range of $6.04 to $9.29. Earnings per share for the last year were $0.45, and it paid a dividend of $0.20, yielding 3.10%.
Earthlink has shown tremendous growth in its internet and telephonic connectivity markets lately. But is this growth soon to blow out? In a market that is dominated by the larger companies, At&T (T), Verizon (VZ), and even AOL (AOL), it is hard to see that these three will allow too much trampling on their markets by the far smaller Earthlink. Gross margins at At&T, Verizon, and Earthlink are similar at around 58%, and there is not much difference in the resultant operating margins, either (15.5%, 17.5%, and 18.5%, respectively). Dividends are twice covered by earnings at AT& T and Earthlink, and marginally covered by earnings at Verizon. If the sector develops into a price war, AT&T’s dividend of yield of 6%, and undemanding price to earnings ratio of 8.39 will be more attractive to investors, and easier to achieve. Switch from Earthlink into AT&T.
Top Penny Stocks For 2012: Deswell Industries Inc. (DSWL)
Deswell Industries, Inc. engages in the manufacture and sale of injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers and contract manufacturers. The company produces various plastic parts and components for the manufacture of consumer and industrial products, including plastic component of electronic entertainment products; cases for flashlights, telephones, paging machines, projectors, and alarm clocks; toner cartridges and cases for photocopy and printer machines; parts for electrical products, such as air-conditioning and ventilators; parts for audio equipment; cases and key tops for personal organizers and remote controls; double injection caps and baby products; parts for medical products comprising apparatus for blood tests; laser key caps; and automobile components. Its electronic products include audio equipment, such as digital audio workstation, digital or analogue mixing consoles, instrument amplifiers, signal processors, firewire/USB audio interfaces, keyboard controllers, and speaker enclosures; high end home theatre audio products comprising 7.1-channel audio-visual Hi-Fi stereo receivers-amplifiers; complex printed circuit board assemblies; and telecommunication products consisting of VoIP keysets for business communications. The company?s metal products include metallic molds and accessory parts used in audio equipment, telephones, copying machines, pay telephones, multimedia stations, automatic teller machines, and vending machines. In addition, it distributes audio equipment. The company sells its products in the United States, the People?s Republic of China, Hong Kong, Thailand, the United Kingdom, Holland, Norway, and Germany. Deswell Industries, Inc. was founded in 1987 and is based in Kowloon Bay, Hong Kong.
Top Penny Stocks For 2012: Federal Signal Corporation (FSS)
Federal Signal Corporation designs and manufactures a suite of products and integrated solutions for municipal, governmental, industrial, and commercial customers worldwide. The company operates in three segments: Safety and Security Systems, Fire Rescue, and Environmental Solutions. The Safety and Security Systems segment offers various systems for automated license plate recognition, campus and community alerting, emergency vehicles, first responder interoperable communications, industrial communications and command, municipal networked security, vehicle classification, parking revenue, and access control. This segment also provides products, such as lightbars and sirens, public warning sirens, and public safety software. The Fire Rescue segment offers articulated and telescopic aerial platforms for rescue, fire fighting, and maintenance purposes. This segment sells its products to municipal and industrial fire services, civil defense authorities, rental companies, electric utilities and industrial customers. The Environmental Solutions segment provides various self-propelled street cleaning vehicles, vacuum loader vehicles, municipal catch basin/sewer cleaning vacuum trucks, and water blasting equipment. The company was founded in 1901 and is based in Oak Brook, Illinois.
Advisors’ Opinion:
* Vita2011-9-11Federal Signal Corporation is a global manufacturer and supplier of safety, security and communication equipment; street sweepers and other environmental vehicles and equipment, and vehicle-mounted, aerial platforms for fire fighting, rescue, electric utility and industrial uses. Its EPS forecast for the current year is 0.29 and next year is 0.61. According to consensus estimates, its topline is expected to grow 8.2% current year and 10.66% next year. It is trading at a forward P/E of 10.67. Out of five analysts covering the company, three are positive and have buy recommendations and two have hold ratings.
The returns can be even more powerful when you combine the power of technology stocks and penny stocks. Specifically, the software space is seeing lots of action, thanks to the mass acceptance of smartphones and personal computing devices.
These devices are quite powerful, but they still need programs to make them run. The best software companies are those that make users more productive. In this tough economy, those companies that help workers do more with less are poised to be the penny stocks that really move higher.
Top Penny Stocks For 2012: China Sky One Medical Inc. (CSKI)
China Sky One Medical, Inc., through its subsidiaries, engages in the development, manufacture, marketing, and sale of over-the-counter, branded nutritional supplements, and over-the-counter plant and herb-based pharmaceutical and medicinal products primarily in the People?s Republic of China. The company?s product line includes ointments, sprays, medicated skin patches, injections, capsules, suppositories, tablets, and granules. It offers compound camphor cream that is used for the treatment of various pathogens on the skin surface, such as mycete, trichopytic, staphylococcal bacteria aureus, bacillus coli, and candida albicans; Hemorrhoids ointment, which is made in soft ointment form and is effective in sterilizing and relieving hemorrhoid symptoms, including itching, distending pain, burning, and bleeding; Sumei slim patch, a natural treatment for weight loss; and pain relief patch used for various ailments, including fever, headache, heart dysentery, diarrhea, and stiffness and pain caused by hypertension. China Sky One also provides anti-hypertension patch that stimulates blood capillaries, improves circulation, and reduces blood pressure; QiXue asthma patch, which is designed for the treatment of chronic inflammation of the airways and lungs; Stomatitis spray used for the treatment of dental ulcers, pharyngitis, and faucitis; Naphazoline Hydrochloride eye drops for the temporary relief of eye redness associated with minor irritations; cardiac arrest early examination kit used for early stage diagnosis of myocardial infarction; and Naftopidil dispersible tablet designed to treat benign enlargement of the prostate among middle age males, as well as various wash fluids, tablets, liniments, syrups, capsules, granules, injections, aerosols, and oral liquids. The company sells its products through Chinese domestic pharmaceutical chains. China Sky One Medical, Inc. is headquartered in Harbin, the People?s Republic of China.
Top Penny Stocks For 2012: EarthLink Inc. (ELNK)
EarthLink, Inc. provides communications services to individual and business customers in the United States. It operates in two segments, Consumer Services and Business Services. The Consumer Services segment offers Internet access and related value-added services. It provides dial-up Internet and narrowband access, broadband access, and voice-over-Internet-protocol services, as well as value-added services that include products for protection, communication, and performance, such as security products, premium email only, home networking, email storage, and Internet call waiting. This segment offer its products and services primarily through its call centers, search engine marketing, affinity marketing partners, resellers, and marketing alliances. The Business Services segment offers integrated communications services, such as secure IP-based networks, virtual private networks, Internet access, local telephone and long distance services, enhanced services, access trunks, private line services, asynchronous transfer mode/frame relay services, and mobile data and voice services, as well as installation, managed network, remote access, and disaster recovery services. It also provides wholesale services comprising broadband transport services, including private line, Ethernet private line, and wavelength services; local communications and local dial tone communications services; live and automated operator, and directory assistance services; and dedicated Internet access services and direct connectivity. In addition, this segment leases server space and provides Web hosting services that enable customers to build and maintain an online presence, including domain names, storage, mailboxes, software tools to build Web sites, e-commerce applications, and 24/7 customer support. This segment offers its services through direct sales, and independent dealers and sales agents. The company was founded in 1994 and is headquartered in Atlanta, Georgia.
Advisors’ Opinion:
* Vatalyst2011-10-22Shares are trading at $6.50 at the time of writing, as against their 52-week trading range of $6.04 to $9.29. Earnings per share for the last year were $0.45, and it paid a dividend of $0.20, yielding 3.10%.
Earthlink has shown tremendous growth in its internet and telephonic connectivity markets lately. But is this growth soon to blow out? In a market that is dominated by the larger companies, At&T (T), Verizon (VZ), and even AOL (AOL), it is hard to see that these three will allow too much trampling on their markets by the far smaller Earthlink. Gross margins at At&T, Verizon, and Earthlink are similar at around 58%, and there is not much difference in the resultant operating margins, either (15.5%, 17.5%, and 18.5%, respectively). Dividends are twice covered by earnings at AT& T and Earthlink, and marginally covered by earnings at Verizon. If the sector develops into a price war, AT&T’s dividend of yield of 6%, and undemanding price to earnings ratio of 8.39 will be more attractive to investors, and easier to achieve. Switch from Earthlink into AT&T.
Top Penny Stocks For 2012: Deswell Industries Inc. (DSWL)
Deswell Industries, Inc. engages in the manufacture and sale of injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers and contract manufacturers. The company produces various plastic parts and components for the manufacture of consumer and industrial products, including plastic component of electronic entertainment products; cases for flashlights, telephones, paging machines, projectors, and alarm clocks; toner cartridges and cases for photocopy and printer machines; parts for electrical products, such as air-conditioning and ventilators; parts for audio equipment; cases and key tops for personal organizers and remote controls; double injection caps and baby products; parts for medical products comprising apparatus for blood tests; laser key caps; and automobile components. Its electronic products include audio equipment, such as digital audio workstation, digital or analogue mixing consoles, instrument amplifiers, signal processors, firewire/USB audio interfaces, keyboard controllers, and speaker enclosures; high end home theatre audio products comprising 7.1-channel audio-visual Hi-Fi stereo receivers-amplifiers; complex printed circuit board assemblies; and telecommunication products consisting of VoIP keysets for business communications. The company?s metal products include metallic molds and accessory parts used in audio equipment, telephones, copying machines, pay telephones, multimedia stations, automatic teller machines, and vending machines. In addition, it distributes audio equipment. The company sells its products in the United States, the People?s Republic of China, Hong Kong, Thailand, the United Kingdom, Holland, Norway, and Germany. Deswell Industries, Inc. was founded in 1987 and is based in Kowloon Bay, Hong Kong.
Top Penny Stocks For 2012: Federal Signal Corporation (FSS)
Federal Signal Corporation designs and manufactures a suite of products and integrated solutions for municipal, governmental, industrial, and commercial customers worldwide. The company operates in three segments: Safety and Security Systems, Fire Rescue, and Environmental Solutions. The Safety and Security Systems segment offers various systems for automated license plate recognition, campus and community alerting, emergency vehicles, first responder interoperable communications, industrial communications and command, municipal networked security, vehicle classification, parking revenue, and access control. This segment also provides products, such as lightbars and sirens, public warning sirens, and public safety software. The Fire Rescue segment offers articulated and telescopic aerial platforms for rescue, fire fighting, and maintenance purposes. This segment sells its products to municipal and industrial fire services, civil defense authorities, rental companies, electric utilities and industrial customers. The Environmental Solutions segment provides various self-propelled street cleaning vehicles, vacuum loader vehicles, municipal catch basin/sewer cleaning vacuum trucks, and water blasting equipment. The company was founded in 1901 and is based in Oak Brook, Illinois.
Advisors’ Opinion:
* Vita2011-9-11Federal Signal Corporation is a global manufacturer and supplier of safety, security and communication equipment; street sweepers and other environmental vehicles and equipment, and vehicle-mounted, aerial platforms for fire fighting, rescue, electric utility and industrial uses. Its EPS forecast for the current year is 0.29 and next year is 0.61. According to consensus estimates, its topline is expected to grow 8.2% current year and 10.66% next year. It is trading at a forward P/E of 10.67. Out of five analysts covering the company, three are positive and have buy recommendations and two have hold ratings.
12 Small Cap High Yielding Dividend Stocks Under $10
Kurtis Hemmerling submits:
Most people think of giant value companies with reduced growth and high cash-flow as being the typical blue chip dividend paying stock. But tiny stocks can also deliver high yielding income payouts. The benefit of picking small cap companies with large dividends is the added exposure to capital gains in addition to the income strategy.
The small cap effect is highlighted in the Fama and French paper, Value Versus Growth: The International Evidence (1997). This team of researchers have provided empirical data that show smaller cap companies (both value and growth) as historically outperforming larger cap stocks.
Our stock scan will try to give income investors a healthy capital gain potential to compliment their dividends. Our criteria is as follows:
* Price under $10
* Small cap or below 2 billion market capitalization
* Dividend yield above 5%
* Price to Free Cash Flow under 30
* Price went up over the past 3 months
Most people think of giant value companies with reduced growth and high cash-flow as being the typical blue chip dividend paying stock. But tiny stocks can also deliver high yielding income payouts. The benefit of picking small cap companies with large dividends is the added exposure to capital gains in addition to the income strategy.
The small cap effect is highlighted in the Fama and French paper, Value Versus Growth: The International Evidence (1997). This team of researchers have provided empirical data that show smaller cap companies (both value and growth) as historically outperforming larger cap stocks.
Our stock scan will try to give income investors a healthy capital gain potential to compliment their dividends. Our criteria is as follows:
* Price under $10
* Small cap or below 2 billion market capitalization
* Dividend yield above 5%
* Price to Free Cash Flow under 30
* Price went up over the past 3 months
Top Ten Best Stocks to Invest in India
Top Ten Stocks to Buy in India
How do select a stock to invest to get Multibagger profits, Stock Selection in Stock Market is not a easy job. Thousands of companies listed and available for trading and investment. Retail investors have no chance to made best investment without Fundamental Research and Technical Analysis. This post provides a short list of “Top Ten Stocks” to invest for 2011 and 2012 years in India. This post provides list of stocks and sector based on fundamental equity research reports, but reports data can’t provide here for lot of stocks.Following table provides Top Ten Shares, a mix of strong fundamental stocks and some high risk scrips. For example, In “Portfolio Management” large caps yield low returns with low volatile in bear market means protects capital. High risk stocks having high beta values may earn high profits in bull market means appreciation of capital. Following “Portfolio Stocks” may subject to change based on Performance of Stocks and Equity Market conditions. Investors consider the following scrips to add to Investment Portfolio. Stocks selected from Small and Mid caps.
Stocks data update every month to choose Best Top Ten Stocks. Following stocks selected based on various Company News and Equity Research reports.
| No: | Name of Stock | Sector | Best Stocks, Why? |
|---|---|---|---|
| 1 | NTPC | Power | Low risk low return, Shock absorber to portfolio in volatile markets. |
| 2 | Patel Engineering | Infrastructure | One of the fundamental pick with lot of subsidiaries and Business model can add value to Money. |
| 3 | SEL Manufacturing | Textiles | High risk scrip with low price earning, May turns Multibagger, single risk to this counter is high interest expenditure. |
| 4 | NDTV | Media | One of the top Media scrip with growth potentials. |
| 5 | SBI | Banking | Leading nationalized bank with sufficient capitalized. |
| 6 | HDIL | Realty | High risk and High return scrip, can zoom in bull market with high beta value. |
| 7 | Hindustan Unilever Limited | FMCG | Leading Consumer player. Highest population and Purchasing capacity can maintains company profits. FMCG sector is shock absorber when markets fall. |
| 8 | Torrent Pharmaceuticals Limited | Pharma | Now a days need of new drugs is necessary. |
| 9 | Reliance Broadcast | Media | Major expansion plans on card to place in one of the top broadcaster. |
| 10 | Career Point Info | Education and Training | Education is a Fast growing sector and lot of space available for future developments. |
Best Stocks to Invest in Right Now
Many experts are saying that the stock market is cheap right now. This includes great investors like Warren Buffett who thinks that equities are cheap. That is prompting a lot of investors to find the best stocks to buy right now as the market is still cheap. That is of course unless you are part of the crowd that things there will be a contraction once the quantitative easing measures are over.
I’ve heard Target as a good stock to buy recently. Their fundamentals are strong. They are profitable and the rest of the financial statements show a pretty strong company. They also look like they could potentially be undervalued from doing a business valuation based on discounted cash flows.
Ford is another good company right now. They are a strong company and were able to bounce back after they refused government bailout money. They are profitable in an industry that is bouncing back as a whole. More and more people will start buying cars again, and they already have. There is a lot of pent up demand that will be released on this market and Ford is one of the strongest players to profit off of this move.
More of the best investment options would be to be in technology stocks as well. You can see the fastest trending ones will be the likes of Apple and Google. Also look for Facebook to come out as an IPO at some point down the line. They have made some moves recently that have indicated that they may be interested in going public.
The healthcare industry is also good as well. Find strong companies that are growing with lots of future potential market growth. These would be niche markets like elderly care or the retirement industry. But really, most healthcare companies that are strong and growing will be good as this rising tide raises the good ships in this sector.
I’ve heard Target as a good stock to buy recently. Their fundamentals are strong. They are profitable and the rest of the financial statements show a pretty strong company. They also look like they could potentially be undervalued from doing a business valuation based on discounted cash flows.
Ford is another good company right now. They are a strong company and were able to bounce back after they refused government bailout money. They are profitable in an industry that is bouncing back as a whole. More and more people will start buying cars again, and they already have. There is a lot of pent up demand that will be released on this market and Ford is one of the strongest players to profit off of this move.
More of the best investment options would be to be in technology stocks as well. You can see the fastest trending ones will be the likes of Apple and Google. Also look for Facebook to come out as an IPO at some point down the line. They have made some moves recently that have indicated that they may be interested in going public.
The healthcare industry is also good as well. Find strong companies that are growing with lots of future potential market growth. These would be niche markets like elderly care or the retirement industry. But really, most healthcare companies that are strong and growing will be good as this rising tide raises the good ships in this sector.
Invest 2012: Best Energy Companies to invest in
27
Aug/11
Invest 2012: Best Energy Companies to invest in
by admin under best gold stock for 2012, best shares to invest in 2012, best silver stocks to buy 2012, best stocks to buy now for 2012, best stocks to hold 2012, best stocks to invest, Best stocks to invest in 2011, Best stocks to invest right now, best stocks to pick up, best way to invest in 2012, best-penny-stocks, Chinese stocks to invest in 2012
Invest 2012: Best Energy Companies to invest in
Best Energy El Paso Pipeline Partners, L.P. (EPB)
El Paso Pipeline Partners are a growth-oriented Delaware limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines, storage and other midstream assets. Their initial assets consist of Wyoming Interstate Company, Ltd., or WIC, a wholly-owned interstate pipelinetransportation business primarily located in Wyoming and Colorado and ten percent general partner interests in two interstate pipeline transportation businesses: Colorado Interstate Gas Company, or CIG, which is located in the U.S. Rocky Mountains, and Southern Natural Gas Company, or SNG, which is located in the southeastern United States.
Best Energy Companies to invest 2012: Dresser-Rand Group Inc. (DRC)
Dresser-Rand Group is among the largest global suppliers of rotating equipment solutions to the worldwide oil, gas, petrochemical and process industries. Their services and products are used for a wide range of applications, including oil and gas production, high-pressure field injection and enhanced oil recovery, pipelines, refinery processes, natural gas processing, and petrochemical production.
Best Energy Companies to invest 2012: Delta Natural Gas Co. Inc. (DGAS)
Delta Natural Gas Company, Inc. is a regulated public utility. As a result of acquisitions and expansions of its customer base within its existing service areas, Delta provides retail gas distribution service to customers in central and southeastern Kentucky and, additionally, provides transportation service to industrial customers and interconnected pipelines located in the area.
Best Energy Companies to invest 2012: Linn Energy, LLC (LINE)
Linn Energy, LLC is an independent oil and gas company focused on the development and acquisition of long-lived properties which complement its asset profile in producing basins within the United States. Its goal is to provide stability and growth in distributions to our unitholders through a combination of continued successful drilling and acquisitions.
Aug/11
Invest 2012: Best Energy Companies to invest in
by admin under best gold stock for 2012, best shares to invest in 2012, best silver stocks to buy 2012, best stocks to buy now for 2012, best stocks to hold 2012, best stocks to invest, Best stocks to invest in 2011, Best stocks to invest right now, best stocks to pick up, best way to invest in 2012, best-penny-stocks, Chinese stocks to invest in 2012
Invest 2012: Best Energy Companies to invest in
Best Energy El Paso Pipeline Partners, L.P. (EPB)
El Paso Pipeline Partners are a growth-oriented Delaware limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines, storage and other midstream assets. Their initial assets consist of Wyoming Interstate Company, Ltd., or WIC, a wholly-owned interstate pipelinetransportation business primarily located in Wyoming and Colorado and ten percent general partner interests in two interstate pipeline transportation businesses: Colorado Interstate Gas Company, or CIG, which is located in the U.S. Rocky Mountains, and Southern Natural Gas Company, or SNG, which is located in the southeastern United States.
Best Energy Companies to invest 2012: Dresser-Rand Group Inc. (DRC)
Dresser-Rand Group is among the largest global suppliers of rotating equipment solutions to the worldwide oil, gas, petrochemical and process industries. Their services and products are used for a wide range of applications, including oil and gas production, high-pressure field injection and enhanced oil recovery, pipelines, refinery processes, natural gas processing, and petrochemical production.
Best Energy Companies to invest 2012: Delta Natural Gas Co. Inc. (DGAS)
Delta Natural Gas Company, Inc. is a regulated public utility. As a result of acquisitions and expansions of its customer base within its existing service areas, Delta provides retail gas distribution service to customers in central and southeastern Kentucky and, additionally, provides transportation service to industrial customers and interconnected pipelines located in the area.
Best Energy Companies to invest 2012: Linn Energy, LLC (LINE)
Linn Energy, LLC is an independent oil and gas company focused on the development and acquisition of long-lived properties which complement its asset profile in producing basins within the United States. Its goal is to provide stability and growth in distributions to our unitholders through a combination of continued successful drilling and acquisitions.
The best stocks to invest in 2011
19
Apr/11
The best stocks to invest in 2011
by admin under best stocks to invest, hot-stocks, investments
Despite the market’s recent resuscitation, many stocks are still trading at fire-sale prices-no surprise given the immense decline that preceded the advance. But which stocks to invest in 2011?
Between March 9 and May 4, Standard & Poor’s 500-stock index surged 34%. Beaten-down “value” stocks and stocks of smaller companies have been the best performers during the recovery. Examples of revived value stocks are Citigroup (symbol C), which tripled from an intra-day low of 99 cents on March 9 to $3.20 at the May 4 close, and Bank of America (BAC), which skyrocketed from $3 to $10.38. Meanwhile, Morningstar’s small-company-value index rose 22% in April, and its large-company-growth index gained just 8%.
I’m not jumping on the bandwagon. Given the fragility of the markets, the financial system and the economy, I don’t think stocks of small companies or companies with huge problems are the ones to buy. Instead, I think you should put most of your money into the highest-quality blue chips (companies with little or no debt and the ability to generate a lot of cash).
If you’re looking for ideas, Morningstar StockInvestor ($119 annually) is a great resource. According to the authoritative Hulbert Financial Digest, the newsletter’s stock picks returned an annualized 2.6% from the end of 1999 through last February, a period in which the broad-based Dow Jones Wilshire 5000 stock index lost an annualized 5.0%. What’s more, the Morningstar letter is less risky than the index and tends to do little trading; on average, the letter holds stocks for about three years.
Editor Paul Larson says he looks for companies with competitive advantages over their rivals: “My strategy is fairly simple. I focus on high-quality companies, and I buy them when they’re cheap.”
Morningstar’s 100-plus stock analysts estimate “intrinsic value” for every company they cover. They compare intrinsic value to a company’s share price to arrive at a star rating. Larson then draws up two lists — a “tortoise” portfolio and a “hare” portfolio-consisting of about 25 highly rated stocks each.
Larson’s favorite is Warren Buffett’s Berkshire Hathaway (BRK.B)(best stocks to invest in 2011). At $3,114.90 a share on May 4, the stock has shed more than one-third of its value in the past year. But Larson believes that Berkshire’s collection of more than 70 businesses, dominated by insurance, is dirt-cheap. Says Larson: “For a long time, people have been pricing Berkshire as though Buffett were no longer around. But he’s still alive and kicking-and adding value. And the balance sheet is still one of the strongest around, even though the company no longer carries a triple-A debt rating.”
The world’s largest and most diverse health-care company, best stocks to invest in 2011 -Johnson & Johnson (JNJ), is another favorite. Larson says that the company is largely insulated from economic downturns. “People need to take their medicines regardless of what the economy is doing,” he says. J&J is well-managed, has little debt and generates a staggering $1 billion in free cash flow per month (free cash flow is the money left after a company makes the capital expenditures needed to maintain the business). The stock closed at $53.76 on May 4.
Defense giant best stocks to invest in 2011- General Dynamics (GD) is another company that’s built to withstand recessions. It builds ships and armored vehicles, as well as information-technology systems for the military. “The government has a vested interest in maintaining the health of this company,” Larson says. “It came through the Defense Department budget cuts relatively unscathed.” The company boasts a rock-solid balance sheet. The stock closed at $54.00.
Wal-Mart Stores (WMT), the world’s largest retailer, has increased its market share during the economic slump. Its sales of consumer staples at discount prices have been increasing as other retailers have been going out of business. The company’s managers are focusing on cutting costs and satisfying customers. Wal-Mart, one of only two stocks in the Dow industrials to climb last year, closed at $50.84.
As employee benefits grow ever more complex, The best stocks to invest in 2011-Automatic Data Processing (ADP) benefits. It provides such services as payroll processing and benefits administration. Its large scale and respected brand, and the high cost of switching to another vendor, give it a big competitive advantage. The share price: $34.86.
When competitors were spending enormous sums to build up oil-and-gas reserves during last year’s bubble in oil prices, ExxonMobil (XOM) stayed focused on increasing profit margins. Because of that, Exxon can continue to buy back shares, raise its dividend and increase capital spending (at a price of $68.20, the stock yields 2.5%). It’s the world largest integrated oil-and-gas company, and participates in almost every facet of the business.
Apr/11
The best stocks to invest in 2011
by admin under best stocks to invest, hot-stocks, investments
Despite the market’s recent resuscitation, many stocks are still trading at fire-sale prices-no surprise given the immense decline that preceded the advance. But which stocks to invest in 2011?
Between March 9 and May 4, Standard & Poor’s 500-stock index surged 34%. Beaten-down “value” stocks and stocks of smaller companies have been the best performers during the recovery. Examples of revived value stocks are Citigroup (symbol C), which tripled from an intra-day low of 99 cents on March 9 to $3.20 at the May 4 close, and Bank of America (BAC), which skyrocketed from $3 to $10.38. Meanwhile, Morningstar’s small-company-value index rose 22% in April, and its large-company-growth index gained just 8%.
I’m not jumping on the bandwagon. Given the fragility of the markets, the financial system and the economy, I don’t think stocks of small companies or companies with huge problems are the ones to buy. Instead, I think you should put most of your money into the highest-quality blue chips (companies with little or no debt and the ability to generate a lot of cash).
If you’re looking for ideas, Morningstar StockInvestor ($119 annually) is a great resource. According to the authoritative Hulbert Financial Digest, the newsletter’s stock picks returned an annualized 2.6% from the end of 1999 through last February, a period in which the broad-based Dow Jones Wilshire 5000 stock index lost an annualized 5.0%. What’s more, the Morningstar letter is less risky than the index and tends to do little trading; on average, the letter holds stocks for about three years.
Editor Paul Larson says he looks for companies with competitive advantages over their rivals: “My strategy is fairly simple. I focus on high-quality companies, and I buy them when they’re cheap.”
Morningstar’s 100-plus stock analysts estimate “intrinsic value” for every company they cover. They compare intrinsic value to a company’s share price to arrive at a star rating. Larson then draws up two lists — a “tortoise” portfolio and a “hare” portfolio-consisting of about 25 highly rated stocks each.
Larson’s favorite is Warren Buffett’s Berkshire Hathaway (BRK.B)(best stocks to invest in 2011). At $3,114.90 a share on May 4, the stock has shed more than one-third of its value in the past year. But Larson believes that Berkshire’s collection of more than 70 businesses, dominated by insurance, is dirt-cheap. Says Larson: “For a long time, people have been pricing Berkshire as though Buffett were no longer around. But he’s still alive and kicking-and adding value. And the balance sheet is still one of the strongest around, even though the company no longer carries a triple-A debt rating.”
The world’s largest and most diverse health-care company, best stocks to invest in 2011 -Johnson & Johnson (JNJ), is another favorite. Larson says that the company is largely insulated from economic downturns. “People need to take their medicines regardless of what the economy is doing,” he says. J&J is well-managed, has little debt and generates a staggering $1 billion in free cash flow per month (free cash flow is the money left after a company makes the capital expenditures needed to maintain the business). The stock closed at $53.76 on May 4.
Defense giant best stocks to invest in 2011- General Dynamics (GD) is another company that’s built to withstand recessions. It builds ships and armored vehicles, as well as information-technology systems for the military. “The government has a vested interest in maintaining the health of this company,” Larson says. “It came through the Defense Department budget cuts relatively unscathed.” The company boasts a rock-solid balance sheet. The stock closed at $54.00.
Wal-Mart Stores (WMT), the world’s largest retailer, has increased its market share during the economic slump. Its sales of consumer staples at discount prices have been increasing as other retailers have been going out of business. The company’s managers are focusing on cutting costs and satisfying customers. Wal-Mart, one of only two stocks in the Dow industrials to climb last year, closed at $50.84.
As employee benefits grow ever more complex, The best stocks to invest in 2011-Automatic Data Processing (ADP) benefits. It provides such services as payroll processing and benefits administration. Its large scale and respected brand, and the high cost of switching to another vendor, give it a big competitive advantage. The share price: $34.86.
When competitors were spending enormous sums to build up oil-and-gas reserves during last year’s bubble in oil prices, ExxonMobil (XOM) stayed focused on increasing profit margins. Because of that, Exxon can continue to buy back shares, raise its dividend and increase capital spending (at a price of $68.20, the stock yields 2.5%). It’s the world largest integrated oil-and-gas company, and participates in almost every facet of the business.
Markets Need to Get Off the Juice
In recent weeks, I’ve been focusing all my efforts on large- and mid-cap stocks, especially those with strong balance sheets and consistent free cash flow. Many of these rock-solid companies offer a degree of stability in this choppy market and are currently trading at outstandingly cheap values. In effect, they allow you to play offense while being defensive.
On the flip side, small- and micro-cap stocks are far less resilient. As investors continue their “flight to quality,” these stocks are being deeply shunned. Until we have a clear sense of the potential duration and depth of a possible looming recession, investors will keep selling off smaller company stocks.
But there’s a curious twist to this oft-repeated cycle. When the recession finally arrives (which is still not a given), small stocks tend to actually outperform. We’re now cycling through the 20-year anniversary of just such a move, and you need to watch for signs of another breakout.
Back in 1990, the U.S. economy was quickly losing steam when gross domestic product (GDP) growth fell from a robust 4.2% in the first quarter to -3.5% in the fourth quarter. This should have spooked small-cap investors. Instead, they started to buying aggressively, anticipating the eventual economic rebound.
The Russell 2000 Index of small-cap stocks bottomed out at the end of the third quarter of 1990 at 119, but it would hit 144 by year-end (even though the economy slumped badly that quarter), and would hit 178 by the following May. That’s a 50% gain in just seven months, even though the economic data painted a bleak picture. (The index went up to about 200 by the end of 1991, even though GDP growth didn’t prove to be robust until the first quarter of 1992.)
The key takeaway: small caps represent great buying opportunities, even when the economy looks scary, so it pays to keep a watch list prepared. Here are three small-cap stocks that could double or even triple in value when the Russell 2000 finally rebounds. It may take a few years for this to fully play out, but the upward move may come sooner than you think.
1. Power One (Nasdaq: PWER)
This is a solid company stuck in a tough industry. Power One makes a range of power conversion and power-management components. The company has had notable recent success with inverters that help solar panels and wind turbines convert their variable power generation into energy flow that is suitable to feed into electricity grids. This has proved to be a choppy business, because the renewable fuels industry has seen major peaks and valleys. Still, Power One is taking market share from rivals, maintaining sales levels while rivals see sharp drops.
Power One is likely to post flat sales this year of $1 billion. Earnings per share (EPS) are expected to fall about 20% to around $0.90 this year. Growth is likely to resume in 2012 at a moderate double-digit pace as stalled power projects finally come to fruition. Meanwhile, shares trade for just five times trailing earnings. As business moves back up onto a growth trajectory, look for the multiple to move up into the low teens, implying at least a double for this beaten-down name.
2. Exide Technologies (Nasdaq: XIDE)
In keeping with the energy/power theme, this auto battery maker has been too sharply discounted. (I recently suggested Exide could be part of a paired trade strategy.) The company had seen profits slump as lead prices surged. Lead is Exide’s biggest raw material expense.
The company belatedly pushed through price increases for its batteries, which should help profits rebound. As a further tailwind, lead prices are finally in retreat. They peaked above $1.30 a pound in the spring, and are now $1.05. As those factors finally hit the income statement, look for much better quarterly results. In a stable pricing environment, Exide’s annual operating income could hit $200 million, which is more than half of the stock’s current market value. Simply applying a multiple of five on normalized operating income would make this stock triple.
3. KIT Digital (Nasdaq: KITD)
This is a very promising — and hugely frustrating — company. KIT has built an impressive suite of products to help companies develop sophisticated video services on a wide range of platforms. Thanks to an acquisition spree, the company now has a broad set of tools to offer, which is fueling 100% sales growth this year and projected 40% sales growth (to $300 million) in 2012. To pay for these deals, the company has raised fresh capital several times. The number of shares outstanding keeps rising — from 7 million in 2009 to a recent 33 million — and shares take a big hit every time another capital raise is announced.
Management is expected to finally stop issuing fresh equity, which should enable investors to focus on the attractive core business. Recent major contract wins with John Malone’s Liberty Global and Korea’s LG should help KIT to post very solid growth metrics in coming quarters. This sub-$10 stock could move north of $20 when quarterly results are more robust and investors finally can trust that no more capital raises will be needed. A $20 target price implies a target 2012 EBITDA (earnings before interest, debt, depreciation and amortization) multiple of just 10, which is quite reasonable for a high-growth stock like this.
On the flip side, small- and micro-cap stocks are far less resilient. As investors continue their “flight to quality,” these stocks are being deeply shunned. Until we have a clear sense of the potential duration and depth of a possible looming recession, investors will keep selling off smaller company stocks.
But there’s a curious twist to this oft-repeated cycle. When the recession finally arrives (which is still not a given), small stocks tend to actually outperform. We’re now cycling through the 20-year anniversary of just such a move, and you need to watch for signs of another breakout.
Back in 1990, the U.S. economy was quickly losing steam when gross domestic product (GDP) growth fell from a robust 4.2% in the first quarter to -3.5% in the fourth quarter. This should have spooked small-cap investors. Instead, they started to buying aggressively, anticipating the eventual economic rebound.
The Russell 2000 Index of small-cap stocks bottomed out at the end of the third quarter of 1990 at 119, but it would hit 144 by year-end (even though the economy slumped badly that quarter), and would hit 178 by the following May. That’s a 50% gain in just seven months, even though the economic data painted a bleak picture. (The index went up to about 200 by the end of 1991, even though GDP growth didn’t prove to be robust until the first quarter of 1992.)
The key takeaway: small caps represent great buying opportunities, even when the economy looks scary, so it pays to keep a watch list prepared. Here are three small-cap stocks that could double or even triple in value when the Russell 2000 finally rebounds. It may take a few years for this to fully play out, but the upward move may come sooner than you think.
1. Power One (Nasdaq: PWER)
This is a solid company stuck in a tough industry. Power One makes a range of power conversion and power-management components. The company has had notable recent success with inverters that help solar panels and wind turbines convert their variable power generation into energy flow that is suitable to feed into electricity grids. This has proved to be a choppy business, because the renewable fuels industry has seen major peaks and valleys. Still, Power One is taking market share from rivals, maintaining sales levels while rivals see sharp drops.
Power One is likely to post flat sales this year of $1 billion. Earnings per share (EPS) are expected to fall about 20% to around $0.90 this year. Growth is likely to resume in 2012 at a moderate double-digit pace as stalled power projects finally come to fruition. Meanwhile, shares trade for just five times trailing earnings. As business moves back up onto a growth trajectory, look for the multiple to move up into the low teens, implying at least a double for this beaten-down name.
2. Exide Technologies (Nasdaq: XIDE)
In keeping with the energy/power theme, this auto battery maker has been too sharply discounted. (I recently suggested Exide could be part of a paired trade strategy.) The company had seen profits slump as lead prices surged. Lead is Exide’s biggest raw material expense.
The company belatedly pushed through price increases for its batteries, which should help profits rebound. As a further tailwind, lead prices are finally in retreat. They peaked above $1.30 a pound in the spring, and are now $1.05. As those factors finally hit the income statement, look for much better quarterly results. In a stable pricing environment, Exide’s annual operating income could hit $200 million, which is more than half of the stock’s current market value. Simply applying a multiple of five on normalized operating income would make this stock triple.
3. KIT Digital (Nasdaq: KITD)
This is a very promising — and hugely frustrating — company. KIT has built an impressive suite of products to help companies develop sophisticated video services on a wide range of platforms. Thanks to an acquisition spree, the company now has a broad set of tools to offer, which is fueling 100% sales growth this year and projected 40% sales growth (to $300 million) in 2012. To pay for these deals, the company has raised fresh capital several times. The number of shares outstanding keeps rising — from 7 million in 2009 to a recent 33 million — and shares take a big hit every time another capital raise is announced.
Management is expected to finally stop issuing fresh equity, which should enable investors to focus on the attractive core business. Recent major contract wins with John Malone’s Liberty Global and Korea’s LG should help KIT to post very solid growth metrics in coming quarters. This sub-$10 stock could move north of $20 when quarterly results are more robust and investors finally can trust that no more capital raises will be needed. A $20 target price implies a target 2012 EBITDA (earnings before interest, debt, depreciation and amortization) multiple of just 10, which is quite reasonable for a high-growth stock like this.
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