Mutual funds and 401k investing is the primary way that most folks experience the stock market and plan for retirement. Though I love buying and selling individual stocks, it’s clar that most people don’t have the time or the brainpower to look beyond mutual funds — to say nothing of the added risk you take on when trading a diversified mutual fund investment for an individual stock.
So it’s no surprise that one of the most frequent questions I get is about picking the best mutual funds within your 401k. I’d like to tackle that topic today, but broaden the discussion to picking the best mutual funds overall – whether you have a limited menu from your employer’s 401k retirement plan or a broader IRA account with access to more options.
When evaluating your 401k and mutual fund options, you should check out the following factors:
Did the fund beat the S&P 500? This question matters on two fronts. First, did it beat in the last year? Secondly, did it outperform in the longer term, like across the last five or 10 years? (Surprisingly most managers DON’T … here’s the disturbing proof.)
What’s the expense ratio? This is the amount of your returns that the fund shaves off. 1% sounds like a reasonable expense, but what if you only get 3% in annual returns? Well, your expenses shove that down to just 2%. Giving up 1% in returns every year adds up dramatically over a decade or two. If your fund has an expense ratio higher than .75% or 1% it better deliver impressive returns to be worth it.
How long has the manager been there? If the guy moves around a lot or has only recently been put in charge of the fund, you really can’t credit him with any of its success. That would be like saying it doesn’t matter whether Steve Jobs is leading Apple Inc. (NASDAQ:AAPL) or not – it matters a great deal. That’s not to say a different manager can’t prove himself over time, but don’t be his guinea pig. Less than a year or two is a warning sign.
Another good rule of thumb is the Morningstar rating. This is a firm that specializes in ranking the best and worst funds. Anything that’s a four or five star is typically a solid fund overall. This mutual fund research firm is a great resource, though obviously you shouldn’t rely too heavily on their evaluation alone.
So what if you want to check these three metrics on your own?
My favorite one-stop shop is Fidelity … If your mutual funds aren’t in the Fidelity family, don’t worry – it offers info for ALL funds. Well, over 1,700 funds anyway.
Just type in the name of your fund under the “search” functionality at the very top of the page in the green bar, and then click on the fund you want to research to get an in-depth summary of the investment.
Showing posts with label Stocks to Sell. Show all posts
Showing posts with label Stocks to Sell. Show all posts
Top 5 Stocks Must to Sell in May in 2012
You’ve probably heard the adage “sell in May and go away.” It’s a
nice little rhyme, and it does have a basis in the market’s seasonal
patterns. Over time, the stock market as a whole has typically been
weaker from May to October than it has from November through April.
Going back to 1950, the Dow is just about flat May to October but up
over 7% on average from November to April.
On the other hand, that’s certainly not the pattern every year, and bailing out of stocks altogether for such a long period of time is tricky. For one thing, you have to figure out the right time to get back in. And this year in particular, there’s another historical trend at work that muddies the waters: the Presidential election. Going back to 1950, the S&P 500 has moved higher in the last seven months of Presidential election years 13 out of 15 times, according to Stock Trader’s Almanac.
Also important, first-quarter earnings-reporting season, which lingers into May, has been solid so far, with nearly three-quarters of companies beating expectations. In addition, housing, which was the biggest cause of our economic problems, looks close to bottoming out, European debt contagion risks remain largely contained at the moment, and anemic interest rates are supportive of demand for stocks — many of which pay higher dividend yields than CDs, savings accounts and bonds.
My strategy is simple: I like to make sure I’m properly diversified and that my portfolio is in balance with my desired allocations. I also make sure the stocks I own are the strongest opportunities with specific catalysts in place to drive the stocks higher.
That said, “sell in May” isn’t a bad way to go for stocks you’re not sure about. As an example, let me share a few of the stocks on a list I just put together for subscribers to my GameChangers advisory service.
Many of these stocks have shrinking margins, bleak revenue outlooks, face increased competition and could be affected by a cautious consumer as well. At best, I expect them to be dead money for a long time; at worst, they could drag your portfolio down.
In short, Chipotle must deal with labor-cost pressures, unstable commodity/food expenses and customers who are concerned about prices. International growth is Chipotle’s big plan, but it’s not clear yet if its spicier foods will translate as well in international markets as menus of competitors such as McDonald’s (NYSE:MCD) and KFC (NYSE:YUM).
In addition, Dunkin Brands faces a tough challenge in its efforts to do better in the afternoons and evenings and unseat Starbucks, the currently leader at those times of the day. DNKN is also not cheap, trading at more than 25X expected 2012 earnings. I think a more reasonable valuation would be around 16X, which would be closer to $20 a share.
Not surprisingly, DirecTV has said that customer growth should slow as a result of higher costs, and management recently signaled a shift in focus toward “customer retention” rather than heavy promotions to draw in new subscribers. Equipment subsidies and marketing costs now top $800 for each customer acquired, and it takes about 18 months for DirecTV to get that money back.
In addition, more content is available online, so more people are turning to the Internet for programming. That hurts DTV more than competing cable companies that offer high-speed Internet access along with phone and television service.
Part of the problem is that a higher percentage of the company’s sales are coming from mobile products, which carry very low margins, and changes at Sprint have also impacted results. In addition, in early March, right as the company was searching for a new lead advertising agency, Executive Vice President and Chief Marketing Officer Lee Applebaum abruptly left the company. I would stay away from the stock until there’s a clearer picture of where the company is going.
CEO Eddie Lampert has been scrambling to raise cash and calm investor fears, and he does have a history of igniting investor interest from time to time. To stay afloat with enough cash flow, Sears has been trying to sell or spin off stores. One well-respected Wall Street analyst called the process “a controlled liquidation of its chain,” and I agree. While the move sent SHLD soaring more than 20% and put rumors of bankruptcy to rest, in the end, Sears looks to be on its way to another cash-flow crunch.
You can’t run a business by selling off assets. Sears needs to address its fundamental problems and find a buyer that can provide synergistic upside. Meanwhile, the company has too big of a struggle ahead at a time of high unemployment, shrinking credit and competitors doing a better job both online and in big-box stores.
On the other hand, that’s certainly not the pattern every year, and bailing out of stocks altogether for such a long period of time is tricky. For one thing, you have to figure out the right time to get back in. And this year in particular, there’s another historical trend at work that muddies the waters: the Presidential election. Going back to 1950, the S&P 500 has moved higher in the last seven months of Presidential election years 13 out of 15 times, according to Stock Trader’s Almanac.
Also important, first-quarter earnings-reporting season, which lingers into May, has been solid so far, with nearly three-quarters of companies beating expectations. In addition, housing, which was the biggest cause of our economic problems, looks close to bottoming out, European debt contagion risks remain largely contained at the moment, and anemic interest rates are supportive of demand for stocks — many of which pay higher dividend yields than CDs, savings accounts and bonds.
My strategy is simple: I like to make sure I’m properly diversified and that my portfolio is in balance with my desired allocations. I also make sure the stocks I own are the strongest opportunities with specific catalysts in place to drive the stocks higher.
That said, “sell in May” isn’t a bad way to go for stocks you’re not sure about. As an example, let me share a few of the stocks on a list I just put together for subscribers to my GameChangers advisory service.
Many of these stocks have shrinking margins, bleak revenue outlooks, face increased competition and could be affected by a cautious consumer as well. At best, I expect them to be dead money for a long time; at worst, they could drag your portfolio down.
Top 5 Stocks Must to Sell in May in 2012 #1: CMG
Chipotle Mexican Grill (NYSE:CMG) has had a great run — up 200% over the last two years. But the company now faces a number of challenges. One is potential market saturation, which would lead to a decline in its record revenue growth. There’s also a new emphasis among consumers on homemade meals as well as upgraded supermarket takeout food.In short, Chipotle must deal with labor-cost pressures, unstable commodity/food expenses and customers who are concerned about prices. International growth is Chipotle’s big plan, but it’s not clear yet if its spicier foods will translate as well in international markets as menus of competitors such as McDonald’s (NYSE:MCD) and KFC (NYSE:YUM).
Top 5 Stocks Must to Sell in May in 2012 #2: DNKN
Dunkin Brands Group (NASDAQ:DNKN) has put up some good numbers recently, but I’m leery of several things, including the company’s huge debt load and ownership structure. DNKN is a “controlled company,” with over 80% of its ownership in the hands of three private-equity firms (Bain, Carlyle and Thomas H. Lee), which always raises the concern that private-equity owners will want to “cash out.”In addition, Dunkin Brands faces a tough challenge in its efforts to do better in the afternoons and evenings and unseat Starbucks, the currently leader at those times of the day. DNKN is also not cheap, trading at more than 25X expected 2012 earnings. I think a more reasonable valuation would be around 16X, which would be closer to $20 a share.
Top 5 Stocks Must to Sell in May in 2012 #3: DTV
DirecTV (NYSE:DTV) is expecting to face rapidly increasing programming costs, in large measure because the company has had to fork over ever-increasing amounts of cash to keep exclusive National Football League content for its NFL Sunday Ticket package.Not surprisingly, DirecTV has said that customer growth should slow as a result of higher costs, and management recently signaled a shift in focus toward “customer retention” rather than heavy promotions to draw in new subscribers. Equipment subsidies and marketing costs now top $800 for each customer acquired, and it takes about 18 months for DirecTV to get that money back.
In addition, more content is available online, so more people are turning to the Internet for programming. That hurts DTV more than competing cable companies that offer high-speed Internet access along with phone and television service.
Top 5 Stocks Must to Sell in May in 2012 #4: RSH
Radio Shack (NYSE:RSH) is struggling with competition from giants such as Amazon (NASDAQ:AMZN) and Best Buy (NYSE:BBY). The company met analysts’ expectations in its fourth-quarter report, but that came on the heels of four straight earnings misses, and first-quarter results announced April 24 went back to being another miss.Part of the problem is that a higher percentage of the company’s sales are coming from mobile products, which carry very low margins, and changes at Sprint have also impacted results. In addition, in early March, right as the company was searching for a new lead advertising agency, Executive Vice President and Chief Marketing Officer Lee Applebaum abruptly left the company. I would stay away from the stock until there’s a clearer picture of where the company is going.
Top 5 Stocks Must to Sell in May in 2012 #5: SHLD
Sears Holdings (NASDAQ:SHLD) just keeps reporting lower sales and profits. With its poor customer service and consumer concerns about the quality of its appliances and other onetime A-level items, the retailer is on a downward path.CEO Eddie Lampert has been scrambling to raise cash and calm investor fears, and he does have a history of igniting investor interest from time to time. To stay afloat with enough cash flow, Sears has been trying to sell or spin off stores. One well-respected Wall Street analyst called the process “a controlled liquidation of its chain,” and I agree. While the move sent SHLD soaring more than 20% and put rumors of bankruptcy to rest, in the end, Sears looks to be on its way to another cash-flow crunch.
You can’t run a business by selling off assets. Sears needs to address its fundamental problems and find a buyer that can provide synergistic upside. Meanwhile, the company has too big of a struggle ahead at a time of high unemployment, shrinking credit and competitors doing a better job both online and in big-box stores.
Four Dividend Stocks to Invest in 2012
Dividend growth investing is a strategy where investors buy stock in
companies which consistently raise distributions. This leads to higher
dividend payouts over time, and also leads to capital gains, as the
market adjusts stock prices to reflect the higher income generated by
the stock.
Dividend growth does not just miraculously appear out of a thin air however. In order to get dividend hikes every year, the company has to generate earnings growth over time.
For example, back in 2001, Chevron (NYSE:CVX) earned $1.85 per share, paid a dividend of $1.325 per share and traded at $44.81 per share. Ten years later, in 2011 the company is earning $13.44 per share, the dividend is $3.09 per share. The stock is trading around very comfortable $100 per share. The company is expected to distribute at least $3.24 per share in 2012. Investors who purchased the stock a decade ago are sitting at handsome capital gains, and are earning 7.20% yield on cost.
In order to generate high returns from dividends and capital gains, investors need to focus on companies which will be able to earn higher amounts in the future.
Corporations that have designated roadmaps to generate higher earnings per share, increase investors odds of receiving higher distributions and enjoying capital gains in the process are a great place to start earning money for your portfolio.
Below, you could find a list of four companies which have outlined their corporate strategies of achieving high earnings per share for the next several years:
Coca-Cola’s 2020 Vision Strategy strives for a high single digit annual EPS growth throughout this decade, driven through 5%-6% annual increases in revenues as the company expects 3%-4% yearly increase in sales volumes. The company is focusing more of its attention to still beverages like waters and juices, which stand the chance of delivering strong growth over time.
In addition, growth could come from emerging markets such as China and India, where the average number of servings per capita is much lower than that of the US. The company is pursuing differing strategies to capture the imaginations (and dollars) of consumers in emerging, developing and developed markets.
While the company might be focusing on growth through innovation and productivity initiatives in the developed markets, it might generate growth in emerging markets by heavy investing and maximizing volumes.
In addition, the company is playing on strong long-term demographic trends of continued rise in the global population, increased urbanization as well as the expected rise of the middle class worldwide. Yield: 2.70% (analysis)
In 2007 the company introduced its Centennial Strategy where the company is focused on achieving double-digit annual growth in economic profit. A key driver of the strategy is to accelerate sales by growing existing brands, including expanding into adjacent categories, entering new sales channels and increasing penetration within existing countries.
The company also anticipates using its strong cash flow to pursue growth opportunities and increase shareholder returns.
Basically the company will try to deliver further growth through an ongoing focus on consumer megatrends.
In addition to that the company will be targeting a 2% sales growth through product innovation. The company projects sales growth of 3-5 percent, excluding acquisitions and expansion into new geographies through 2013.
Last but not least Clorox will target margin expansion and maximizing cash flow through implementation a continued robust cost-saving program and maintaining price increases the company has taken. Yield: 3.40% (analysis)
This dividend aristocrat has consistently raised dividends for 40 years in a row. As with other consumer products companies, the growth is likely to come from developing and emerging markets, rather than developed markets.
Developed markets could benefit from cost cutting and
efficiency profits, which would decrease the total price of doing
business. Under the company’s global business plan, announced in 2003,
it is looking for annual sales growth in the 3%-5% range, EPS growth in
the mid to high single digits and dividend increases in line with
earnings growth. Yield: 3.80% (analysis)
The company expects that one third of the gains would come from revenue growth driven by organic growth and acquisitions. The company is relying on growth markets, its business analytics segment, its smarter planet initiative as well as its cloud and next generation data center businesses to deliver revenue growth.
Almost one third of the growth would come from share buybacks as well. The remainder would come from increased productivity in its core segments, as well as continuing its focus on offering high value to its customers. Yield: 1.70% (analysis)
Dividend growth does not just miraculously appear out of a thin air however. In order to get dividend hikes every year, the company has to generate earnings growth over time.
For example, back in 2001, Chevron (NYSE:CVX) earned $1.85 per share, paid a dividend of $1.325 per share and traded at $44.81 per share. Ten years later, in 2011 the company is earning $13.44 per share, the dividend is $3.09 per share. The stock is trading around very comfortable $100 per share. The company is expected to distribute at least $3.24 per share in 2012. Investors who purchased the stock a decade ago are sitting at handsome capital gains, and are earning 7.20% yield on cost.
In order to generate high returns from dividends and capital gains, investors need to focus on companies which will be able to earn higher amounts in the future.
Corporations that have designated roadmaps to generate higher earnings per share, increase investors odds of receiving higher distributions and enjoying capital gains in the process are a great place to start earning money for your portfolio.
Below, you could find a list of four companies which have outlined their corporate strategies of achieving high earnings per share for the next several years:
Four Dividend Stocks to Invest in 2012 #1 Coca-Cola
Beverage company Coca-Cola (NYSE:KO) engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. This dividend king has raised distributions for 50 years in a row.Coca-Cola’s 2020 Vision Strategy strives for a high single digit annual EPS growth throughout this decade, driven through 5%-6% annual increases in revenues as the company expects 3%-4% yearly increase in sales volumes. The company is focusing more of its attention to still beverages like waters and juices, which stand the chance of delivering strong growth over time.
In addition, growth could come from emerging markets such as China and India, where the average number of servings per capita is much lower than that of the US. The company is pursuing differing strategies to capture the imaginations (and dollars) of consumers in emerging, developing and developed markets.
While the company might be focusing on growth through innovation and productivity initiatives in the developed markets, it might generate growth in emerging markets by heavy investing and maximizing volumes.
In addition, the company is playing on strong long-term demographic trends of continued rise in the global population, increased urbanization as well as the expected rise of the middle class worldwide. Yield: 2.70% (analysis)
Four Dividend Stocks to Invest in 2012 #2 Clorox
Clorox (NYSE:CLX) manufactures and markets consumer and institutional products worldwide. The company operates in four segments: Cleaning, Lifestyle, Household, and International. This dividend champion has consistently raised distributions for 34 years in a row.In 2007 the company introduced its Centennial Strategy where the company is focused on achieving double-digit annual growth in economic profit. A key driver of the strategy is to accelerate sales by growing existing brands, including expanding into adjacent categories, entering new sales channels and increasing penetration within existing countries.
The company also anticipates using its strong cash flow to pursue growth opportunities and increase shareholder returns.
Basically the company will try to deliver further growth through an ongoing focus on consumer megatrends.
In addition to that the company will be targeting a 2% sales growth through product innovation. The company projects sales growth of 3-5 percent, excluding acquisitions and expansion into new geographies through 2013.
Last but not least Clorox will target margin expansion and maximizing cash flow through implementation a continued robust cost-saving program and maintaining price increases the company has taken. Yield: 3.40% (analysis)
Four Dividend Stocks to Invest in 2012 #3 Kimberly-Clark
Kimberly-Clark (NYSE:KMB), together with its subsidiaries, engages in manufacturing and marketing health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional and Other, and Health Care.This dividend aristocrat has consistently raised dividends for 40 years in a row. As with other consumer products companies, the growth is likely to come from developing and emerging markets, rather than developed markets.
Four Dividend Stocks to Invest in 2012 #4 IBM
IBM (NYSE:IBM)
provides information technology (IT) products and services worldwide.
The company operates in five segments: Global Technology Services,
Global Business Services, Software, Systems and Technology, and Global
Financing. This dividend achiever has rasied distributions for 17 years
in a row.
IBM has publicly announced its goal to hit $20 in
earnings per share by 2015. The company is one of the most consistent
repurchasers of stock, having reduced the total shares outstanding by
50% since 1995.The company expects that one third of the gains would come from revenue growth driven by organic growth and acquisitions. The company is relying on growth markets, its business analytics segment, its smarter planet initiative as well as its cloud and next generation data center businesses to deliver revenue growth.
Almost one third of the growth would come from share buybacks as well. The remainder would come from increased productivity in its core segments, as well as continuing its focus on offering high value to its customers. Yield: 1.70% (analysis)
20 Best Companies Stocks to Invest in 2012
It’s the thick of earnings season, and the parade of companies
reporting better-than-expected numbers marches on. Along with what has
been a stellar earnings season thus far, we’ve also seen a deluge of
dividend divas increasing their payouts to shareholders.
This week was no exception, as a score of companies moved to make their respective owners happier. 20 companies made it onto our Companies Increasing Dividends list this week:
5 Boring Stocks, 5 Sexy Yields
Energy services holding company 20 Best Companies Stocks to Invest in 2012 -AGL Resources (NYSE:GAS)
opened the valve on its quarterly payout by 2.2% to 46 cents per share.
The dividend will be paid June 1 to shareholders of record as of May
18. The new dividend yield, based on the May 3 closing price of $38.55
(the day the dividend was announced), is 4.77%. The stalwart energy
concern has paid dividends every quarter since 1958.
Industrial specialty gases maker Airgas (NYSE:ARG) inflated its quarterly largess to shareholders, raising its dividend 25% to 40 cents per share. The new dividend is payable June 29 to shareholders of record as of June 15. The new dividend yield, based on the May 3 closing price of $92.04, is 1.74%.
Electronic instrument maker Ametek (NYSE:AME) turned up the dial on its quarterly dividend by 50% to 6 cents per share. The new dividend is payable June 29 to shareholders of record as of June 15. The new dividend also comes with a 3-for-2 stock split. The new dividend yield, based on the May 1 closing price of $51.07, is 0.7%.
Mining giant Barrick Gold (NYSE:ABX) dug into its fiscal soil and unearthed a 33% increase in its quarterly payout to 20 cents per share. The new dividend will be paid June 15 to shareholders of record as of May 31. The new dividend yield, based on the May 2 closing price of $39.36, is 2.03%.
Energy MLP Boardwalk Pipeline Partners LP (NYSE:BWP) added to its dividend pipeline, raising its payout to unitholders nearly 1% to 53.25 cents per unit. The new distribution is payable May 17 to unitholders of record as of May 10. The new dividend yield, based on the April 30 closing price of $27.63, is 7.71%.
20 Best Companies Stocks to Invest in 2012 - Cardinal Health (NYSE:CAH) moved to improve the vitality of its quarterly payout, increasing its dividend 10.5% to 23.75 cents per share. The payout will be made on July 15 to shareholders of record as of July 1. The new dividend yield, based on the May 2 closing price of $42.42, is 2.24%. This marks the 111th consecutive quarter of dividends from Cardinal.
Natural gas firm Chesapeake Midstream Partners LP (NYSE:CHKM) turned up the heat on its quarterly distribution by 15.7% to 40.5 cents per unit. The new payout is scheduled for delivery on May 15 to unitholders of record as of May 8. The new dividend yield, based on the April 27 closing price of $27.87, is 5.81%.
Paper products manufacturer Domtar Corp (NYSE:UFS) put a new package around its dividend, increasing the payout 29% to 45 cents per share. The new dividend is payable on July 16 to shareholders of record as of June 15. The new dividend yield, based on the May 2 closing price of $88.04, is 2.04%.
Health insurance giant 20 Best Companies Stocks to Invest in 2012 -Humana Inc. (NYSE:HUM) moved to ensure shareholders that its dividend was in good shape, as the company raised its quarterly payout 4% to 26 cents per share. The new dividend is payable July 27 to shareholders of record as of June 29. The new dividend yield, based on the May 1 closing price of $84.33, is 1.23%.
Real estate and investment management firm Jones Lang LaSalle (NYSE:JLL) increased its semi-annual dividend by 33% to 20 cents per share. The new dividend is payable June 15 to shareholders of record as of May 15. The new dividend yield, based on the May 2 closing price of $85.09, is 0.47%.
Asset management giant Legg Mason (NYSE:LM) knows the value of dividends to shareholders, and this week the company moved to raise its own dividend by 37.5% to 11 cents per share. The new dividend is payable July 9 to shareholders of record as of June 12. The new dividend yield, based on the May 1 closing price of $25.32, is 1.74%.
Employment services firm ManpowerGroup (NYSE:MAN) moved to increase the salary it pays shareholders by nearly 7% to 43 cents per share. The semi-annual dividend is payable on June 15 to shareholders of record as of June 1. The new dividend yield, based on the May 3 closing price of $41.25, is 2.08%.
Markwest Energy Partners L.P. (NYSE:MWE)
raised its quarterly distribution 17.9% to 79 cents per unit. The
natural gas MLP will pay the new distribution on May 15 to unitholders
of record as of May 7. The new dividend yield, based on the April 30
closing price of $60.15, is 5.25%.
Regional energy operator 20 Best Companies Stocks to Invest in 2012 -Northeast Utilities (NYSE:NU) turned up the power on its quarterly payout by approximately 17% to 34.3 cents per share. The new payout will be made on June 29 to shareholders of record as of June 1. The new dividend yield, based on the May 2 closing price of $37.03, is 3.70%.
Beverage behemoth PepsiCo (NYSE:PEP) added more fizz to its quarterly dividend, pouring a 4.4% increase to 53.75 cents per share. The new dividend is payable June 29 to shareholders of record as of June 1. The new dividend yield, based on the May 2 closing price of $66.83, is 3.22%.
Cigarette manufacturer Reynolds American (NYSE:RAI) lit up a 5.4% increase in its quarterly payout to 59 cents per share. The new dividend is payable on July 2 to shareholders of record as of June 11. The new dividend yield, based on the May 3 closing price of $40.54, is 5.82%.
Commercial real estate investment trust Simon Property Group (NYSE:SPG) raised the rent it pays shareholder by 5.3% to $1.00 per share. The new payout will be delivered May 31 to shareholders of record as of May 17. The new dividend yield, based on the April 27 closing price of $155.33, is 2.58%.
Canadian oil sands firm Suncor Energy (NYSE:SU) sifted through its fiscal sand and came up with an 18.2% increase in its quarterly payout. The new dividend of 13 cents per share is payable June 25 to shareholders of record as of June 4. The new dividend yield, based on the May 1 closing price of $33.42, is 1.56%.
Rural retailer 20 Best Companies Stocks to Invest in 2012 -Tractor Supply Company (NASDAQ:TSCO) plowed a new dividend field, watering shareholders with a 67% increase in its quarterly dividend to 20 cents per share. The new payout will be harvested June 5 by shareholders of record as of May 21. The new dividend yield, based on the May 3 closing price of $98.96, is 0.81%.
Employee benefits provider20 Best Companies Stocks to Invest in 2012 - Unum Group (NYSE:UNM) moved to add a fiscal benefit to shareholders by raising its dividend 23.8% to 13 cents per share. The new dividend is expected to be paid starting in the third quarter. The new dividend yield, based on the May 1 closing price of $23.73, is 2.19%.
This week was no exception, as a score of companies moved to make their respective owners happier. 20 companies made it onto our Companies Increasing Dividends list this week:
5 Boring Stocks, 5 Sexy Yields
Industrial specialty gases maker Airgas (NYSE:ARG) inflated its quarterly largess to shareholders, raising its dividend 25% to 40 cents per share. The new dividend is payable June 29 to shareholders of record as of June 15. The new dividend yield, based on the May 3 closing price of $92.04, is 1.74%.
Electronic instrument maker Ametek (NYSE:AME) turned up the dial on its quarterly dividend by 50% to 6 cents per share. The new dividend is payable June 29 to shareholders of record as of June 15. The new dividend also comes with a 3-for-2 stock split. The new dividend yield, based on the May 1 closing price of $51.07, is 0.7%.
Mining giant Barrick Gold (NYSE:ABX) dug into its fiscal soil and unearthed a 33% increase in its quarterly payout to 20 cents per share. The new dividend will be paid June 15 to shareholders of record as of May 31. The new dividend yield, based on the May 2 closing price of $39.36, is 2.03%.
Energy MLP Boardwalk Pipeline Partners LP (NYSE:BWP) added to its dividend pipeline, raising its payout to unitholders nearly 1% to 53.25 cents per unit. The new distribution is payable May 17 to unitholders of record as of May 10. The new dividend yield, based on the April 30 closing price of $27.63, is 7.71%.
20 Best Companies Stocks to Invest in 2012 - Cardinal Health (NYSE:CAH) moved to improve the vitality of its quarterly payout, increasing its dividend 10.5% to 23.75 cents per share. The payout will be made on July 15 to shareholders of record as of July 1. The new dividend yield, based on the May 2 closing price of $42.42, is 2.24%. This marks the 111th consecutive quarter of dividends from Cardinal.
Natural gas firm Chesapeake Midstream Partners LP (NYSE:CHKM) turned up the heat on its quarterly distribution by 15.7% to 40.5 cents per unit. The new payout is scheduled for delivery on May 15 to unitholders of record as of May 8. The new dividend yield, based on the April 27 closing price of $27.87, is 5.81%.
Paper products manufacturer Domtar Corp (NYSE:UFS) put a new package around its dividend, increasing the payout 29% to 45 cents per share. The new dividend is payable on July 16 to shareholders of record as of June 15. The new dividend yield, based on the May 2 closing price of $88.04, is 2.04%.
Health insurance giant 20 Best Companies Stocks to Invest in 2012 -Humana Inc. (NYSE:HUM) moved to ensure shareholders that its dividend was in good shape, as the company raised its quarterly payout 4% to 26 cents per share. The new dividend is payable July 27 to shareholders of record as of June 29. The new dividend yield, based on the May 1 closing price of $84.33, is 1.23%.
Real estate and investment management firm Jones Lang LaSalle (NYSE:JLL) increased its semi-annual dividend by 33% to 20 cents per share. The new dividend is payable June 15 to shareholders of record as of May 15. The new dividend yield, based on the May 2 closing price of $85.09, is 0.47%.
Asset management giant Legg Mason (NYSE:LM) knows the value of dividends to shareholders, and this week the company moved to raise its own dividend by 37.5% to 11 cents per share. The new dividend is payable July 9 to shareholders of record as of June 12. The new dividend yield, based on the May 1 closing price of $25.32, is 1.74%.
Employment services firm ManpowerGroup (NYSE:MAN) moved to increase the salary it pays shareholders by nearly 7% to 43 cents per share. The semi-annual dividend is payable on June 15 to shareholders of record as of June 1. The new dividend yield, based on the May 3 closing price of $41.25, is 2.08%.
5 Boring Stocks, 5 Sexy Yields
Regional energy operator 20 Best Companies Stocks to Invest in 2012 -Northeast Utilities (NYSE:NU) turned up the power on its quarterly payout by approximately 17% to 34.3 cents per share. The new payout will be made on June 29 to shareholders of record as of June 1. The new dividend yield, based on the May 2 closing price of $37.03, is 3.70%.
Beverage behemoth PepsiCo (NYSE:PEP) added more fizz to its quarterly dividend, pouring a 4.4% increase to 53.75 cents per share. The new dividend is payable June 29 to shareholders of record as of June 1. The new dividend yield, based on the May 2 closing price of $66.83, is 3.22%.
Cigarette manufacturer Reynolds American (NYSE:RAI) lit up a 5.4% increase in its quarterly payout to 59 cents per share. The new dividend is payable on July 2 to shareholders of record as of June 11. The new dividend yield, based on the May 3 closing price of $40.54, is 5.82%.
Commercial real estate investment trust Simon Property Group (NYSE:SPG) raised the rent it pays shareholder by 5.3% to $1.00 per share. The new payout will be delivered May 31 to shareholders of record as of May 17. The new dividend yield, based on the April 27 closing price of $155.33, is 2.58%.
Canadian oil sands firm Suncor Energy (NYSE:SU) sifted through its fiscal sand and came up with an 18.2% increase in its quarterly payout. The new dividend of 13 cents per share is payable June 25 to shareholders of record as of June 4. The new dividend yield, based on the May 1 closing price of $33.42, is 1.56%.
Rural retailer 20 Best Companies Stocks to Invest in 2012 -Tractor Supply Company (NASDAQ:TSCO) plowed a new dividend field, watering shareholders with a 67% increase in its quarterly dividend to 20 cents per share. The new payout will be harvested June 5 by shareholders of record as of May 21. The new dividend yield, based on the May 3 closing price of $98.96, is 0.81%.
Employee benefits provider20 Best Companies Stocks to Invest in 2012 - Unum Group (NYSE:UNM) moved to add a fiscal benefit to shareholders by raising its dividend 23.8% to 13 cents per share. The new dividend is expected to be paid starting in the third quarter. The new dividend yield, based on the May 1 closing price of $23.73, is 2.19%.
3 Crash-Proof Dividend Stocks to Buy in 2012
The market is having an off week and has lost ground six of the last eight days. That has some investors wondering if the rally is “too good to be true.”
There’s no doubt we could be in store for some short-term volatility. There’s the “sell in May” seasonality at play that we hear so much about. Earnings season always is a period of uncertainty, where a few bad headlines could sink a sector or send the market running for cover. There also are continued fireworks in Europe, with Spain now the crisis du jour. And let’s not forget the fact that some jobs data at home was less than impressive and has caused some to wonder if the economy is healing fast enough — or still healing at all.
I know it’s hard to do … but if you’re a buy-and-hold investor, you have to just tune this out. There are a host of excellent low-risk dividend stocks that will serve your portfolio well over the next few years, even if they do take a short-term stumble. And if you’re smart, you can use a short-term slide as a buying opportunity.
So what picks should be on your radar right now even if the market could take a spill? Here are three of my favorite crash-proof dividend stocks to consider as long-term plays.
The trajectory of earnings and revenue at General Mills is understandably sleepy. After all, this is a packaged foods company and there’s only so much growth in the grocery aisles. However brands like Lucky Charms, Betty Crocker and Hamburger Helper are some of the most powerful names in the business. That means stability — and has resulted in an S&P Quality Ranking of A+, an exclusive rating reserved for only the most reliable and low-risk stocks reviewed by Standard & Poor’s.
But don’t think growth is out of the question. General Mills is building a big international presence that’s paying off. Fiscal third-quarter net sales for General Mills, reported in March, showed that international sales grew 51% year-over-year — 43% of that growth coming from a shrewd 2011 Yoplait acquisition.
In short, the dividend and balance sheet are both bulletproof. So why worry about short-term macro fears with a stock like this?
For those concerned about buying a top, it’s also worth noting that GIS stock has rolled back recently about 5% from its 52-week high in January. That might not sound like much, but the 52-week range for GIS is a very tight band of $34.64 to $41.06 — so buy the minor dip if you can, because this stock is pretty much crash-proof.
Oh, and long-term performance hasn’t exactly been sleepy, either. GIS has a five-year return of 32% vs. about 3% for the Dow Jones Industrial Average. Not bad.
Yes, rising input costs for packaged foods companies is a concern. But long-term investors should see this as an opportunity to build a position in a crash-proof dividend stock in the sector like General Mills.
Like General Mills, Dupont offers a 3.1% yield, and its dividend payout ratio is about 45% based on fiscal 2011 earnings. DuPont also has paid dividends for over a century, dating back to 1904. Quite an income play, without a doubt.
On the earnings and sales side, the numbers are growing strongly. Take a look at these figures since the recession and financial crisis:
DuPont is up 15% year-to-date in 2012, and seems to be heating up. However, shares remain almost 10% off their 2011 peak. What’s more, DuPont has a forward P/E of under 11 based on fiscal 2013 earnings — and a current P/E of just 14.
Admittedly, long-term performance isn’t much to scream about. The stock has a five-year return of 6% vs. 3% for the Dow — outperforming, but not by much. More troublesome is a 10-year return of just 12% vs. 26% for the benchmark Dow Jones Industrial Average.
However, there is reason to think that the past several years have been an important turning point for DuPont, as it has refocused through divestitures, acquisitions and product development. And if the last few years of big growth can’t be replicated in the years ahead? Well, then investors still can be content with DuPont’s industry dominance and nice dividend — making it an attractive low-risk investment with limited downside.
On the dividend front, you’ll be hard pressed to find a company with a better track record of distributions. The company has paid dividends since 1944, but more importantly has raised its dividend annually for 49 years in a row! In the past 10 years, the company has boosted distributions by a 12.4% annual rate. Think about that — as companies from Citigroup (NYSE:C) to General Electric (NYSE:GE) to Ford (NYSE:F) have shadows of their pre-recession dividends, Johnson & Johnson has been upping the ante at more than 12% per year on average.
And don’t think those increases have been from a measly sum to a slightly bigger sum. The annual payout is $2.28 a year with a headline yield of 3.5%. It has a slightly higher dividend payout ratio than these other two picks, of around 64%, but it also is one of the only four blue-chip stocks to get a AAA debt rating from Standard & Poor’s.
But enough about the dividend: Let’s talk about the prospect for growth and stability. The trouble with Johnson & Johnson lately has been serious concerns about product quality — including more than 50 drug and device recalls since 2010 thanks in part to problems at manufacturing facilities. This has been a major distraction and a hit to the company’s reputation.
However, even amid those costly recalls and the tarnish on the J&J brand, the company has managed to post four consecutive quarters of year-over-year revenue growth. And while profits took a hit in fiscal 2011, the company is projecting earnings growth of more than 45% in fiscal 2012!
More interesting to me is the 2011 buyout of Swiss-American medical device maker Synthes for a massive $21.3 billion. Before the deal was announced, JNJ stock was hanging out at around $59 a share. After the deal was announced, the stock spiked 10% in a matter of days.
But continued recall woes have been a distraction, and Wall Street has been focused on changes in the corner office as longtime leader William Weldon will hand the reins over to a former Army Ranger. JNJ is now about 7% off its 52-high attained last summer, and is in the red year-to-date in 2012.
Calling JNJ a turnaround play is a bit of an overstatement, since this company never was at risk of going anywhere. But it’s safe to say that now is a good buying opportunity as the company looks to refocus and win back Wall Street.
And if it doesn’t? Well, the bad news is baked in and the Synthes acquisition is going to naturally inflate numbers in the next few quarters. Look for proof of that when JNJ reports on Tuesday, April 17.
There’s no doubt we could be in store for some short-term volatility. There’s the “sell in May” seasonality at play that we hear so much about. Earnings season always is a period of uncertainty, where a few bad headlines could sink a sector or send the market running for cover. There also are continued fireworks in Europe, with Spain now the crisis du jour. And let’s not forget the fact that some jobs data at home was less than impressive and has caused some to wonder if the economy is healing fast enough — or still healing at all.
I know it’s hard to do … but if you’re a buy-and-hold investor, you have to just tune this out. There are a host of excellent low-risk dividend stocks that will serve your portfolio well over the next few years, even if they do take a short-term stumble. And if you’re smart, you can use a short-term slide as a buying opportunity.
So what picks should be on your radar right now even if the market could take a spill? Here are three of my favorite crash-proof dividend stocks to consider as long-term plays.
3 Crash-Proof Dividend Stocks to Buy in 2012 General Mills
Here’s an impressive stat for you: General Mills (NYSE:GIS) has paid a dividend for 113 years, never once cutting its payouts in over a century. The current yield is an attractive 3.1%, and the payout ratio — that is, the portion of profits that are dedicated to dividends — is a very sustainable 45%. Historically, most dividend stocks’ payout ratios are around 50%.The trajectory of earnings and revenue at General Mills is understandably sleepy. After all, this is a packaged foods company and there’s only so much growth in the grocery aisles. However brands like Lucky Charms, Betty Crocker and Hamburger Helper are some of the most powerful names in the business. That means stability — and has resulted in an S&P Quality Ranking of A+, an exclusive rating reserved for only the most reliable and low-risk stocks reviewed by Standard & Poor’s.
But don’t think growth is out of the question. General Mills is building a big international presence that’s paying off. Fiscal third-quarter net sales for General Mills, reported in March, showed that international sales grew 51% year-over-year — 43% of that growth coming from a shrewd 2011 Yoplait acquisition.
In short, the dividend and balance sheet are both bulletproof. So why worry about short-term macro fears with a stock like this?
For those concerned about buying a top, it’s also worth noting that GIS stock has rolled back recently about 5% from its 52-week high in January. That might not sound like much, but the 52-week range for GIS is a very tight band of $34.64 to $41.06 — so buy the minor dip if you can, because this stock is pretty much crash-proof.
Oh, and long-term performance hasn’t exactly been sleepy, either. GIS has a five-year return of 32% vs. about 3% for the Dow Jones Industrial Average. Not bad.
Yes, rising input costs for packaged foods companies is a concern. But long-term investors should see this as an opportunity to build a position in a crash-proof dividend stock in the sector like General Mills.
3 Crash-Proof Dividend Stocks to Buy in 2012 DuPont
E.I. du Pont de Nemours and Company (NYSE:DD) — or just plain old DuPont to most of us — is only the top chemicals producer in the world. It’s not a sexy business, making polymers and adhesive and the like, but it’s certainly a profitable one. It’s also worth noting that DuPont has taken great strides to move beyond nylon — with R&D centers all over the world working on genetic research, biofuels and electronics.Like General Mills, Dupont offers a 3.1% yield, and its dividend payout ratio is about 45% based on fiscal 2011 earnings. DuPont also has paid dividends for over a century, dating back to 1904. Quite an income play, without a doubt.
On the earnings and sales side, the numbers are growing strongly. Take a look at these figures since the recession and financial crisis:
- Fiscal 2009: $26.1 billion in revenue, $1.92 in earnings per share.
- Fiscal 2010: $31.5 billion in revenue (+20%), $3.28 in EPS (+70%)
- Fiscal 2011: $38.7 billion in revenue (+22%), $3.68 in EPS (+12%)
- Fiscal 2012 Forecasts: $41.4 billion in revenue (+6%), $4.25 in EPS (+15%)
DuPont is up 15% year-to-date in 2012, and seems to be heating up. However, shares remain almost 10% off their 2011 peak. What’s more, DuPont has a forward P/E of under 11 based on fiscal 2013 earnings — and a current P/E of just 14.
Admittedly, long-term performance isn’t much to scream about. The stock has a five-year return of 6% vs. 3% for the Dow — outperforming, but not by much. More troublesome is a 10-year return of just 12% vs. 26% for the benchmark Dow Jones Industrial Average.
However, there is reason to think that the past several years have been an important turning point for DuPont, as it has refocused through divestitures, acquisitions and product development. And if the last few years of big growth can’t be replicated in the years ahead? Well, then investors still can be content with DuPont’s industry dominance and nice dividend — making it an attractive low-risk investment with limited downside.
3 Crash-Proof Dividend Stocks to Buy in 2012 Johnson & Johnson
Many investors might not see any pharma stock as “low-risk” right now, even with a plump dividend yield. However, Johnson & Johnson (NYSE:JNJ) is not your typical pharmaceutical company because of its very strong consumer health business. Band-Aid bandages, Tylenol medications, Neutrogena skin care and Acuvue contact lens products are just a few of the items J&J sells at the grocery store instead of behind the pharmacy counter.On the dividend front, you’ll be hard pressed to find a company with a better track record of distributions. The company has paid dividends since 1944, but more importantly has raised its dividend annually for 49 years in a row! In the past 10 years, the company has boosted distributions by a 12.4% annual rate. Think about that — as companies from Citigroup (NYSE:C) to General Electric (NYSE:GE) to Ford (NYSE:F) have shadows of their pre-recession dividends, Johnson & Johnson has been upping the ante at more than 12% per year on average.
And don’t think those increases have been from a measly sum to a slightly bigger sum. The annual payout is $2.28 a year with a headline yield of 3.5%. It has a slightly higher dividend payout ratio than these other two picks, of around 64%, but it also is one of the only four blue-chip stocks to get a AAA debt rating from Standard & Poor’s.
But enough about the dividend: Let’s talk about the prospect for growth and stability. The trouble with Johnson & Johnson lately has been serious concerns about product quality — including more than 50 drug and device recalls since 2010 thanks in part to problems at manufacturing facilities. This has been a major distraction and a hit to the company’s reputation.
However, even amid those costly recalls and the tarnish on the J&J brand, the company has managed to post four consecutive quarters of year-over-year revenue growth. And while profits took a hit in fiscal 2011, the company is projecting earnings growth of more than 45% in fiscal 2012!
More interesting to me is the 2011 buyout of Swiss-American medical device maker Synthes for a massive $21.3 billion. Before the deal was announced, JNJ stock was hanging out at around $59 a share. After the deal was announced, the stock spiked 10% in a matter of days.
But continued recall woes have been a distraction, and Wall Street has been focused on changes in the corner office as longtime leader William Weldon will hand the reins over to a former Army Ranger. JNJ is now about 7% off its 52-high attained last summer, and is in the red year-to-date in 2012.
Calling JNJ a turnaround play is a bit of an overstatement, since this company never was at risk of going anywhere. But it’s safe to say that now is a good buying opportunity as the company looks to refocus and win back Wall Street.
And if it doesn’t? Well, the bad news is baked in and the Synthes acquisition is going to naturally inflate numbers in the next few quarters. Look for proof of that when JNJ reports on Tuesday, April 17.
7 Best Industrial Stocks to Sell in 2012
After the banks and homebuilders that fueled the housing bubble, the industrial sector was perhaps hardest hit by the financial crisis and resulting economic downturn. As overall spending and activity slowed, manufacturers took a beating — and many haven’t recovered.
I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. And this week, I’ve identified seven industrial stocks to sell.
Each one of these stocks gets a “D” or “F” according to my research, meaning it is a “sell” or “strong sell.”
7 Best Industrial Stocks to Sell in 2012 - ABB Ltd. (NYSE:ABB) works with power and automation technologies. While the Dow Jones has posted a gain of 9% in the last year, ABB has recorded a loss of 11% in the same time. ABB stock gets an “F” grade for its ability to exceed the consensus earnings estimates on Wall Street and a “D” grade for the magnitude with which earnings projections have increased over the past months. For more information, view my complete analysis of ABB stock.
7 Best Industrial Stocks to Sell in 2012 - Emerson Electric Co. (NYSE:EMR) is a diversified global technology company that has dropped 13% in the past 12 months. Emerson stock gets a “D” grade for sales growth, a “D” grade for earnings growth and a “D” grade for its ability to exceed the consensus earnings estimates. For more information, view my complete analysis of EMR stock.
7 Best Industrial Stocks to Sell in 2012 - Koninklijke Philips Electronics (NYSE:PHG) is the parent company of Philips Group and has 118 production sites in 27 countries. PHG stock has dipped more than 36% since March 2011. Philips stock gets a “D” grade for sales growth, an “F” grade for operating margin growth, an “F” grade for earnings growth, a “D” grade for earnings momentum, an “F” grade for its ability to exceed the consensus earnings estimates on Wall Street, a “D” grade for the magnitude in which earnings projections have increased over the past months, a “D” grade for cash flow and a “D” grade for return on equity. For more information, view my complete analysis of PHG stock.
7 Best Industrial Stocks to Sell in 2012 - General Electric Co. (NYSE:GE) is the most well-known stock on this list. It’s involved in aircraft engines, power generation, water processing, household appliances, medical imaging, consumer financing and other endeavors. Despite its big name, GE has posted a loss of 4% in the last year. GE stock gets an “F” grade for sales growth. For more information, view my complete analysis of GE stock.
7 Best Industrial Stocks to Sell in 2012 - Siemens (NYSE:SI) is an electronics and electrical-engineering company. Despite gains by the broader markets, SI stock is down 21% in the last year. Siemens stock gets a “D” grade for sales growth, a “D” grade for earnings growth, an “F” grade for earnings momentum, a “D” grade for its ability to exceed the consensus earnings estimates on Wall Street and a “D” grade for the magnitude with which earnings projections have increased over the past months. For more information, view my complete analysis of SI stock.
7 Best Industrial Stocks to Sell in 2012 - Ingersoll-Rand (NYSE:IR) is involved in enhancing the comfort of air in homes and buildings, in the transport of food and perishables and in secure homes and commercial properties. Ingersoll-Rand stock has lost 13% in the last 12 months. IR stock gets an “F” grade for sales growth, an “F” grade for operating margin growth and a “D” grade for cash flow. For more information, view my complete analysis of IR stock.
CSX Corp. (NYSE: CSX) is a transportation supplier that rounds out the list with a 17% drop in the past year. CSX stock gets a “D” grade for its ability to exceed the consensus earnings estimates on Wall Street. For more information, view my complete analysis of CSX stock.
I watch more than 5,000 publicly traded companies with my Portfolio Grader tool, ranking companies by a number of fundamental and quantitative measures. And this week, I’ve identified seven industrial stocks to sell.
Each one of these stocks gets a “D” or “F” according to my research, meaning it is a “sell” or “strong sell.”
7 Best Industrial Stocks to Sell in 2012 - ABB Ltd. (NYSE:ABB) works with power and automation technologies. While the Dow Jones has posted a gain of 9% in the last year, ABB has recorded a loss of 11% in the same time. ABB stock gets an “F” grade for its ability to exceed the consensus earnings estimates on Wall Street and a “D” grade for the magnitude with which earnings projections have increased over the past months. For more information, view my complete analysis of ABB stock.
7 Best Industrial Stocks to Sell in 2012 - Emerson Electric Co. (NYSE:EMR) is a diversified global technology company that has dropped 13% in the past 12 months. Emerson stock gets a “D” grade for sales growth, a “D” grade for earnings growth and a “D” grade for its ability to exceed the consensus earnings estimates. For more information, view my complete analysis of EMR stock.
7 Best Industrial Stocks to Sell in 2012 - Koninklijke Philips Electronics (NYSE:PHG) is the parent company of Philips Group and has 118 production sites in 27 countries. PHG stock has dipped more than 36% since March 2011. Philips stock gets a “D” grade for sales growth, an “F” grade for operating margin growth, an “F” grade for earnings growth, a “D” grade for earnings momentum, an “F” grade for its ability to exceed the consensus earnings estimates on Wall Street, a “D” grade for the magnitude in which earnings projections have increased over the past months, a “D” grade for cash flow and a “D” grade for return on equity. For more information, view my complete analysis of PHG stock.
7 Best Industrial Stocks to Sell in 2012 - General Electric Co. (NYSE:GE) is the most well-known stock on this list. It’s involved in aircraft engines, power generation, water processing, household appliances, medical imaging, consumer financing and other endeavors. Despite its big name, GE has posted a loss of 4% in the last year. GE stock gets an “F” grade for sales growth. For more information, view my complete analysis of GE stock.
7 Best Industrial Stocks to Sell in 2012 - Siemens (NYSE:SI) is an electronics and electrical-engineering company. Despite gains by the broader markets, SI stock is down 21% in the last year. Siemens stock gets a “D” grade for sales growth, a “D” grade for earnings growth, an “F” grade for earnings momentum, a “D” grade for its ability to exceed the consensus earnings estimates on Wall Street and a “D” grade for the magnitude with which earnings projections have increased over the past months. For more information, view my complete analysis of SI stock.
7 Best Industrial Stocks to Sell in 2012 - Ingersoll-Rand (NYSE:IR) is involved in enhancing the comfort of air in homes and buildings, in the transport of food and perishables and in secure homes and commercial properties. Ingersoll-Rand stock has lost 13% in the last 12 months. IR stock gets an “F” grade for sales growth, an “F” grade for operating margin growth and a “D” grade for cash flow. For more information, view my complete analysis of IR stock.
CSX Corp. (NYSE: CSX) is a transportation supplier that rounds out the list with a 17% drop in the past year. CSX stock gets a “D” grade for its ability to exceed the consensus earnings estimates on Wall Street. For more information, view my complete analysis of CSX stock.
5 Health Care Penny Stocks to Buy in 2012
One of the residual benefits of the cantankerous debate regarding the debt ceiling in Washington is the health care sector. The debate on raising the debt limit has demonstrated the remarkable gains in political clout of the tea party and fiscally conservative elements of the GOP. With that clout, expect current health care legislation to be repealed or changed entirely at some point in the near future.
Already, the health care sector has been humming along in 2011. Stocks in the group have been rallying as politicians’ attention shifted to other priorities. Free to operate without the fear of onerous regulations, investors have been bidding up health care stocks like UnitedHealth (NYSE:UNH) and WellPoint (NYSE:WLP).
The biggest gains are yet to come, especially if the current health care law is repealed. I expect outsized gains in the sector, and I am particularly enamored with health care penny stocks. The SEC defines a penny stock as being less than $5 per share. The penny stocks mentioned here are all real companies with promising futures despite low prices.
Catalyst Pharmaceutical is a biopharmaceutical company in search of drugs to treat neural system disorders. As one would expect, the company is losing money. The play here is to buy future success today. There really are only two outcomes: huge success or failure. Thus, this a higher-risk/high-reward health care penny stock.
The medical device-maker has signed impressive purchasing agreements that bode well for its future. The company, now trading for more than $1 per share, is listed on NASDAQ. That listing is likely to attract the attention of more buyers that otherwise would shun the company. A focus on chiropractic and alternative solutions to physical ailments holds much promise for this health care penny stock.
The company generated a profit in excess of $1 million on sales of $7.6 million. The sales number represented an improvement of 24% from the year prior. As quickly as the market bid up shares, the rug was pulled out as sellers emerged. Shares now trade below $2. Investors might have been spooked by the company’s admission that future buying might not be similar to the impressive quarter announced.
That said, Pro-Dex is working hard to diversify its customer base. To the extent they are successful, this stock will rally back to more than $3 per share – and then some.
Shares soared on the news of the bid to more than $2 per share, but the eventual rejection of the offer has resulted in shares drifting lower. You can buy the stock today for $1.70 per share. As acceptance of its prostate treatment gains momentum, look for TGX to soar higher.
The company is in the business of providing contract-based research and development in the biotechnology industry. The tiny $9 million market cap company stands to benefit from the increasing research activity in this critical area of health care. As more barriers to research are removed, this stock should climb higher. It certainly is worthy of a speculation at this low price.
Already, the health care sector has been humming along in 2011. Stocks in the group have been rallying as politicians’ attention shifted to other priorities. Free to operate without the fear of onerous regulations, investors have been bidding up health care stocks like UnitedHealth (NYSE:UNH) and WellPoint (NYSE:WLP).
The biggest gains are yet to come, especially if the current health care law is repealed. I expect outsized gains in the sector, and I am particularly enamored with health care penny stocks. The SEC defines a penny stock as being less than $5 per share. The penny stocks mentioned here are all real companies with promising futures despite low prices.
5 Health Care Penny Stocks to Buy in 2012 - Catalyst Pharmaceutical Partners
Catalyst Pharmaceutical Partners (NASDAQ:CPRX) is a tiny health care penny stock with a $35 million market cap. Despite the low price, the average volume of shares traded is at 129,000 per day. There is plenty of action in this stock, including a recent analyst recommendation of “outperform” from Wall Street firm Cowen.Catalyst Pharmaceutical is a biopharmaceutical company in search of drugs to treat neural system disorders. As one would expect, the company is losing money. The play here is to buy future success today. There really are only two outcomes: huge success or failure. Thus, this a higher-risk/high-reward health care penny stock.
5 Health Care Penny Stocks to Buy in 2012 -
Dynatronics
Low-priced health care penny stocks can generate significant returns. Dynatronics (NASDAQ:DYNT) is one of the best-performing under-$5 stocks in the market, with a gain of more than 100% this year.The medical device-maker has signed impressive purchasing agreements that bode well for its future. The company, now trading for more than $1 per share, is listed on NASDAQ. That listing is likely to attract the attention of more buyers that otherwise would shun the company. A focus on chiropractic and alternative solutions to physical ailments holds much promise for this health care penny stock.
5 Health Care Penny Stocks to Buy in 2012 -
Pro-Dex
Pro-Dex (NASDAQ:PDEX) is a medical device company specializing in rotary drives and motors for physician and dental practitioners. This tiny health care penny stock has a valuation of only $6 million, and as a result, shares are volatile. In May, shares soared to more than $3, thanks in part to an impressive earnings report.The company generated a profit in excess of $1 million on sales of $7.6 million. The sales number represented an improvement of 24% from the year prior. As quickly as the market bid up shares, the rug was pulled out as sellers emerged. Shares now trade below $2. Investors might have been spooked by the company’s admission that future buying might not be similar to the impressive quarter announced.
That said, Pro-Dex is working hard to diversify its customer base. To the extent they are successful, this stock will rally back to more than $3 per share – and then some.
5 Health Care Penny Stocks to Buy in 2012 -
Theragenics
If the name Theragenics (NYSE:TGX) sounds familiar, you likely heard of this stock via its heavily advertised prostate cancer treatment program. TheraSeed is an FDA-approved medical device helping to diversify this 30-year-old medical device company. Earlier this year, the $58 million market cap company received a takeover bid that would have valued Theragenics at $74 million.Shares soared on the news of the bid to more than $2 per share, but the eventual rejection of the offer has resulted in shares drifting lower. You can buy the stock today for $1.70 per share. As acceptance of its prostate treatment gains momentum, look for TGX to soar higher.
5 Health Care Penny Stocks to Buy in 2012 -
Bioanalytical Systems
It doesn’t take much to move a health care penny stock significantly higher. On Wednesday, shares of Bioanalytical Systems (NASDAQ:BASI) gained 5% on a 9 cent-per-share move in stock price. At the end of last year, BASI spiked to $3.98 per share, hitting a 52-week high. Shares have been sliding lower since and now trade for $1.88.The company is in the business of providing contract-based research and development in the biotechnology industry. The tiny $9 million market cap company stands to benefit from the increasing research activity in this critical area of health care. As more barriers to research are removed, this stock should climb higher. It certainly is worthy of a speculation at this low price.
Best Investments in 2012 - 5 Popular Mutual Funds to Avoid
While competitive returns are key for attracting assets, some funds mostly rely on their former glory. They have become somewhat like a trusted brand, leading some investors to do not perform their due diligence. And even if they’re down, won’t an iconic fund return to its winning ways?
Not necessarily. There are many examples where portfolio managers have lost their touch. Sometimes it’s because prior success came on just a few good investments or a surge in a particular market. Or, even more ominously, it could have been the result of some risky bets that just happened to pay off — at one time.
Here’s a look at a few big-time mutual funds that investors shouldn’t just trust on name alone:
However, in September, Fidelity brought on board a new manager, Jeff Feingold. Before this, he managed the Best Investments in 2012 -Fidelity Trend (MUTF:FTRNX) fund and posted a strong track record. And at least early on, Feingold is showing promise, with FMAGX up 11.07% year-to-date.
But Best Investments in 2012 -Janus Overseas A (MUTF:JDIAX), which has more than $9 billion in assets, has truly struggled. JDIAX posted a 32.88% loss in 2011, and its average return for the past five years is barely positive, at 0.28%.
The portfolio manager, Brent Lynn, likes to focus on emerging markets and smaller companies. Some years, that strategy can result in big returns. But in others, it means big losses. Either way, it’s a wild ride mutual fund investors could do without.
Yet RGAAX still has a whopping $127 billion under management.
A key issue has been the fund’s focus on foreign markets. Also, because of its enormous size, the Growth Fund is heavily concentrated with large-cap stocks, which can be a bit of a drag, too.
Current VWNDX manager Jim Mordy (who oversees 70% of the portfolio) is trying to stay true to Neff’s contrarian style. But making money as a contrarian is no easy feat, considering that in today’s markets, value stocks can stay depressed for prolonged periods of time.
As the name implies, the fund sticks to large-cap stocks, with top holdings including Pfizer (NYSE:PFE), Best Investments in 2012 -Johnson & Johnson (NYSE:JNJ) and Apple (NASDAQ:AAPL). But EILVX has had missteps with its industry allocation — last year, it was bullish on financials, and we all know how that sector played out.
Not necessarily. There are many examples where portfolio managers have lost their touch. Sometimes it’s because prior success came on just a few good investments or a surge in a particular market. Or, even more ominously, it could have been the result of some risky bets that just happened to pay off — at one time.
Here’s a look at a few big-time mutual funds that investors shouldn’t just trust on name alone:
Fidelity Magellan
Back in the 1980s, legendary investor Peter Lynch posted a standout performance at the helm of the Best Investments in 2012 -Fidelity Magellan (MUTF:FMAGX) fund. Now that success is a distant memory. Over the past decade, the average annual return was a meager 1.58%. Of course, with $15.9 billion in assets, it is not easy to find investment opportunities that can significantly move the needle.However, in September, Fidelity brought on board a new manager, Jeff Feingold. Before this, he managed the Best Investments in 2012 -Fidelity Trend (MUTF:FTRNX) fund and posted a strong track record. And at least early on, Feingold is showing promise, with FMAGX up 11.07% year-to-date.
Janus Overseas A
Foreign investing is never easy. A portfolio manager must not only figure out where to find growth opportunities across hundreds of countries, but also deal with political situations and currency swings.But Best Investments in 2012 -Janus Overseas A (MUTF:JDIAX), which has more than $9 billion in assets, has truly struggled. JDIAX posted a 32.88% loss in 2011, and its average return for the past five years is barely positive, at 0.28%.
The portfolio manager, Brent Lynn, likes to focus on emerging markets and smaller companies. Some years, that strategy can result in big returns. But in others, it means big losses. Either way, it’s a wild ride mutual fund investors could do without.
American Funds Growth Fund
Investors have been losing patience with the American Funds Growth Fund (MUTF:RGAAX). The fund lost 5.58% last year, and it suffered outflows of almost $26 billion.Yet RGAAX still has a whopping $127 billion under management.
A key issue has been the fund’s focus on foreign markets. Also, because of its enormous size, the Growth Fund is heavily concentrated with large-cap stocks, which can be a bit of a drag, too.
Vanguard Windsor Investor
For 31 years, John Neff posted an average return of 13.7% at the Best Investments in 2012 -Vanguard Windsor Investor (MUTF:VWNDX) fund. However, it has not had the same kind of magic since he left in the mid-90s. The fund has generated an average loss of about 2% int he past five years and fell 4% in 2011.Current VWNDX manager Jim Mordy (who oversees 70% of the portfolio) is trying to stay true to Neff’s contrarian style. But making money as a contrarian is no easy feat, considering that in today’s markets, value stocks can stay depressed for prolonged periods of time.
Eaton Vance Large-Cap Value
It’s tough to get excited about the Eaton Vance Large-Cap Value (MUTF:EILVX) fund, which has almost $12 billion in assets. During the past five years, EILVX is averaging a loss of 1.6%, and it shed more than 4% last year.As the name implies, the fund sticks to large-cap stocks, with top holdings including Pfizer (NYSE:PFE), Best Investments in 2012 -Johnson & Johnson (NYSE:JNJ) and Apple (NASDAQ:AAPL). But EILVX has had missteps with its industry allocation — last year, it was bullish on financials, and we all know how that sector played out.
Top Stocks to Invest in 2012 - ETF Alternatives for Last Week’s Hot Stocks
Until Warren Buffett sent his annual letter to shareholders Saturday, the highlight for stocks last week was the S&P 500 hitting its highest level since June 2008. In an otherwise slow week, investors had something to talk about. Here at InvestorPlace.com, several stocks were on the minds of our writers. In my weekly roundup, I’ll look at some ETF alternatives.
Beginning the week, crime was on Lawrence Meyers’ mind. On Feb. 20, he pointed out that Top Stocks to Invest in 2012 - Corrections Corporation of America (NYSE:CXW), the largest private prison company in the nation, is really a real estate business that happens to also run prisons. Hedge fund manager Bill Ackman owned a big position in CXW until the middle of 2011, when he moved into Top Stocks to Invest in 2012 - J.C. Penney (NYSE:JCP), likely because of the hiring of Ron Johnson, Apple‘s (NASDAQ:AAPL) former head of retail, around the same time.
Investors who like what they see at Corrections Corporation of America might consider two exchange-traded funds in its place. The first is Top Stocks to Invest in 2012 - First Trust’s Industrials/Producer Durables AlphaDEX Fund (NYSE:FXR), which takes the top stocks from the Russell 1000 index that exhibit both growth and value factors. Corrections Corporation of America has a 0.99% weighting and is one of 103 stocks in the portfolio. With an expense ratio of 0.70% and an annual turnover of more than 100%, the fund is expensive to own and not very tax efficient.
A second idea is the Rydex S&P MidCap 400 Equal Weight ETF (NYSE:EWMD), which unlike the quant fund earlier, has 400 equal-weighted stocks that are rebalanced quarterly and reconstituted annually. Although Corrections Corporation of America’s weighting is only 0.24%, its expense ratio is 43% cheaper at 0.40%. Long-term I like the Rydex fund because equal-weighted funds tend to do better than cap-weighted funds and quant funds are simply too complicated for average investors.
On Feb. 21, Tom Taulli was talking up Top Stocks to Invest in 2012 - Groupon‘s (NASDAQ:GRPN) acquisition strategy. The daily-deal site raised $700 million in its December IPO and is busily spending some of that stash in an effort to improve its technology relative to LinkedIn (NYSE:LNKD) and others. I’ve never been a fan of Groupon’s business model, but those who are will likely be interested in the Global X Social Media Index ETF (NASDAQ:SOCL), which invests in all the big names in social media, including Groupon at 3% of the portfolio.
I had previously recommended SOCL on Feb. 13 as a good alternative to Zynga (NASDAQ:ZNGA), which accounts for 4.49% of the fund. For social media, it’s the only game in town.
InvestorPlace.com editor Jeff Reeves was on Boston’s WRKO AM 680 on Feb. 22, extolling the virtues of Top Stocks to Invest in 2012 - Caterpillar (NYSE:CAT), suggesting that the maker of construction and mining equipment is a good long-term play based on its business in emerging markets and an economy that continues to recover. Back in November I picked Joy Global (NYSE:JOY) over Caterpillar as the better stock to own. After the way Caterpillar manhandled its Electro-Motive employees in London, Ontario, I’m confident I made the right choice despite short-term results indicating otherwise.
However, if you must own this labor despot, a better alternative would be to buy the Industrial Select Sector SPDR Fund (NYSE:XLI), which gives you ownership of some of this country’s biggest industrial companies, including Caterpillar at 5.67% of the portfolio. The fund has almost $4 billion in assets, its expense ratio is cheap at 0.18% and it has provided good long-term performance. Eventually, all stocks revert to the mean, and Caterpillar is due.
Kellogg‘s (NYSE:K) recent acquisition of Pringles from Procter & Gamble (NYSE:PG) for $2.7 billion made Jeff Reeves take notice on Feb. 23. It turns out P&G had a Plan B if its original deal with Top Stocks to Invest in 2012 - Diamond Foods (NASDAQ:DMND) fell apart, which it did.
Kellogg suddenly finds itself in second place in the snack-food business. I like Kellogg as a stock, but you have to wonder about the integration process given the quality-control issues the food giant has faced in the past couple of years.
Consumer-staples stocks have done well in recent years. A good defensive position that also gives you a piece of Kellogg would be to buy the Top Stocks to Invest in 2012 -Consumer Staples Select SPDR Fund (NYSE:XLP), which has an annual expense ratio of 0.18%. It has 44 holdings, including the maker of Special K at 1.25% of the portfolio. Long term, you won’t find many funds more predictable.
Jim Woods wrapped up the week on Feb. 24 talking about 24 companies that increased their quarterly dividends. The rise that most caught my attention was that of Herbalife (NYSE:HLF), which bumped its dividend by 50%, to $0.30 quarterly. With share repurchases outweighing dividend payments by 300% in the past three years, this was a good opportunity to provide shareholders with a more tangible reward.
Despite the increase, HLF’s yield is still below 2%. Consumer Staples Select is the obvious choice, but it doesn’t hold Herbalife. Instead, go for the Vanguard Consumer Staples ETF (NYSE:VDC), which has a small HLF weighting (less than 1%), but an SEC yield of 2.69%, giving you better income and diversification.
Beginning the week, crime was on Lawrence Meyers’ mind. On Feb. 20, he pointed out that Top Stocks to Invest in 2012 - Corrections Corporation of America (NYSE:CXW), the largest private prison company in the nation, is really a real estate business that happens to also run prisons. Hedge fund manager Bill Ackman owned a big position in CXW until the middle of 2011, when he moved into Top Stocks to Invest in 2012 - J.C. Penney (NYSE:JCP), likely because of the hiring of Ron Johnson, Apple‘s (NASDAQ:AAPL) former head of retail, around the same time.
Investors who like what they see at Corrections Corporation of America might consider two exchange-traded funds in its place. The first is Top Stocks to Invest in 2012 - First Trust’s Industrials/Producer Durables AlphaDEX Fund (NYSE:FXR), which takes the top stocks from the Russell 1000 index that exhibit both growth and value factors. Corrections Corporation of America has a 0.99% weighting and is one of 103 stocks in the portfolio. With an expense ratio of 0.70% and an annual turnover of more than 100%, the fund is expensive to own and not very tax efficient.
A second idea is the Rydex S&P MidCap 400 Equal Weight ETF (NYSE:EWMD), which unlike the quant fund earlier, has 400 equal-weighted stocks that are rebalanced quarterly and reconstituted annually. Although Corrections Corporation of America’s weighting is only 0.24%, its expense ratio is 43% cheaper at 0.40%. Long-term I like the Rydex fund because equal-weighted funds tend to do better than cap-weighted funds and quant funds are simply too complicated for average investors.
On Feb. 21, Tom Taulli was talking up Top Stocks to Invest in 2012 - Groupon‘s (NASDAQ:GRPN) acquisition strategy. The daily-deal site raised $700 million in its December IPO and is busily spending some of that stash in an effort to improve its technology relative to LinkedIn (NYSE:LNKD) and others. I’ve never been a fan of Groupon’s business model, but those who are will likely be interested in the Global X Social Media Index ETF (NASDAQ:SOCL), which invests in all the big names in social media, including Groupon at 3% of the portfolio.
I had previously recommended SOCL on Feb. 13 as a good alternative to Zynga (NASDAQ:ZNGA), which accounts for 4.49% of the fund. For social media, it’s the only game in town.
InvestorPlace.com editor Jeff Reeves was on Boston’s WRKO AM 680 on Feb. 22, extolling the virtues of Top Stocks to Invest in 2012 - Caterpillar (NYSE:CAT), suggesting that the maker of construction and mining equipment is a good long-term play based on its business in emerging markets and an economy that continues to recover. Back in November I picked Joy Global (NYSE:JOY) over Caterpillar as the better stock to own. After the way Caterpillar manhandled its Electro-Motive employees in London, Ontario, I’m confident I made the right choice despite short-term results indicating otherwise.
However, if you must own this labor despot, a better alternative would be to buy the Industrial Select Sector SPDR Fund (NYSE:XLI), which gives you ownership of some of this country’s biggest industrial companies, including Caterpillar at 5.67% of the portfolio. The fund has almost $4 billion in assets, its expense ratio is cheap at 0.18% and it has provided good long-term performance. Eventually, all stocks revert to the mean, and Caterpillar is due.
Kellogg‘s (NYSE:K) recent acquisition of Pringles from Procter & Gamble (NYSE:PG) for $2.7 billion made Jeff Reeves take notice on Feb. 23. It turns out P&G had a Plan B if its original deal with Top Stocks to Invest in 2012 - Diamond Foods (NASDAQ:DMND) fell apart, which it did.
Kellogg suddenly finds itself in second place in the snack-food business. I like Kellogg as a stock, but you have to wonder about the integration process given the quality-control issues the food giant has faced in the past couple of years.
Consumer-staples stocks have done well in recent years. A good defensive position that also gives you a piece of Kellogg would be to buy the Top Stocks to Invest in 2012 -Consumer Staples Select SPDR Fund (NYSE:XLP), which has an annual expense ratio of 0.18%. It has 44 holdings, including the maker of Special K at 1.25% of the portfolio. Long term, you won’t find many funds more predictable.
Jim Woods wrapped up the week on Feb. 24 talking about 24 companies that increased their quarterly dividends. The rise that most caught my attention was that of Herbalife (NYSE:HLF), which bumped its dividend by 50%, to $0.30 quarterly. With share repurchases outweighing dividend payments by 300% in the past three years, this was a good opportunity to provide shareholders with a more tangible reward.
Despite the increase, HLF’s yield is still below 2%. Consumer Staples Select is the obvious choice, but it doesn’t hold Herbalife. Instead, go for the Vanguard Consumer Staples ETF (NYSE:VDC), which has a small HLF weighting (less than 1%), but an SEC yield of 2.69%, giving you better income and diversification.
Hot Stocks to buy - Sears Holdings Stock: 3 Prosm 3 Cons
Last year, shareholders of Hot Stocks to buy - Sears Holdings (NASDAQ:SHLD) lost 57%, and they even had to deal with talks of bankruptcy.
But 2012 has been a whole new year. Rather than become the next American icon to bite the dust, Sears has watched its stock soar a stunning 124% so far this year.
So does SHLD still have room to make investors money, or would it be better to hold off? Let’s take a look at Sears’ pros and cons:
In the case of Sears, it actually has an assortment of strong proprietary brands. Examples include Kenmore, Craftsman, DieHard and Lands’ End. With more attention and investment, the company has an opportunity to leverage these assets to find growth.
Convenience: Between Sears and Kmart locations, SHLD’s extensive footprint is a competitive advantage. It not only has thousands of stores but also service centers (for example, there are nearly 800 Sears auto centers).
But Sears wants to integrate this infrastructure with its e-commerce platform and mobile technologies. This is all part of the company’s “Shop Your Way Rewards” strategy, which has the goal of creating a continuous relationship with customers. It could be an effective way to increase loyalty and sales.
Skin in the Game: Members of the Sears board control roughly 65% of the outstanding stock. Of this, ESL Investments has a 61% stake. In other words, there is strong motivation to find ways to enhance shareholder value. Eddie Lampert, who operates ESL, has a strong investment track record, with investments in great companies like Hot Stocks to buy - AutoNation (NYSE:AN) and Hot Stocks to buy - AutoZone (NYSE:AZO).
Competition: It’s brutal. While Sears restructures, it also must fend off brick-and-mortar competitors like Hot Stocks to buy - Wal-Mart (NYSE:WMT), Kohl’s (NYSE:KSS) and Best Buy (NYSE:BBY), as well as e-commerce operators like Amazon (NASDAQ:AMZN).
Macroeconomic Trends. The U.S. economy has shown renewed strength during the past few months, but it might be temporary. Consumers might once again start to pull back thanks to a recent surge in gas prices.
Sears also has shown a lack of ability to deal with changes in the economy. For example, it was not able to move quickly enough to change its inventory to adapt to the hotter winter. While companies like Hot Stocks to buy - Home Depot (NYSE:HD) and Hot Stocks to buy - Lowe’s (NYSE:LOW) were able to capitalize on warmer weather, Sears could not.
All in all, these actions certainly will help to deal with the company’s liquidity concerns. Yet they do little about the core problem of Sears — that is, getting more people to come into its stores. This will take more than financial engineering. Unfortunately, Sears still has not provided much detail on how to get back on track.
So for now, Sears’ cons outweigh the pros.
But 2012 has been a whole new year. Rather than become the next American icon to bite the dust, Sears has watched its stock soar a stunning 124% so far this year.
So does SHLD still have room to make investors money, or would it be better to hold off? Let’s take a look at Sears’ pros and cons:
Hot Stocks to buy - Pros
Proprietary Brands: These are products that retailers own, and they have become increasingly popular over the years. Reasons include better differentiation and higher margins.In the case of Sears, it actually has an assortment of strong proprietary brands. Examples include Kenmore, Craftsman, DieHard and Lands’ End. With more attention and investment, the company has an opportunity to leverage these assets to find growth.
Convenience: Between Sears and Kmart locations, SHLD’s extensive footprint is a competitive advantage. It not only has thousands of stores but also service centers (for example, there are nearly 800 Sears auto centers).
But Sears wants to integrate this infrastructure with its e-commerce platform and mobile technologies. This is all part of the company’s “Shop Your Way Rewards” strategy, which has the goal of creating a continuous relationship with customers. It could be an effective way to increase loyalty and sales.
Skin in the Game: Members of the Sears board control roughly 65% of the outstanding stock. Of this, ESL Investments has a 61% stake. In other words, there is strong motivation to find ways to enhance shareholder value. Eddie Lampert, who operates ESL, has a strong investment track record, with investments in great companies like Hot Stocks to buy - AutoNation (NYSE:AN) and Hot Stocks to buy - AutoZone (NYSE:AZO).
Cons
Losses: In 2011, Sears posted a loss of $3.14 billion, and the company has seen revenues decline for the past six years. And it’s far from clear when and if the company can reverse these adverse trends.Competition: It’s brutal. While Sears restructures, it also must fend off brick-and-mortar competitors like Hot Stocks to buy - Wal-Mart (NYSE:WMT), Kohl’s (NYSE:KSS) and Best Buy (NYSE:BBY), as well as e-commerce operators like Amazon (NASDAQ:AMZN).
Macroeconomic Trends. The U.S. economy has shown renewed strength during the past few months, but it might be temporary. Consumers might once again start to pull back thanks to a recent surge in gas prices.
Sears also has shown a lack of ability to deal with changes in the economy. For example, it was not able to move quickly enough to change its inventory to adapt to the hotter winter. While companies like Hot Stocks to buy - Home Depot (NYSE:HD) and Hot Stocks to buy - Lowe’s (NYSE:LOW) were able to capitalize on warmer weather, Sears could not.
Verdict
Last week, Sears announced a major restructuring. The company plans to raise as much as $500 million through a spinoff of its specialty Hometown and Outlet stores. There also will be a $270 million infusion from the sale of real estate assets.All in all, these actions certainly will help to deal with the company’s liquidity concerns. Yet they do little about the core problem of Sears — that is, getting more people to come into its stores. This will take more than financial engineering. Unfortunately, Sears still has not provided much detail on how to get back on track.
So for now, Sears’ cons outweigh the pros.
Top Stocks to Invest in 2012 - 4 Stocks That Love Stalled Home Sales
The current environment is bad news if you’re trying to sell your home — prices haven’t been this low since the first season of American Idol. (That’s 2002 for you non-Ryan Seacrest fans.)
The Case-Shiller national home price index reported a 4% drop in 4Q 2011, marking the biggest decline since 2008. Since the market peaked in 2Q 2006, home prices have dropped 33.8%.
This disappointing trend comes despite pockets of recovery in other parts of the economic world. Industrial production has been gaining ground, for example, and consumer confidence is at an annual high. Even the unemployment rate is moving lower, finally, though perhaps not for long.
Every cloud has a silver lining, however, and most negative market trends have some beneficiaries. The group of companies that may be enjoying a little schadenfreude at the expense of homeowners are home-improvement retailers such as Top Stocks to Invest in 2012 - Home Depot (NYSE:HD), Top Stocks to Invest in 2012 -Lowe’s (NYSE:LOW), Top Stocks to Invest in 2012 -Fastenal (NASDAQ:FAST) and Sherwin-Williams (NYSE:SHW). Respectively, this quartet of stocks has returned 38%, 35%, 63%, and 38% over the past six months.
The rationale behind this relationship is twofold: First, consumers desperate to sell their homes may pour additional funds into improvements to make the property more attractive to buyers. Second, homeowners who realize they may not have be able to sell might opt to spend on upgrades rather than shop around for a new place.
Technically speaking, HD is looking quite strong. The stock has rallied to a new 52-week high along support from its 10-day and 20-day moving averages. What’s more, the shares recently overtook the $44-to-$45 region, which acted as price-level resistance throughout 2004-2006.
HD is now trading at levels not seen since — what a coincidence — 2002. Meanwhile, earnings have continued to grow at a 16% annual rate, and the stock’s price-to-earnings ratio, at 19.1, is on par with HD’s competitors.
Home Depot’s top rival, Lowe’s, is trying to overtake some technical resistance of its own. The stock has been muscling higher since last fall and is currently trying to break out above the $28 level. While this proved insurmountable for LOW in April 2010 and March 2011, the stock’s current momentum may be enough to power it through this resistance.
Traders looking for a possible entry point should watch for a breakout above $30. Earnings growth at LOW is lower than HD’s, at 8% year-over-year, but the stock’s P-E ratio is lower as well, at 16.5.
FAST has been in a steady uptrend since late 2009, gaining roughly 150% since the beginning of 2010. Currently, the stock is exploring new all-time-high territory. Quarterly earnings have met or exceeded analysts’ estimates in each of the past eight quarters, and year-over-year earnings have grown at a rate of over 20%. One caveat: FAST’s P-E ratio stands at 42.6, well above the average in the industrials sector (19.0) or the S&P 500 (18.5).
Finally, the principal of paint — SHW. Nothing spruces up a room more quickly and inexpensively than a new color, and SHW is happy to help. Year-over-year, earnings have grown by more than 18% and are predicted to keep edging higher in the next half-decade. Like FAST, SHW is currently trading near an all-time high and recently entered triple-digit territory.
Finally, if you like this overall theory, another name to consider that is adjacent to the home-improvement sector is Top Stocks to Invest in 2012 - Sears Holdings (NASDAQ:SHLD), which has been rallying lately in the wake of some strategic changes. Valspar Corp. (NYSE:VAL), another paint and coatings manufacturer, could also participate in any upside.
The Case-Shiller national home price index reported a 4% drop in 4Q 2011, marking the biggest decline since 2008. Since the market peaked in 2Q 2006, home prices have dropped 33.8%.
This disappointing trend comes despite pockets of recovery in other parts of the economic world. Industrial production has been gaining ground, for example, and consumer confidence is at an annual high. Even the unemployment rate is moving lower, finally, though perhaps not for long.
Every cloud has a silver lining, however, and most negative market trends have some beneficiaries. The group of companies that may be enjoying a little schadenfreude at the expense of homeowners are home-improvement retailers such as Top Stocks to Invest in 2012 - Home Depot (NYSE:HD), Top Stocks to Invest in 2012 -Lowe’s (NYSE:LOW), Top Stocks to Invest in 2012 -Fastenal (NASDAQ:FAST) and Sherwin-Williams (NYSE:SHW). Respectively, this quartet of stocks has returned 38%, 35%, 63%, and 38% over the past six months.
The rationale behind this relationship is twofold: First, consumers desperate to sell their homes may pour additional funds into improvements to make the property more attractive to buyers. Second, homeowners who realize they may not have be able to sell might opt to spend on upgrades rather than shop around for a new place.
Technically speaking, HD is looking quite strong. The stock has rallied to a new 52-week high along support from its 10-day and 20-day moving averages. What’s more, the shares recently overtook the $44-to-$45 region, which acted as price-level resistance throughout 2004-2006.
HD is now trading at levels not seen since — what a coincidence — 2002. Meanwhile, earnings have continued to grow at a 16% annual rate, and the stock’s price-to-earnings ratio, at 19.1, is on par with HD’s competitors.
Home Depot’s top rival, Lowe’s, is trying to overtake some technical resistance of its own. The stock has been muscling higher since last fall and is currently trying to break out above the $28 level. While this proved insurmountable for LOW in April 2010 and March 2011, the stock’s current momentum may be enough to power it through this resistance.
Traders looking for a possible entry point should watch for a breakout above $30. Earnings growth at LOW is lower than HD’s, at 8% year-over-year, but the stock’s P-E ratio is lower as well, at 16.5.
FAST has been in a steady uptrend since late 2009, gaining roughly 150% since the beginning of 2010. Currently, the stock is exploring new all-time-high territory. Quarterly earnings have met or exceeded analysts’ estimates in each of the past eight quarters, and year-over-year earnings have grown at a rate of over 20%. One caveat: FAST’s P-E ratio stands at 42.6, well above the average in the industrials sector (19.0) or the S&P 500 (18.5).
Finally, the principal of paint — SHW. Nothing spruces up a room more quickly and inexpensively than a new color, and SHW is happy to help. Year-over-year, earnings have grown by more than 18% and are predicted to keep edging higher in the next half-decade. Like FAST, SHW is currently trading near an all-time high and recently entered triple-digit territory.
Finally, if you like this overall theory, another name to consider that is adjacent to the home-improvement sector is Top Stocks to Invest in 2012 - Sears Holdings (NASDAQ:SHLD), which has been rallying lately in the wake of some strategic changes. Valspar Corp. (NYSE:VAL), another paint and coatings manufacturer, could also participate in any upside.
The Best Dividend Stocks 2012 - 20 Companies Increasing Dividends
The bull market of 2012 continues, and stocks keep adding to their year-to-date totals. On the dividend front, the nascent year is turning out to be one of the best that income investors have witnessed in a very long time. There have been a record number of companies increasing their dividend payouts so far this year, and this week we saw another batch of high-profile outfits thickening shareholders’ wallets. Here are 20 companies that are increasing dividends:
Canadian gold-mining giant The Best Dividend Stocks 2012 Agnico-Eagle Mines (NYSE:AEM) dug up a 25% shinier dividend nugget, raising its quarterly payout to 20 cents per share. The new dividend yield, based on the Feb. 16 closing price of $36.59 (the day the dividend was announced), is 2.19%.
Diversified specialty-chemical producer Albermarle Corp. (NYSE:ALB) went into the fiscal lab and came out with a 14.3% increase in its quarterly dividend, to 20 cents per share. The new dividend is payable Apr. 1 to shareholders of record as March 15. The new dividend yield, based on the Feb. 15 closing price of $64.71, is 1.24%.
Beverage giant The Best Dividend Stocks 2012 Coca-Cola Co. (NYSE:KO) popped the cap on its quarterly payout, pouring an 8.5% dividend increase, to 51 cents per share. The new dividend is payable Apr. 1 to shareholders of record as of March 15. The new dividend yield, based on the Feb. 16 closing price of $68.86, is 2.96%.
Cable TV behemoth Comcast (NASDAQ:CMCSA) added 44% to its quarterly dividend, hiking its payout to 16.25 cents per share. The new payout will be made Apr. 25 to shareholders of record as of Apr. 4. The new dividend yield, based on the Feb. 15 closing price of $28.52, is 2.28%.
Electrical-parts maker The Best Dividend Stocks 2012 Cooper Industries (NYSE:CBE) turned up the dial on its quarterly dividend, increasing the voltage to shareholders by 7%, to 31 cents per share. The new dividend is payable Apr. 2 to shareholders of record as of Feb. 29. The new dividend yield, based on the Feb. 14 closing price of $60.83, is 2.04%.
Oil-and-gas exploration and production giant The Best Dividend Stocks 2012 Devon Energy (NYSE:DVN) upped its quarterly payout to shareholders by about 18%, to 20 cents per share. The new dividend is payable March 30 to shareholders of record as of March 15. The new dividend yield, based on the Feb. 15 closing price of $71.70, is 1.12%.
Corporate data-center REIT The Best Dividend Stocks 2012 Digital Realty Trust (NYSE:DLR) stored and delivered a new quarterly dividend that is 7.4% higher, to 73 cents per share. The new dividend is payable March 30 to holders of record March 15. The new dividend yield, based on the Feb. 15 closing price of $69.19, is 4.22%.
Natural gas and crude oil producer The Best Dividend Stocks 2012 EOG Resources (NYSE:EOG) turned up the BTUs on its quarterly payout by 6.25%, to 17 cents per share. The new dividend is payable Apr. 30 to shareholders of record as of Apr. 16. The new dividend yield, based on the Feb. 16 closing price of $117.62, is .58%.
Credit-reporting and information agency Equifax (NYSE:EFX) upped its quarterly payment to shareholders by 12.5%, to 18 cents per share. The new dividend is payable March 15 to shareholders of record as of Feb. 23. The new dividend yield, based on the Feb. 10 closing price of $42.63, is 1.69%.
Financial-payment technology firm Fidelity National Information Services (NYSE:FIS) increased its payment to shareholders by 2.8%, to 20 cents per share. The new dividend is payable on March 30 to shareholders of record as of March 16. The new dividend yield, based on the Feb. 13 closing price of $29.00, is 2.76%.
Athletic footwear retailer The Best Dividend Stocks 2012 Foot Locker (NYSE:FL) gave shareholders a win in the form of a 9% jump in its quarterly payout. The new dividend can be worn on Apr. 27 to shareholders of record as of Apr. 13. The new dividend yield, based on the Feb. 14 closing price of $27.68, is 2.60%.
Electrical-components maker Hubbell Incorporated (NYSE:HUB-B) sparked an 8% increase in its quarterly payout, to 41 cents per share. The new dividend is payable Apr. 11 to shareholders of record as of March 5. The new dividend yield, based on the Feb. 10 closing price of $74.97, is 2.19%.
Power provider Northeast Utilities (NYSE:NU) juiced its dividend by approximately 7.3%, to 29.375 cents per share. The new dividend will be paid on March 30 to shareholders of record as of March 1. The new dividend yield, based on the Feb. 15 closing price of $35.52, is 3.32%.
Energy and utility holding company PPL Corporation (NYSE:PPL) sent a new dividend to shareholders that’s approximately 2.86% higher. The new payout of 36 cents per share is payable Apr. 2 to shareholders of record as of March 9. The new dividend yield, based on the Feb. 10 closing price of $28.45, is 5.06%.
Utility and energy producer The Best Dividend Stocks 2012 SCANA Corp. (NYSE:SCG) upped its payment to shareholders by a penny, to 49.5 cents per share. The new dividend represents an increase of 2.1% over the previous payout and will be sent out on Apr. 1 to shareholders of record as of March 9. The new dividend yield, based on the Feb. 15 closing price of $44.60, is 4.44%.
Television and internet content producer Scripps Network Interactive (NYSE:SNI), owner of HGTV, the Food Network and the Travel Channel, improved shareholders’ portfolios with a 20% tastier all-expenses paid dividend trip, to 12 cents per share. The new payout will be made March 9 to shareholders of record as of Feb. 29. The new dividend yield, based on the Feb. 16 closing price of $43.59, is 1.10%.
Paint maker Sherwin Williams (NYSE:SHW) put a fresh coat of fiscal shine on shareholders’ portfolios, raising its quarterly payout by 7%, to 39 cents per share. The new dividend is payable March 9 to shareholders of record as of Feb. 27. The new dividend yield, based on the Feb. 15 closing price of $99.22, is 1.57%.
Life-science technology company The Best Dividend Stocks 2012 Sigma Aldrich (NASDAQ:SIAL) grew its quarterly dividend by 11.1%, to 20 cents per share. The new dividend is payable March 15 to shareholders of record as of March 1. The new dividend yield, based on the Feb. 14 closing price of $70.32, is 1.14%.
Energy infrastructure company TransCanada Corp. (NYSE:TRP) is sending more oil through the dividend pipeline, upping its payout to shareholders 5%, to 44 cents per share. The new dividend is payable Apr. 30 to shareholders of record as of March 30. The new dividend yield, based on the Feb. 14 closing price of $42.17, is 4.17%.
Insurance broker Willis Group Holdings (NYSE:WSH) upped the premium it pays shareholders by 3.8%, to 27 cents per share. The new dividend is payable on Apr. 13 to shareholders of record at March 31. The new dividend yield, based on the Feb. 14 closing price of $38.67, is 2.79%.
Canadian gold-mining giant The Best Dividend Stocks 2012 Agnico-Eagle Mines (NYSE:AEM) dug up a 25% shinier dividend nugget, raising its quarterly payout to 20 cents per share. The new dividend yield, based on the Feb. 16 closing price of $36.59 (the day the dividend was announced), is 2.19%.
Diversified specialty-chemical producer Albermarle Corp. (NYSE:ALB) went into the fiscal lab and came out with a 14.3% increase in its quarterly dividend, to 20 cents per share. The new dividend is payable Apr. 1 to shareholders of record as March 15. The new dividend yield, based on the Feb. 15 closing price of $64.71, is 1.24%.
Beverage giant The Best Dividend Stocks 2012 Coca-Cola Co. (NYSE:KO) popped the cap on its quarterly payout, pouring an 8.5% dividend increase, to 51 cents per share. The new dividend is payable Apr. 1 to shareholders of record as of March 15. The new dividend yield, based on the Feb. 16 closing price of $68.86, is 2.96%.
Cable TV behemoth Comcast (NASDAQ:CMCSA) added 44% to its quarterly dividend, hiking its payout to 16.25 cents per share. The new payout will be made Apr. 25 to shareholders of record as of Apr. 4. The new dividend yield, based on the Feb. 15 closing price of $28.52, is 2.28%.
Electrical-parts maker The Best Dividend Stocks 2012 Cooper Industries (NYSE:CBE) turned up the dial on its quarterly dividend, increasing the voltage to shareholders by 7%, to 31 cents per share. The new dividend is payable Apr. 2 to shareholders of record as of Feb. 29. The new dividend yield, based on the Feb. 14 closing price of $60.83, is 2.04%.
Oil-and-gas exploration and production giant The Best Dividend Stocks 2012 Devon Energy (NYSE:DVN) upped its quarterly payout to shareholders by about 18%, to 20 cents per share. The new dividend is payable March 30 to shareholders of record as of March 15. The new dividend yield, based on the Feb. 15 closing price of $71.70, is 1.12%.
Corporate data-center REIT The Best Dividend Stocks 2012 Digital Realty Trust (NYSE:DLR) stored and delivered a new quarterly dividend that is 7.4% higher, to 73 cents per share. The new dividend is payable March 30 to holders of record March 15. The new dividend yield, based on the Feb. 15 closing price of $69.19, is 4.22%.
Natural gas and crude oil producer The Best Dividend Stocks 2012 EOG Resources (NYSE:EOG) turned up the BTUs on its quarterly payout by 6.25%, to 17 cents per share. The new dividend is payable Apr. 30 to shareholders of record as of Apr. 16. The new dividend yield, based on the Feb. 16 closing price of $117.62, is .58%.
Credit-reporting and information agency Equifax (NYSE:EFX) upped its quarterly payment to shareholders by 12.5%, to 18 cents per share. The new dividend is payable March 15 to shareholders of record as of Feb. 23. The new dividend yield, based on the Feb. 10 closing price of $42.63, is 1.69%.
Financial-payment technology firm Fidelity National Information Services (NYSE:FIS) increased its payment to shareholders by 2.8%, to 20 cents per share. The new dividend is payable on March 30 to shareholders of record as of March 16. The new dividend yield, based on the Feb. 13 closing price of $29.00, is 2.76%.
Athletic footwear retailer The Best Dividend Stocks 2012 Foot Locker (NYSE:FL) gave shareholders a win in the form of a 9% jump in its quarterly payout. The new dividend can be worn on Apr. 27 to shareholders of record as of Apr. 13. The new dividend yield, based on the Feb. 14 closing price of $27.68, is 2.60%.
Electrical-components maker Hubbell Incorporated (NYSE:HUB-B) sparked an 8% increase in its quarterly payout, to 41 cents per share. The new dividend is payable Apr. 11 to shareholders of record as of March 5. The new dividend yield, based on the Feb. 10 closing price of $74.97, is 2.19%.
Power provider Northeast Utilities (NYSE:NU) juiced its dividend by approximately 7.3%, to 29.375 cents per share. The new dividend will be paid on March 30 to shareholders of record as of March 1. The new dividend yield, based on the Feb. 15 closing price of $35.52, is 3.32%.
Energy and utility holding company PPL Corporation (NYSE:PPL) sent a new dividend to shareholders that’s approximately 2.86% higher. The new payout of 36 cents per share is payable Apr. 2 to shareholders of record as of March 9. The new dividend yield, based on the Feb. 10 closing price of $28.45, is 5.06%.
Utility and energy producer The Best Dividend Stocks 2012 SCANA Corp. (NYSE:SCG) upped its payment to shareholders by a penny, to 49.5 cents per share. The new dividend represents an increase of 2.1% over the previous payout and will be sent out on Apr. 1 to shareholders of record as of March 9. The new dividend yield, based on the Feb. 15 closing price of $44.60, is 4.44%.
Television and internet content producer Scripps Network Interactive (NYSE:SNI), owner of HGTV, the Food Network and the Travel Channel, improved shareholders’ portfolios with a 20% tastier all-expenses paid dividend trip, to 12 cents per share. The new payout will be made March 9 to shareholders of record as of Feb. 29. The new dividend yield, based on the Feb. 16 closing price of $43.59, is 1.10%.
Paint maker Sherwin Williams (NYSE:SHW) put a fresh coat of fiscal shine on shareholders’ portfolios, raising its quarterly payout by 7%, to 39 cents per share. The new dividend is payable March 9 to shareholders of record as of Feb. 27. The new dividend yield, based on the Feb. 15 closing price of $99.22, is 1.57%.
Life-science technology company The Best Dividend Stocks 2012 Sigma Aldrich (NASDAQ:SIAL) grew its quarterly dividend by 11.1%, to 20 cents per share. The new dividend is payable March 15 to shareholders of record as of March 1. The new dividend yield, based on the Feb. 14 closing price of $70.32, is 1.14%.
Energy infrastructure company TransCanada Corp. (NYSE:TRP) is sending more oil through the dividend pipeline, upping its payout to shareholders 5%, to 44 cents per share. The new dividend is payable Apr. 30 to shareholders of record as of March 30. The new dividend yield, based on the Feb. 14 closing price of $42.17, is 4.17%.
Insurance broker Willis Group Holdings (NYSE:WSH) upped the premium it pays shareholders by 3.8%, to 27 cents per share. The new dividend is payable on Apr. 13 to shareholders of record at March 31. The new dividend yield, based on the Feb. 14 closing price of $38.67, is 2.79%.
3 Buys to Escape the Agony of Low Treasury Yields
Will marvels never cease? France, Germany and Japan are in recession. China is slowing abruptly. But the good ol’ USA is trucking along just fine. With initial jobless claims hitting their lowest reading in nearly four years, the Dow jumped 123 points on Thursday for its best close since May 19, 2008. It then added another 47 points on Friday to seal that best close since 2008.
For the sake of America’s 13.5 million unemployed, I’m happy to see the definite signs of strengthening in the job market. The private sector is adapting, in amazing ways, to the tough economic climate we’ve been in. Entrepreneurs are overcoming a host of obstacles (including some thrown up by our own government), and businesses are hiring again.
Kudos to them!
As investors, our challenge is to figure out how much to pay for this somewhat improved state of affairs. It would be a lot easier to know what stocks are really worth if the Federal Reserve allowed interest rates to seek a normal level.
Instead, we’re left to compare stock P/Es and dividend yields against artificially depressed bond and money market yields. Maybe equities, on the whole, are fairly valued. If, however, Bernanke’s “quantitative easing” has created the economic equivalent of a sugar high, many stocks — particularly in the market’s riskier sectors — could be quite seriously overvalued at today’s prices.
How do you protect yourself from making a major miscalculation? First, of course, by maintaining a balanced portfolio, with an ample fixed-income component. A fund like DoubleLine Total Return Bond (MUTF:DLTNX) can help you escape the agony of extremely low Treasury yields, while giving you a cushion should the stock market stumble.
Current yield: 7.87%
In the stock market itself, you should focus your buying on the very few situations that still offer great value — even after the monster rally of the past four-plus months.
I include PepsiCo (NYSE:PEP) in that select list. Over the long haul, the company’s latest organizational shake-up, with $600 million to be spent on North American marketing this year, should pay handsome dividends (literally). Meanwhile, you’re collecting a safe 3.3% dividend.
For income seekers, I’m also finding renewed value in Buckeye Partners (NYSE:BPL). Some analysts and investors panicked after the pipeline partnership reported lackluster Q4 earnings last Friday.
However, BPL went through a similar earnings slowdown in 2006, when the partnership was financing another hefty expansion program like today’s.
Back then, Buckeye’s investments paid off. Not only did the partnership keep its distribution intact but it also continued to raise its cash payout — and has now done so, without fail, for 31 quarters in a row. Current yield: 6.9%, largely tax-deferred. Please note that because BPL went ex-dividend yesterday, your first cash distribution will arrive in late May. It’s also important to note special tax rules applicable to master limited partnerships make Buckeye unsuitable for retirement accounts
For the sake of America’s 13.5 million unemployed, I’m happy to see the definite signs of strengthening in the job market. The private sector is adapting, in amazing ways, to the tough economic climate we’ve been in. Entrepreneurs are overcoming a host of obstacles (including some thrown up by our own government), and businesses are hiring again.
Kudos to them!
As investors, our challenge is to figure out how much to pay for this somewhat improved state of affairs. It would be a lot easier to know what stocks are really worth if the Federal Reserve allowed interest rates to seek a normal level.
Instead, we’re left to compare stock P/Es and dividend yields against artificially depressed bond and money market yields. Maybe equities, on the whole, are fairly valued. If, however, Bernanke’s “quantitative easing” has created the economic equivalent of a sugar high, many stocks — particularly in the market’s riskier sectors — could be quite seriously overvalued at today’s prices.
How do you protect yourself from making a major miscalculation? First, of course, by maintaining a balanced portfolio, with an ample fixed-income component. A fund like DoubleLine Total Return Bond (MUTF:DLTNX) can help you escape the agony of extremely low Treasury yields, while giving you a cushion should the stock market stumble.
Current yield: 7.87%
In the stock market itself, you should focus your buying on the very few situations that still offer great value — even after the monster rally of the past four-plus months.
I include PepsiCo (NYSE:PEP) in that select list. Over the long haul, the company’s latest organizational shake-up, with $600 million to be spent on North American marketing this year, should pay handsome dividends (literally). Meanwhile, you’re collecting a safe 3.3% dividend.
For income seekers, I’m also finding renewed value in Buckeye Partners (NYSE:BPL). Some analysts and investors panicked after the pipeline partnership reported lackluster Q4 earnings last Friday.
However, BPL went through a similar earnings slowdown in 2006, when the partnership was financing another hefty expansion program like today’s.
Back then, Buckeye’s investments paid off. Not only did the partnership keep its distribution intact but it also continued to raise its cash payout — and has now done so, without fail, for 31 quarters in a row. Current yield: 6.9%, largely tax-deferred. Please note that because BPL went ex-dividend yesterday, your first cash distribution will arrive in late May. It’s also important to note special tax rules applicable to master limited partnerships make Buckeye unsuitable for retirement accounts
Ranking the 10 Best Stocks to buy for 2012
InvestorPlace.com launched a feature in late December highlighting the 10 Best Stocks for 2012. The idea was to offer a list of buy-and-hold investments that, if held all year, would provide market-beating returns for individual investors.
It’s awfully early in our little contest, but so far the 10 Best Stocks for 2012 list has simply blown away the broader market. Thus far, the Dow is up about 6% and the S&P is up about 8% year-to-date. Our 10 stocks average a stunning 17% gain!
What’s more, nine of the 10 stocks are in the green — and eight of 10 are up by double digits!
Obviously there’s a lot of time left in 2012, and a lot of things can happen. But it’s worth pointing out the big winners so far.
Here’s a recap of InvestorPlace.com’s 10 Best Stocks for 2012:
Investor: Jon Markman
The lone decliner on the list of 10 Best stocks, don’t count Hershey (NYSE:HSY) out just yet. Jon Markman’s original recommendation of the confectioner pointed out a rather bearish outlook for the broader market in 2012, and strength in Hershey based on its low-risk potential.
“Hershey is a best-of-breed operator that deserves and gets a premium valuation. Even in a tough environment, it could appreciate by 10% or more,” Jon wrote.
The trouble is that after a 31% run in 2011, as investors took shelter in Hershey’s low-risk appeal and decent dividend, Wall Street now is looking for growth. Defensive plays like consumer staples and utilities stocks have lagged the market so far.
But if things get rocky, the low-risk appeal could cause this top stock to rise in a hurry.
Investor: Josh Brown
Arcos Dorados (NYSE:ARCO) is Spanish for “Golden Arches” and operates one of the largest McDonald’s franchisees in the world — focused mainly on Latin America. As Josh Brown wrote in his original ARCO stock recommendation, Arcos Dorados is a play on four key themes:
And as Josh wrote in a recent Arcos Dorados stock update, the company reports Q4 earnings on Feb. 22. That will be the real litmus test for how this company is growing after its 2011 IPO.
Investor: Jim Jubak
Jim Jubak summed it up nicely in the headline of his initial recommendation, “A European Bank Is Your Best Buy for 2012 … Really!” That European bank was Banco Santander (NYSE:STD), a Spanish financial stock at the heart of the eurozone meltdown.
So far, though, Jim has been right on with his assessment that the worst is past and STD stock has strong upside. He wrote in his original recommendation, “I think Banco Santander’s price has been a victim to standard investor behavior: In a panic, the motto is ‘Sell everything and sort it out later.’”
Bargain hunters have been rewarded with a double-digit gainer so far in 2012. And if the eurozone nonsense continues to move toward some resolution of Greek debt, there could be bigger gains ahead.
Of course, if there’s a default, it could be trouble too. As Jim points out, the panic mentality isn’t rational. Every European stock, even STD, could suffer in the event of a Greek default.
Investor: Paul R. La Monica
Paul R. La Monica, the brains behind CNNMoney’s daily “The Buzz” column and a prolific tweeter at @LaMonicaBuzz, is not one to let the market’s hourly antics pass him by. But for our InvestorPlace.com feature, the CNNMoney assistant managing editor made a pick with a much longer time frame behind it — and it has turned out nicely.
His reasons to select FedEx (NYSE:FDX) for our little contest: A low-risk investment with the ability to profit for organic growth if and when a recovery takes shape in 2012.
“Don’t get me wrong. I don’t think the economy is going to surge in 2012,” Paul wrote in his original FedEx post. But I don’t think it’s going to pull a Tom Petty and freefall out into nothing, either.”
So far, the bull market of the first several weeks this year have really lifted stocks — and FedEx has outperformed nicely thanks to investor optimism. The real question is whether FDX will continue to rev up in 2012 or if it will downshift if the economy hits a snag later this year.
Investor: Charles Sizemore
Charles Sizemore, editor of the Sizemore Investment Letter, is a firm believer in emerging markets as part of your portfolio. Last year, Charles picked the Best Stock for 2011 with his recommendation of Visa (NYSE:V) — based in large part on a thesis of strong emerging market growth for the payment processor. And this year, he once again looked to overseas opportunities with Turkcell (NYSE:TKC).
“The best-performing stocks on the (Best Stocks for 2012) list are some of the most cyclical, and I am quite happy to see that,” Charles said in a recent Turkcell update. “It means investor risk appetites are returning. Barring a major blowup coming out of Europe, I expect this to continue, and I recommend investors maintain overweighted positions in the beaten-down markets of Europe and emerging markets.”
In short, TKC was a bargain buy amid the panic and should continue to show strength as the eurozone moves towards some favorable conclusion to the debt crisis.
Of course, like Santander, we could see a backslide in Turkcell stock if things go south for Greece. However, it’s hard to argue with market-doubling returns year-to-date in TKC.
Investor: Philip van Doorn
In his initial article, “Capital One: Top Bank Stock Pick for 2012,” TheStreet.com contributor Philip van Doorn makes the case that financials in general aren’t as bad as you think — and certain smaller banks like Capital One (NYSE:COF) are, in fact, ready to soar.
His reasons included “continued strength in earnings and a historically low valuation to forward earnings estimates and book value.” And those reasons continue to hold firm, delivering Philip’s pick impressive year-to-date returns of 17%.
It’s worth noting, too, that the broader financial sector has just been on a tear. Bank of America (NYSE:BAC) is up more than 43% so far in 2012, and Citigroup (NYSE:C) is up more than 25%.
There are real risks of financial stocks overheating, since earnings remain choppy amid persistent eurozone troubles and continued foreclosure problems. But the gains so far leave a very nice cushion in Capital One and other financial stocks.
Investor: Jeff Reeves
My personal pick for the Best Stocks for 2012 lineup is Alcoa (NYSE:AA). My thesis was a simple one — the valuation was great, the company already had flopped dramatically from pre-recession levels and streamlined its way back to profitability, and there really was nothing but upside considering that aluminum has a certain baseline demand built in. If Alcoa wasn’t at the bottom in December, I reasoned, it was pretty darn near the bottom.
That buy was very well timed, with Alcoa soaring 19% so far to start out 2012. Most recently, Alcoa earnings showed a quarterly loss (as expected) but offered encouraging revenue increases. What’s more, aluminum prices remain at rock bottom — and Alcoa has continued to adjust production to ensure supply is as thin as possible. That means there really is nowhere to go but up as demand increases and prices rise.
OK, that’s an oversimplification. A shock in Greece and continued weak demand from the housing and manufacturing sectors could cause aluminum demand to remain at ultra-low levels for years to come. But there are reasons to be cautiously optimistic about the recovery, and bullish on Alcoa after its previous troubles in 2011.
Disclosure: Jeff Reeves owns a personal position in Alcoa stock.
Investor: James Altucher
When making his call for InvestorPlace.com’s 10 Best Stocks for 2011 a year ago, James Altucher picked “A tiny company called Microsoft (NASDAQ:MSFT).” James went back to the well again in 2012 with the same call for this year’s feature.
James picked Microsoft because it has:
So far, the value proposition alone has paid off for Microsoft. The stock has rallied nicely with the rest of the tech sector.
Investor: Dan Burrows
If you’re looking for a broad-based recovery play, it’s hard to get better than Caterpillar (NYSE:CAT). The world’s largest maker of construction and mining equipment has its fingers in a lot of pies, and will benefit nicely from any sustained economic growth.
Judging by recent earnings, Caterpillar looks to be on the way up. The company saw increased global demand that boosted profit 60% in the most recent quarter on record sales.
“The 2011 increase in sales and revenues was the largest percentage increase in any year since 1947, and much of it was driven by demand for Caterpillar products and services outside of the United States,” CEO Doug Oberhelman said in a statement. “As a result, 2011 was a record-breaking year for U.S. exports at nearly $20 billion.”
So have you missed your ride on the CAT? Maybe not. Dan recently wrote a Caterpillar stock update that notes, “the stock trades at very compelling valuations, even at current levels.”
In short, there might be continued growth ahead for Caterpillar in 2012 even after these market-beating gains.
Investor: David Gardner
Interestingly enough, though many of the stocks on our Best Stocks for 2012 buy list include broad-based plays on an economic recovery, the top performer on the entire list is a very niche medical company that is seeing strength on a very narrow product line rather than any overall optimism.
MAKO Surgical (NASDAQ:MAKO) was pitched by Motley Fool co-founder David Gardner, and his original write-up had the headline, “This Innovative Joint Replacement Stock Will Thrive in 2012.” MAKO has a cutting-edge joint replacement technology that helps reduce the amount of recovery time and rehab for patients, and its surgery gear is in high demand.
This is a highly speculative play, of course, since it’s a small-cap medical device company. But based on recent stock performance and momentum behind the company, it appears that MAKO could have a blockbuster technology on its hands that is playing right into the demographic trends of aging baby boomers in need of a higher quality of life in retirement.
Is 46% in less than two months too much too soon? Maybe. But if not, David’s pick could easily prove a doubler in 2012.
It’s awfully early in our little contest, but so far the 10 Best Stocks for 2012 list has simply blown away the broader market. Thus far, the Dow is up about 6% and the S&P is up about 8% year-to-date. Our 10 stocks average a stunning 17% gain!
What’s more, nine of the 10 stocks are in the green — and eight of 10 are up by double digits!
Obviously there’s a lot of time left in 2012, and a lot of things can happen. But it’s worth pointing out the big winners so far.
Here’s a recap of InvestorPlace.com’s 10 Best Stocks for 2012:
the 10 Best Stocks for 2012 No. 10: Hershey
Current Return: -2%Investor: Jon Markman
The lone decliner on the list of 10 Best stocks, don’t count Hershey (NYSE:HSY) out just yet. Jon Markman’s original recommendation of the confectioner pointed out a rather bearish outlook for the broader market in 2012, and strength in Hershey based on its low-risk potential.
“Hershey is a best-of-breed operator that deserves and gets a premium valuation. Even in a tough environment, it could appreciate by 10% or more,” Jon wrote.
The trouble is that after a 31% run in 2011, as investors took shelter in Hershey’s low-risk appeal and decent dividend, Wall Street now is looking for growth. Defensive plays like consumer staples and utilities stocks have lagged the market so far.
But if things get rocky, the low-risk appeal could cause this top stock to rise in a hurry.
the 10 Best Stocks for 2012 No. 9: Arcos Dorados
Current Return: +6%Investor: Josh Brown
Arcos Dorados (NYSE:ARCO) is Spanish for “Golden Arches” and operates one of the largest McDonald’s franchisees in the world — focused mainly on Latin America. As Josh Brown wrote in his original ARCO stock recommendation, Arcos Dorados is a play on four key themes:
- Expanding consumer spending in Latin America
- The ferocity of McDonald’s as a global brand
- Growth within a defensive sector
- The comeback potential for emerging-market equities in 2012
And as Josh wrote in a recent Arcos Dorados stock update, the company reports Q4 earnings on Feb. 22. That will be the real litmus test for how this company is growing after its 2011 IPO.
the 10 Best Stocks for 2012 No. 8: Banco Santander
Current Return: +11%Investor: Jim Jubak
Jim Jubak summed it up nicely in the headline of his initial recommendation, “A European Bank Is Your Best Buy for 2012 … Really!” That European bank was Banco Santander (NYSE:STD), a Spanish financial stock at the heart of the eurozone meltdown.
So far, though, Jim has been right on with his assessment that the worst is past and STD stock has strong upside. He wrote in his original recommendation, “I think Banco Santander’s price has been a victim to standard investor behavior: In a panic, the motto is ‘Sell everything and sort it out later.’”
Bargain hunters have been rewarded with a double-digit gainer so far in 2012. And if the eurozone nonsense continues to move toward some resolution of Greek debt, there could be bigger gains ahead.
Of course, if there’s a default, it could be trouble too. As Jim points out, the panic mentality isn’t rational. Every European stock, even STD, could suffer in the event of a Greek default.
the 10 Best Stocks for 2012 No. 7: FedEx
Current Return: +14%Investor: Paul R. La Monica
Paul R. La Monica, the brains behind CNNMoney’s daily “The Buzz” column and a prolific tweeter at @LaMonicaBuzz, is not one to let the market’s hourly antics pass him by. But for our InvestorPlace.com feature, the CNNMoney assistant managing editor made a pick with a much longer time frame behind it — and it has turned out nicely.
His reasons to select FedEx (NYSE:FDX) for our little contest: A low-risk investment with the ability to profit for organic growth if and when a recovery takes shape in 2012.
“Don’t get me wrong. I don’t think the economy is going to surge in 2012,” Paul wrote in his original FedEx post. But I don’t think it’s going to pull a Tom Petty and freefall out into nothing, either.”
So far, the bull market of the first several weeks this year have really lifted stocks — and FedEx has outperformed nicely thanks to investor optimism. The real question is whether FDX will continue to rev up in 2012 or if it will downshift if the economy hits a snag later this year.
the 10 Best Stocks for 2012 No. 6: Turkcell
Current Return: +15%Investor: Charles Sizemore
Charles Sizemore, editor of the Sizemore Investment Letter, is a firm believer in emerging markets as part of your portfolio. Last year, Charles picked the Best Stock for 2011 with his recommendation of Visa (NYSE:V) — based in large part on a thesis of strong emerging market growth for the payment processor. And this year, he once again looked to overseas opportunities with Turkcell (NYSE:TKC).
“The best-performing stocks on the (Best Stocks for 2012) list are some of the most cyclical, and I am quite happy to see that,” Charles said in a recent Turkcell update. “It means investor risk appetites are returning. Barring a major blowup coming out of Europe, I expect this to continue, and I recommend investors maintain overweighted positions in the beaten-down markets of Europe and emerging markets.”
In short, TKC was a bargain buy amid the panic and should continue to show strength as the eurozone moves towards some favorable conclusion to the debt crisis.
Of course, like Santander, we could see a backslide in Turkcell stock if things go south for Greece. However, it’s hard to argue with market-doubling returns year-to-date in TKC.
the 10 Best Stocks for 2012 No. 5: Capital One
Current Return: +15%Investor: Philip van Doorn
In his initial article, “Capital One: Top Bank Stock Pick for 2012,” TheStreet.com contributor Philip van Doorn makes the case that financials in general aren’t as bad as you think — and certain smaller banks like Capital One (NYSE:COF) are, in fact, ready to soar.
His reasons included “continued strength in earnings and a historically low valuation to forward earnings estimates and book value.” And those reasons continue to hold firm, delivering Philip’s pick impressive year-to-date returns of 17%.
It’s worth noting, too, that the broader financial sector has just been on a tear. Bank of America (NYSE:BAC) is up more than 43% so far in 2012, and Citigroup (NYSE:C) is up more than 25%.
There are real risks of financial stocks overheating, since earnings remain choppy amid persistent eurozone troubles and continued foreclosure problems. But the gains so far leave a very nice cushion in Capital One and other financial stocks.
the 10 Best Stocks for 2012 No. 4: Alcoa
Current Return: +19%Investor: Jeff Reeves
My personal pick for the Best Stocks for 2012 lineup is Alcoa (NYSE:AA). My thesis was a simple one — the valuation was great, the company already had flopped dramatically from pre-recession levels and streamlined its way back to profitability, and there really was nothing but upside considering that aluminum has a certain baseline demand built in. If Alcoa wasn’t at the bottom in December, I reasoned, it was pretty darn near the bottom.
That buy was very well timed, with Alcoa soaring 19% so far to start out 2012. Most recently, Alcoa earnings showed a quarterly loss (as expected) but offered encouraging revenue increases. What’s more, aluminum prices remain at rock bottom — and Alcoa has continued to adjust production to ensure supply is as thin as possible. That means there really is nowhere to go but up as demand increases and prices rise.
OK, that’s an oversimplification. A shock in Greece and continued weak demand from the housing and manufacturing sectors could cause aluminum demand to remain at ultra-low levels for years to come. But there are reasons to be cautiously optimistic about the recovery, and bullish on Alcoa after its previous troubles in 2011.
Disclosure: Jeff Reeves owns a personal position in Alcoa stock.
the 10 Best Stocks for 2012 No. 3: Microsoft
Current Return: +21%Investor: James Altucher
When making his call for InvestorPlace.com’s 10 Best Stocks for 2011 a year ago, James Altucher picked “A tiny company called Microsoft (NASDAQ:MSFT).” James went back to the well again in 2012 with the same call for this year’s feature.
James picked Microsoft because it has:
- A forward price-to-earnings ratio of less than 8 (less cash), signaling bargain valuation.
- A $40 billion stock buyback plan to boost shareholder value.
- More than $30 billion in cash in the bank at MSFT, and predictable revenue.
So far, the value proposition alone has paid off for Microsoft. The stock has rallied nicely with the rest of the tech sector.
No. 2: Caterpillar
Current Return: +26%Investor: Dan Burrows
If you’re looking for a broad-based recovery play, it’s hard to get better than Caterpillar (NYSE:CAT). The world’s largest maker of construction and mining equipment has its fingers in a lot of pies, and will benefit nicely from any sustained economic growth.
Judging by recent earnings, Caterpillar looks to be on the way up. The company saw increased global demand that boosted profit 60% in the most recent quarter on record sales.
“The 2011 increase in sales and revenues was the largest percentage increase in any year since 1947, and much of it was driven by demand for Caterpillar products and services outside of the United States,” CEO Doug Oberhelman said in a statement. “As a result, 2011 was a record-breaking year for U.S. exports at nearly $20 billion.”
So have you missed your ride on the CAT? Maybe not. Dan recently wrote a Caterpillar stock update that notes, “the stock trades at very compelling valuations, even at current levels.”
In short, there might be continued growth ahead for Caterpillar in 2012 even after these market-beating gains.
the 10 Best Stocks for 2012 No. 1: MAKO Surgical
Current Return: +46%Investor: David Gardner
Interestingly enough, though many of the stocks on our Best Stocks for 2012 buy list include broad-based plays on an economic recovery, the top performer on the entire list is a very niche medical company that is seeing strength on a very narrow product line rather than any overall optimism.
MAKO Surgical (NASDAQ:MAKO) was pitched by Motley Fool co-founder David Gardner, and his original write-up had the headline, “This Innovative Joint Replacement Stock Will Thrive in 2012.” MAKO has a cutting-edge joint replacement technology that helps reduce the amount of recovery time and rehab for patients, and its surgery gear is in high demand.
This is a highly speculative play, of course, since it’s a small-cap medical device company. But based on recent stock performance and momentum behind the company, it appears that MAKO could have a blockbuster technology on its hands that is playing right into the demographic trends of aging baby boomers in need of a higher quality of life in retirement.
Is 46% in less than two months too much too soon? Maybe. But if not, David’s pick could easily prove a doubler in 2012.
5 Ill-Equipped Communications Technology Stocks to invest in 2012
The communications technology industry was hit mighty hard by last year’s volatility roller coaster. Out of the more than 5,000 publicly traded companies I watch with my Portfolio Grader tool, these stocks were some of the worst.
I run these companies by a number of fundamental and quantitative measures. Here they are, in alphabetical order. Each one of these stocks gets a “D” or “F” according to my research.
5 Ill-Equipped Communications Technology Stocks to invest in 2012 - Alcatel-Lucent (NYSE:ALU) is involved with mobile, fixed, Internet Protocol and optics technologies. In the past year, ALU stock is down a significant 45%. ALU stock gets an “F” for sales growth, a “D” for earnings momentum 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 ALU stock.
Ericsson (NASDAQ:ERIC) is a communications technology company based in Sweden. ERIC stock has dipped 25% in the last 12 months, compared to a gain of 5% for the Dow Jones. ERIC stock gets an “F” for sales growth, a “D” for earnings growth, an “F” for earnings momentum, an “F” for its ability to exceed the consensus earnings estimates on Wall Street and an “F” 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 ERIC stock.
5 Ill-Equipped Communications Technology Stocks to invest in 2012 - Juniper Networks (NYSE:JNPR) deals with infrastructures as well as service layer technologies. Despite gains by the broader markets, JNPR stock is down 44% in the last year. JNPR stock gets a “D” for earnings growth, a “D” for earnings momentum, a “D” for its ability to exceed the consensus earnings estimates on Wall Street and an “F” 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 JNPR stock.
5 Ill-Equipped Communications Technology Stocks to invest in 2012 - Nokia (NYSE:NOK) operates in three business segments, but is known best for its consumer electronics, specifically mobile phones. NOK is down 54% in the last year. NOK stock gets an “F” for sales growth, an “F” for operating margin growth, an “F” for earnings growth, an “F” for earnings momentum, an “F” for the magnitude in which earnings projections have increased over the past month and a “D” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of NOK stock.
Research in Motion (NASDAQ:RIMM) is known as the producer of Blackberry smartphones, and is the biggest loser on this list, down 74% in the last year. RIMM stock gets an “F” for sales growth, a “D” for operating margin growth, an “F” for earnings growth, an “F” for earnings momentum and an “F” 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 RIMM stock.
I run these companies by a number of fundamental and quantitative measures. Here they are, in alphabetical order. Each one of these stocks gets a “D” or “F” according to my research.
5 Ill-Equipped Communications Technology Stocks to invest in 2012 - Alcatel-Lucent (NYSE:ALU) is involved with mobile, fixed, Internet Protocol and optics technologies. In the past year, ALU stock is down a significant 45%. ALU stock gets an “F” for sales growth, a “D” for earnings momentum 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 ALU stock.
Ericsson (NASDAQ:ERIC) is a communications technology company based in Sweden. ERIC stock has dipped 25% in the last 12 months, compared to a gain of 5% for the Dow Jones. ERIC stock gets an “F” for sales growth, a “D” for earnings growth, an “F” for earnings momentum, an “F” for its ability to exceed the consensus earnings estimates on Wall Street and an “F” 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 ERIC stock.
5 Ill-Equipped Communications Technology Stocks to invest in 2012 - Juniper Networks (NYSE:JNPR) deals with infrastructures as well as service layer technologies. Despite gains by the broader markets, JNPR stock is down 44% in the last year. JNPR stock gets a “D” for earnings growth, a “D” for earnings momentum, a “D” for its ability to exceed the consensus earnings estimates on Wall Street and an “F” 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 JNPR stock.
5 Ill-Equipped Communications Technology Stocks to invest in 2012 - Nokia (NYSE:NOK) operates in three business segments, but is known best for its consumer electronics, specifically mobile phones. NOK is down 54% in the last year. NOK stock gets an “F” for sales growth, an “F” for operating margin growth, an “F” for earnings growth, an “F” for earnings momentum, an “F” for the magnitude in which earnings projections have increased over the past month and a “D” for return on equity in my Portfolio Grader tool. For more information, view my complete analysis of NOK stock.
Research in Motion (NASDAQ:RIMM) is known as the producer of Blackberry smartphones, and is the biggest loser on this list, down 74% in the last year. RIMM stock gets an “F” for sales growth, a “D” for operating margin growth, an “F” for earnings growth, an “F” for earnings momentum and an “F” 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 RIMM stock.
5 Cruise and Car Stocks to Sell in 2012
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.”
5 Cruise and Car Stocks to Sell in 2012 : 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.
5 Cruise and Car Stocks to Sell in 2012: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.
5 Cruise and Car Stocks to Sell in 2012: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.
5 Cruise and Car Stocks to Sell in 2012: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.
5 Cruise and Car Stocks to Sell in 2012: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.”
5 Cruise and Car Stocks to Sell in 2012 : 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.
5 Cruise and Car Stocks to Sell in 2012: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.
5 Cruise and Car Stocks to Sell in 2012: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.
5 Cruise and Car Stocks to Sell in 2012: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.
5 Cruise and Car Stocks to Sell in 2012: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.
7 Metal and Mining Stocks to Sell in 2012
7 Metal and Mining Stocks to Sell in 2012
Precious metals are in focus as uncertainty reigns in the market, but don’t think it means that all metal and mining stocks are a good investment. Many of these companies also deal with base metals like aluminum and copper — commodities in scarce demand as the global manufacturing sector continues to see headwinds.
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 seven metal and mining 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.”
Agnico-Eagle Mines (NYSE:AEM) is a Canadian-based international gold producer. AEM stock has had a rough year, down 44% since the start of 2011.
Aluminum Corp. of China (NYSE:ACH) produces alumina, primary aluminum and aluminum fabrication in the People’s Republic. Like other metal and mining stocks, ACH has dropped big — 50% year-to-date.
ArcelorMittal (NYSE:MT) is a global steel producer that shipped approximately 85 million tons of steel in 2010. MT stock has been one of the biggest losers, down 60% year-to-date.
HudBay Minerals Inc. (NYSE:HBM) owns copper, zinc and gold mines, ore concentrators and zinc production facilities all across North America. A 50% loss year-to-date for HBM stock has shareholders questioning their initial investment.
Freeport-McMoran Copper & Gold (NYSE:FCX) is a mining company that works with copper, gold and other metals. Since the start of 2011, FCX stock has dipped 42%.
United States Steel (NYSE:X) is a producer of integrated steel products headquartered in Pittsburgh, Pa. Year-to-date, its stock has dropped 60% compared to a loss of just 1% for the Dow Jones.
Vale (NYSE:VALE) works with nickel, iron ore and iron ore pellets, manganese ore, ferroalloys, aluminum, fertilizers, copper and coal. VALE stock is down 34% year-to-date, compared to much smaller losses by the broader markets.
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.
Precious metals are in focus as uncertainty reigns in the market, but don’t think it means that all metal and mining stocks are a good investment. Many of these companies also deal with base metals like aluminum and copper — commodities in scarce demand as the global manufacturing sector continues to see headwinds.
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 seven metal and mining 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.”
Agnico-Eagle Mines (NYSE:AEM) is a Canadian-based international gold producer. AEM stock has had a rough year, down 44% since the start of 2011.
Aluminum Corp. of China (NYSE:ACH) produces alumina, primary aluminum and aluminum fabrication in the People’s Republic. Like other metal and mining stocks, ACH has dropped big — 50% year-to-date.
ArcelorMittal (NYSE:MT) is a global steel producer that shipped approximately 85 million tons of steel in 2010. MT stock has been one of the biggest losers, down 60% year-to-date.
HudBay Minerals Inc. (NYSE:HBM) owns copper, zinc and gold mines, ore concentrators and zinc production facilities all across North America. A 50% loss year-to-date for HBM stock has shareholders questioning their initial investment.
Freeport-McMoran Copper & Gold (NYSE:FCX) is a mining company that works with copper, gold and other metals. Since the start of 2011, FCX stock has dipped 42%.
United States Steel (NYSE:X) is a producer of integrated steel products headquartered in Pittsburgh, Pa. Year-to-date, its stock has dropped 60% compared to a loss of just 1% for the Dow Jones.
Vale (NYSE:VALE) works with nickel, iron ore and iron ore pellets, manganese ore, ferroalloys, aluminum, fertilizers, copper and coal. VALE stock is down 34% year-to-date, compared to much smaller losses by the broader markets.
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.
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.
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.
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