Top 6 Stocks to Buy for May in 2012

Although we are in a long-term secular bull market, it is approaching important resistance at the March highs. This level also coincides with a significant resistance zone that eventually resulted in the market highs in 2007.
Stocks have advanced for several weeks, and the S&P 500 has gained almost 12% this year. Most of the big-name stocks have reported Q1 earnings, and 65% of the S&P 500 stocks have exceeded earnings estimates — a creditable but not spectacular performance in that many of the earnings estimates had been lowered.
The euro-contagion mess is still with us, along with concerns over China’s economic outlook. But these concerns are of a short to intermediate time frame. Thus, good quality stocks should be bought on pullbacks, and stocks that have just begun what appear to be major moves should be bought in stages starting now.
Here are your top stocks to buy for May:

Top 6 Stocks to Buy for May in 2012 #1 – AT&T (T)

AT&T (NYSE:T), one of the most recognized brand names in the world, is expected to see gains in consumer wireless and broadband services. Its strong balance sheet, long-term customer relationships, and expanding profit margins should result in an increase in the stock’s P/E multiple, along with an increase in earnings. Analysts estimate that AT&T will earn $2.41 in 2012. The stock has a dividend yield of over 5%.
Technically the stock reversed from its 50-day moving average early in April, flashed a buy signal from our internal Collins-Bollinger Reversal (CBR) indicator, and then broke through a quadruple-top at $32. The target for AT&T is $38.

Top 6 Stocks to Buy for May in 2012  #2 –EssexProperty Trust (ESS)

Essex Property Trust (NYSE:ESS) is a Real Estate Investment Trust (REIT) that owns and operates multi-family properties in California and the Pacific Northwest. Forecasts are for an average occupancy level of 96% in 2012, and rents this year are expected to rise by 6%. This REIT is a proven performer in redeveloping older properties, which supply a predictable stream of income.
ESS has a dividend yield of almost 3% and is expected to raise its dividend by 3%-5% this year.
Technically the breakout at $148 is very significant in that it breaks from a resistance line that extends back to February 2007. The target for ESS is $175.

Top 6 Stocks to Buy for May in 2012 #3 – Kohl’s Corp. (KSS)

Kohl’s Corp. (NYSE:KSS) owns a chain of family-operated department stores that also provide online shopping. And it owns the Rock & Republic brand, which offers apparel and accessories.
The company’s earnings have steadily grown over the past five years. Earnings predictions are $4.30 in 2012 versus $3.65 in 2011, and $4.85 in 2013. Kohl’s has a dividend yield of 2.5%.
In addition to the long-term goals for the stock, it also appears to be a candidate for a quick trade — note the strong buy from the stochastic. The trading target is $56 and the longer-term target is $68.

Top 6 Stocks to Buy for May in 2012 #4 – Pioneer Natural Resources (PXD)

Pioneer Natural Resources (NYSE:PXD) is an independent oil and gas exploration and production company with operations mostly in the United States and South Africa. However, the South African holdings are expected to be sold this year.
Earnings for the company are on a tear due to its unique position in thePermianBasinand its focus on oil production and cost cutting. S&P says that a higher liquid mix could boost earnings to $6.15 in 2012 and $8.85 in 2013, up from $3.95 in 2011.
The breakout from the triangle late in 2011 was a long-term bullish signal, but the follow-through after holding at its bullish support line is more significant. By breaking over $115, the target of $150 appears attainable within six months. Buy PDX now.

Top 6 Stocks to Buy for May in 2012 #5 – PulteGroup (PHM)

PulteGroup (NYSE:PHM) is a U.S. homebuilder with a financial services division that consists principally of mortgage banking and title operations. It appears that first-time buyers are becoming more active, and U.S. households are increasing at a greater rate than homebuilding, so we may have seen a bottom in the building industry.
Pulte is cash rich, with over $1.1 billion in cash that can be used to build or acquire communities. The company has increased its earnings (though still at a loss) for the past four years and is likely to turn profitable this year.
Technically a golden cross followed by a break through the long-term resistance line at $8 are powerful signals. And the April 27 break to $10 on twice the normal volume is a signal that PHM has the potential to run to the high teens.

Top 6 Stocks to Buy for May in 2012 #6 – Velti (VELT)

Velti (NASDAQ:VELT) is a leading global provider of mobile marketing and advertising that enables companies to implement campaigns by communicating through their mobile devices. Recent acquisitions and the creation of the Open Device Identification Number (ODIN) Working Group have brought Velti to the forefront of mobile advertising.
The company’s Q4 2011 earnings were 59 cents, which beat analysts’ estimates of 48cents. Analysts expect 73 cents in FY 2012.
The stock broke from a consolidation rectangle in January and established a trendline with support on its 50-day moving average. A golden cross was flashed in April, as well as a buy from the stochastic. The trading target for VELT is $18.

The 10 best stocks for a volatile ’11

With so much uncertainty and potential for crisis, the year ahead could be rough. I’m focusing on 3 clear trends — and 10 stocks that will succeed because of them.
[Related content: Deere, Joy Global, Freeport McMoRan, Banco Santander, Jim Jubak]
By Jim Jubak
2011 is shaping up to be a volatile year. The euro debt crisis threatens to expand to include Spain, before Greece and Ireland have even moved out of danger. The U.S. economy seems to be on a path of moderate growth, but the end of spending from the 2009 stimulus package in 2011 — along with the uncertain effects of the Federal Reserve’s $600 billion program to buy Treasurys and of the extension of the Bush administration tax cuts — leaves the country poised between too much inflation and too little growth.
Plus, China’s economy is in danger of overheating. But it’s so hard to calculate the odds that the central bank will raise interest rates and cut growth down to 8% or so that I’ve actually suggested that investors watch next summer’s vegetable harvest for clues.
But that doesn’t mean you won’t be able to make a profit, a pretty good profit, in 2011. As I noted in my post “Why 2010 was so volatile, and why 2011 will be just as wild a ride,” this has been a wild year and yet, as of the beginning of December, investors were looking at a return of 10.64% for the first 11 months of the year — once you adjust for inflation and dividends — versus an annual average return of 8.71% for the Standard and Poor’s 500 stock index ($INX) (after the same adjustments) since 1950.
Making money in 2011 won’t be impossible — just hard. It will be a year when you need to put all the trends you can identify at your back — so that you have the best chance of beating market averages. And then you’ll need to pay careful attention to individual stock picking.
Today I’m going to quickly lay out three trends that I think will be strong enough to pull your portfolio higher — if you hitch your wagon to them. And then I’ll give you 10 stock picks for taking advantage of those trends.
3 trends that hold true
Why start with the trends? Why not go straight to stock picks? In a volatile year, like 2010 or (as I project) 2011, the toughest challenge is staying invested. The second-toughest is knowing when to use the swings of the pendulum toward excessive fear to buy. (For more on this, see my column on investing when you fear the zombies are about to walk.)
You want to use market volatility to buy low — and not let it send you running to the hills after you’ve sold low. The easiest way to do that is to indentify some longer-term trends that you want to own through a reasonable amount of volatility.
What are some of those longer-term trends for 2011? Here are three.

• Food prices are headed higher, as are farm incomes. Speaking at the Bank of America/Merrill Lynch Global Industries Conference on Dec. 15, fertilizer company Potash of Saskatchewan (POT) said that by the middle of 2010 it had become apparent that, for the eighth time in the past 12 years, grain production would fall short of consumption and the world would have to draw down its stockpiles. In 2011, Potash estimates, it will take a 5% increase in grain production to keep pace with consumption. That will be a tough if not impossible task, because grain production has grown by only an average of 2% a year in the past few decades. Without a record increase in production, global grain stocks would fall to the historical lows of 2006 and 2007. That’s certain to produce higher grain and food prices — good for farmers and the companies that sell stuff to them but bad for consumers, especially poor consumers. According to the Food and Agriculture Organization of the United Nations, by November 2010 the year-to-year increase in the global food price index was 22%.

Commodity prices are rising, and there’s a real possibility of supply falling short of demand for such commodities as copper. Encouraged by this, the global mining industry is raising capital-spending budgets for 2011 and beyond as fast as it can. A survey of global mining executives by the Financial Times puts mining capital spending at $115 billion to $120 billion in 2011. That would be a record, surpassing the peak of $110 billion set in 2010. Now, I can’t tell you what the price of any commodity will be in 2011 — too much depends on where the People’s Bank of China comes down on inflation and growth in 2011. But I can tell you that mining companies are not going to cancel orders for capital goods on volatility in commodity prices, and they’re going to be reluctant to cancel orders even on extraordinary volatility, because they’re afraid of losing their place in the customer line. These companies remember from the last big commodities boom that supplies of capital goods are limited and suppliers can quickly ramp up to meet demand. Order early or forget about getting your order filled