Dividends always have been welcome cash returns for investors, but they have become even more important elements in picking stocks in tough economic times. But a word of advice: In scouting for dividend plays, what’s essential is focusing on dividend-growth companies — companies with a potential of consistently increasing their payouts over the next three to five years.
It isn’t enough that the dividend yield is relatively high. What matters is whether a company will have the will and resources to steadily raise them year after year.
“There is sound logic in seeking out companies that are expected to have material growth in their dividend distributions,” says Alan House, analyst at independent investment research outfit Value Line. Dividends that are increased over time suggest a company that’s growing and a management that cares about returning money to shareholders, he adds.
In searching for such companies, the analyst screened Value Line’s database for companies in the 90th percentile or higher in estimated dividend growth rates over the next three to five years. Three companies stood out in Value Line’s search, which are in the diverse businesses of making fertilizer, infant milk and oil-drilling equipment. They aren’t currently paying lofty dividend yields, such as the 9.6% from specialty finance firm Apollo Investment (NASDAQ:AINV), or the 7.4% yield from investment adviser AllianceBernstein Holding (NYSE:AB). The Value Line picks, however, are among the most likely to elevate — in a big way — their currently small dividend yields in the years ahead.
They are (3 Best Stocks With Big Dividend Growth Potential to invest in 2012)CF Industries (NYSE:CF), which makes nitrogen and phosphate fertilizer products in North America; Mead Johnson (NYSE:MJN), which provides infant formula nutritional products; and (3 Best Stocks With Big Dividend Growth Potential to invest in 2012)National-Oilwell Varco (NYSE:NOV), a major supplier of equipment and components for the oil-and-gas drilling and production companies.
CF Industries, which produced strong sales and earnings in 2011, is likely to continue performing well.
“The company’s balance sheet looks solid,” says Michael A. Camp, president of Northwest Criterion Asset Management, which recently has accumulated shares.
Now trading at $182 per share, Camp says a price of $334 is quite possible based on his projected earnings of $22 per share for 2012. The outlook for CF Industries’ long-term growth is favorable, he says, with the strong demand for its products expected to continue.
Value Line’s Alan House says global population growth and increased per-capita income in developing and emerging nations will drive up demand for agricultural crops. What’s more, low global grain supply might well drive high plantings over the next several years. Because of this promising outlook, CF Industries’ board recently quadrupled the quarterly dividend to an average annual rate of 60 cents a share, or a dividend yield of 0.87%.
“We look for the payout to continue climbing in the years ahead,” House says.
Mead Johnson is making great strides in emerging markets, where revenue gains exceeded 25% in each of the past three quarters, notes House. In particular, MJN has been making big inroads into China, which he expects might well become Mead’s largest market down the road. So he looks for the positive momentum to continue and predicts the company will double its annual payout in the next three to five years, from the current 1.4% dividend yield. The stock currently is trading at $74 a share.
National-Oilwell Varco is running strong on all cylinders, House says, benefiting from better operating conditions in recent months, helped by a large order backlog — 80% of which is for international offshore rigs. The company’s low dividend yield of 0.64% is expected to be significantly expanded by the board during the next three to five years. Now trading at $77 per share, analysts expect the stock to climb to $85 to $99 per share during the next 12 months.
Kurt Hallead, analyst at RBC Capital Markets, says National-Oilwell is “one of the best ways to play the various positive trends currently driving oilfield services.” He rates the stock as outperform with a 12-month target of $85 per share.
For investors looking for solid investment bets in good or bad markets, there’s nothing like stocks that combine sturdy growth with potentially robust dividend yields. That’s the promise and potential of CF Industries, Mead Johnson and National-Oilwell over the long haul.
Showing posts with label best investment for 2012. Show all posts
Showing posts with label best investment for 2012. Show all posts
On January 10, 2012, in Investment Strategy, Stock Market, by David
The euro zone is falling apart, and although the US economy is improving, we are still far off from a full recovery. So the question becomes, are there any good stocks to buy now in a climate like this? The answer is yes! Whether you are in a bull market, bear market or in limbo, which is what we are in now, you can make money in the stock market. As this tumultuous year winds down, here are some stock investment ideas for 2012.
Many investors are sitting on the sidelines right now figuring out the next phase in our global economy. They are sitting on cash, US Treasuries or gold. These are all super defensive plays.
Then there are the risk takers who are trying to find deals. Among the sectors where you might find undervalued stocks are in the financial sector and technology. Banks have been struggling since the 2008 financial crisis. They have not fully recovered. There is also nervousness about the exposure to European debt and new financial regulations that are coming down the pike. But for the true believers, they are confident that banks will recover and thrive in the long run, making these good stocks to buy now while they’re cheap. This includes all the bankers right now taking stock options in lieu of cash bonuses. If these insiders didn’t believe it, they wouldn’t be taking their bonuses in stock.
Defensive Stocks – Strong Now, Strong Later
Many experts and analysts are recommending defensive stocks as good stocks to invest in right now. Defensive sectors would be things like healthcare, consumer staples and utilities. Many are also advocating that you should invest in large multinational corporations that have a strong presence in the emerging markets. This will give you financial strength to weather any downturns, but also offer opportunities to leverage the massive growth in developing economies.
You generally think of defensive stocks as those that you invest in when there is a downturn in the economy. But I like the following defensive stocks because I think they will continue to be strong even when the economy is no longer in a recession. The thing is that if you do strict valuations, it looks like the entire stock market is undervalued. So when the economy recovers, it should cause a rising tide that raises all ships, including defensive stocks. They are one of those win-win plays.
Johnson & Johnson (JNJ) - I really like JNJ. They are the largest health care company in the world, in an industry that is ever growing. They have extremely strong brands for consumer products all around the world. They also have a strong business on the medical technology end as well. As the world grays with increasing numbers of the elderly, a massive and emerging middle class in the emerging markets and just the nature of the health care industry in general, I think JNJ is very well positioned to take advantage of significant growth over the next decade. They are also lending money to European banks. That means they have a lot of cash.
Exxon Mobil (XOM) - Again, another company that will win either way. This is the largest company by market cap on the US stock market. That makes them a safe haven asset when the economy is going south. But in addition to their defensive qualities, they also have great long term prospects for growth. They are always finding new reserves of oil. But they are also investing in other energy sources as well like natural gas. I think they will be a huge player in the natural gas power generation business in years to come. I’m bullish here because I think gas will become a major player in the power generation industry in the US. It burns cleaner than coal and safer than nuclear.
Growth Stocks – Speculation Play
If you are a speculator and looking for high growth stocks to buy, here are the ones you want to watch. Remember, with the potential for high returns also comes equal downside risks. Especially right now, only use money you can afford to lose on these stocks.
Google (GOOG) – This stock has been going up higher and higher for at least the last 10 years. They don’t seem to be letting up. On the fundamental side, their market share is growing as well as the market itself. They are starting to get into the social networking space as well with the recent release of Google+. The thing you want to watch for is their operational costs. It’s been rising very quickly due mostly to hiring costs. I don’t foresee that stabilizing at any point. Just make sure the earnings are growing faster than rising costs.
Apple Inc (AAPL) – This is another technology stock with great potential. With each new release of an iPhone or iPad device, the stock continues to climb. They have the “wow” factor down and I don’t see this changing any time soon. Their new server farm in Charlotte, NC just went online as iCloud. I think this is going to make a huge long term difference. But in the short term, you have very regular releases of new versions of their flashy devices. As long as they keep that up, the stock will continue to rise. Although Steve Jobs is no longer here with us, he probably left a road map for Apple to follow for the next 3-5 years. The question will be whether Tim Cook will be able to execute on those plans.
Netflix Inc (NFLX) – I’m not as crazy about this one. Their stock price has risen considerably for sure. Even the great speculator George Soros is said to be holding this stock. But I think the growth is going to be short-lived. Publishers don’t like them and that will only hurt their licensing costs. In addition, their business model of streaming movies and TV shows has relatively low barriers to entry. I think if Google buys Hulu as it’s rumored to be, I suspect Netflix might feel their final blow as a speculative growth play. I would put this in the category of stocks to not buy right now or one to look for short selling opportunities.
Stocks to Buy in a Recovery
Cyclical stocks are ones you want to invest in during a time of economic growth. The ideal time to get into these stocks is right when a recession is turning into a sustained recovery.
Ford (F) - I like Ford for several reasons. First of all, I respect this company. They were the only ones not to receive a government bailout. They stuck it out on their own and survived. Now they are thriving. But I need a little more than respect to want to invest in it. They have a strong presence and penetration into emerging markets. They have been able to adapt to the new environment they find themselves in with low cost, smaller vehicles. They have the pulse of the emerging market consumer. In addition, and this is very important to me, their financials are very strong.
JC Penny (JCP) – JC Penny is what they call a consumer discretionary stock. These are companies that do well during good economic times because they sell stuff that people don’t absolutely need. I like JC Penny in particular because they have not been doing well. Yes, that’s right. I like them because of their failure. That is because they are turning their failure into an opportunity and the best success stories start out that way. In their failure, they have hired a master retailer to become it’s next CEO. Ron Johnson has been the brains behind Apple’s spectacular success with their retail stores. He also has a design background, which you can see when you walk into an Apple store. If you wonder what his potential contributions could be, just walk into one of their stores and get the Apple experience. Johnson is an innovator and I think he’s going to lead a retailing revolution.
Emerging Market Stocks
The emerging markets are growing at an incredible pace. Most retail investors do not have access or the information necessary to access these markets. You can invest in them indirectly with stocks that have a lot of business interest in these regions. These stocks are a bit risky, especially if we start to see a slowdown or even a bubble pop in countries like China, India, Brazil, Russia and Southeast Asia.
Caterpillar – This company makes heavy equipment like backhoes and diggers for the construction industry. This sector has taken a hit in the US and the Western world, but is booming in other emerging economies. As long as there is this building boom in developing countries, you will see companies like Caterpillar do well. The only thing to watch out for is if and when a potential building bubble in China bursts. Then you might see it screech to a halt temporarily.
IBM – I like IBM here because they are providing the hardware and IT infrastructure necessary to equip these economies with the technology to grow. Their server business will only get better as these economies develop. In addition, they are providing the hardware for cloud computing, which is the next mega-trend in technology.
Yum Brands! – This used to be the restaurant arm of Pepsi Co. They were spun off a few years ago. You would recognize the brands that they own like Pizza Hut, KFC and Taco Bell. They also do A&P Restaurants as well. That is why you are seeing combo restaurants in many places now.
They are actually doing quite well. They are also well-positioned to take China by storm. If you know any Asians, you know that many of them love Kentucky Fried Chicken. I’m not exaggerating. Just think about how much you can scale this demand in a place like China. As the middle class grows in that country, there will be tons of opportunities for this brand to expand. KFC is doing even better than McDonald’s in China.
Index Fund Investing
Everyone is trying to beat the market by finding the best stocks to invest in. From professional money managers, to institutional investors on Wall Street, to the retail individual investor on main street, to those looking to skim on penny stock investing, everyone is trying to out-do the stock market. But the harsh reality is that a few actually end up finding the top stocks to invest in.
Research studies are starting to recognize that only a handful of investors actually beat the market consistently over time. So if a professional money manager for a large mutual fund management company can’t consistently beat the market, an individual investor should be wary of stock picking for himself.
That is where index fund investing comes in. You don’t have to spend hours to find good stocks to invest in. Instead, you let the market pick them.
The reason why index investing is highly recommended by so many smart investors, Warren Buffett being one of them, is that over time, they will almost surely give you a return. Now instead of beating the market, you are trying to grow with it. Historically, the market has always grown over time.
Penny Stock Investing
If you are looking for hot stock tips, you will probably run into many penny stock investing opportunities. These are abundant, especially online. They tout really cheap stocks and how you can get in on the ground floor.
Historically, many frauds have come from penny stock investments. They are hard to catch or even see on the radar because they are so small. The SEC has a hard enough time watching the big blue chips let alone tiny IPO’s. In addition, many of them are based outside of the US, which also helps them fly under the radar.
All I have to say here is to be careful of penny stock investing. The only smart way to do it is if you know the company personally or can walk down to their operations and see with your own eyes that it is a legitimate company.
The other problem is that liquidity is horrible on these stocks. That means you won’t get the optimal entry and exit prices on these stocks.
Many investors are sitting on the sidelines right now figuring out the next phase in our global economy. They are sitting on cash, US Treasuries or gold. These are all super defensive plays.
Then there are the risk takers who are trying to find deals. Among the sectors where you might find undervalued stocks are in the financial sector and technology. Banks have been struggling since the 2008 financial crisis. They have not fully recovered. There is also nervousness about the exposure to European debt and new financial regulations that are coming down the pike. But for the true believers, they are confident that banks will recover and thrive in the long run, making these good stocks to buy now while they’re cheap. This includes all the bankers right now taking stock options in lieu of cash bonuses. If these insiders didn’t believe it, they wouldn’t be taking their bonuses in stock.
Defensive Stocks – Strong Now, Strong Later
Many experts and analysts are recommending defensive stocks as good stocks to invest in right now. Defensive sectors would be things like healthcare, consumer staples and utilities. Many are also advocating that you should invest in large multinational corporations that have a strong presence in the emerging markets. This will give you financial strength to weather any downturns, but also offer opportunities to leverage the massive growth in developing economies.
You generally think of defensive stocks as those that you invest in when there is a downturn in the economy. But I like the following defensive stocks because I think they will continue to be strong even when the economy is no longer in a recession. The thing is that if you do strict valuations, it looks like the entire stock market is undervalued. So when the economy recovers, it should cause a rising tide that raises all ships, including defensive stocks. They are one of those win-win plays.
Johnson & Johnson (JNJ) - I really like JNJ. They are the largest health care company in the world, in an industry that is ever growing. They have extremely strong brands for consumer products all around the world. They also have a strong business on the medical technology end as well. As the world grays with increasing numbers of the elderly, a massive and emerging middle class in the emerging markets and just the nature of the health care industry in general, I think JNJ is very well positioned to take advantage of significant growth over the next decade. They are also lending money to European banks. That means they have a lot of cash.
Exxon Mobil (XOM) - Again, another company that will win either way. This is the largest company by market cap on the US stock market. That makes them a safe haven asset when the economy is going south. But in addition to their defensive qualities, they also have great long term prospects for growth. They are always finding new reserves of oil. But they are also investing in other energy sources as well like natural gas. I think they will be a huge player in the natural gas power generation business in years to come. I’m bullish here because I think gas will become a major player in the power generation industry in the US. It burns cleaner than coal and safer than nuclear.
Growth Stocks – Speculation Play
If you are a speculator and looking for high growth stocks to buy, here are the ones you want to watch. Remember, with the potential for high returns also comes equal downside risks. Especially right now, only use money you can afford to lose on these stocks.
Google (GOOG) – This stock has been going up higher and higher for at least the last 10 years. They don’t seem to be letting up. On the fundamental side, their market share is growing as well as the market itself. They are starting to get into the social networking space as well with the recent release of Google+. The thing you want to watch for is their operational costs. It’s been rising very quickly due mostly to hiring costs. I don’t foresee that stabilizing at any point. Just make sure the earnings are growing faster than rising costs.
Apple Inc (AAPL) – This is another technology stock with great potential. With each new release of an iPhone or iPad device, the stock continues to climb. They have the “wow” factor down and I don’t see this changing any time soon. Their new server farm in Charlotte, NC just went online as iCloud. I think this is going to make a huge long term difference. But in the short term, you have very regular releases of new versions of their flashy devices. As long as they keep that up, the stock will continue to rise. Although Steve Jobs is no longer here with us, he probably left a road map for Apple to follow for the next 3-5 years. The question will be whether Tim Cook will be able to execute on those plans.
Netflix Inc (NFLX) – I’m not as crazy about this one. Their stock price has risen considerably for sure. Even the great speculator George Soros is said to be holding this stock. But I think the growth is going to be short-lived. Publishers don’t like them and that will only hurt their licensing costs. In addition, their business model of streaming movies and TV shows has relatively low barriers to entry. I think if Google buys Hulu as it’s rumored to be, I suspect Netflix might feel their final blow as a speculative growth play. I would put this in the category of stocks to not buy right now or one to look for short selling opportunities.
Stocks to Buy in a Recovery
Cyclical stocks are ones you want to invest in during a time of economic growth. The ideal time to get into these stocks is right when a recession is turning into a sustained recovery.
Ford (F) - I like Ford for several reasons. First of all, I respect this company. They were the only ones not to receive a government bailout. They stuck it out on their own and survived. Now they are thriving. But I need a little more than respect to want to invest in it. They have a strong presence and penetration into emerging markets. They have been able to adapt to the new environment they find themselves in with low cost, smaller vehicles. They have the pulse of the emerging market consumer. In addition, and this is very important to me, their financials are very strong.
JC Penny (JCP) – JC Penny is what they call a consumer discretionary stock. These are companies that do well during good economic times because they sell stuff that people don’t absolutely need. I like JC Penny in particular because they have not been doing well. Yes, that’s right. I like them because of their failure. That is because they are turning their failure into an opportunity and the best success stories start out that way. In their failure, they have hired a master retailer to become it’s next CEO. Ron Johnson has been the brains behind Apple’s spectacular success with their retail stores. He also has a design background, which you can see when you walk into an Apple store. If you wonder what his potential contributions could be, just walk into one of their stores and get the Apple experience. Johnson is an innovator and I think he’s going to lead a retailing revolution.
Emerging Market Stocks
The emerging markets are growing at an incredible pace. Most retail investors do not have access or the information necessary to access these markets. You can invest in them indirectly with stocks that have a lot of business interest in these regions. These stocks are a bit risky, especially if we start to see a slowdown or even a bubble pop in countries like China, India, Brazil, Russia and Southeast Asia.
Caterpillar – This company makes heavy equipment like backhoes and diggers for the construction industry. This sector has taken a hit in the US and the Western world, but is booming in other emerging economies. As long as there is this building boom in developing countries, you will see companies like Caterpillar do well. The only thing to watch out for is if and when a potential building bubble in China bursts. Then you might see it screech to a halt temporarily.
IBM – I like IBM here because they are providing the hardware and IT infrastructure necessary to equip these economies with the technology to grow. Their server business will only get better as these economies develop. In addition, they are providing the hardware for cloud computing, which is the next mega-trend in technology.
Yum Brands! – This used to be the restaurant arm of Pepsi Co. They were spun off a few years ago. You would recognize the brands that they own like Pizza Hut, KFC and Taco Bell. They also do A&P Restaurants as well. That is why you are seeing combo restaurants in many places now.
They are actually doing quite well. They are also well-positioned to take China by storm. If you know any Asians, you know that many of them love Kentucky Fried Chicken. I’m not exaggerating. Just think about how much you can scale this demand in a place like China. As the middle class grows in that country, there will be tons of opportunities for this brand to expand. KFC is doing even better than McDonald’s in China.
Index Fund Investing
Everyone is trying to beat the market by finding the best stocks to invest in. From professional money managers, to institutional investors on Wall Street, to the retail individual investor on main street, to those looking to skim on penny stock investing, everyone is trying to out-do the stock market. But the harsh reality is that a few actually end up finding the top stocks to invest in.
Research studies are starting to recognize that only a handful of investors actually beat the market consistently over time. So if a professional money manager for a large mutual fund management company can’t consistently beat the market, an individual investor should be wary of stock picking for himself.
That is where index fund investing comes in. You don’t have to spend hours to find good stocks to invest in. Instead, you let the market pick them.
The reason why index investing is highly recommended by so many smart investors, Warren Buffett being one of them, is that over time, they will almost surely give you a return. Now instead of beating the market, you are trying to grow with it. Historically, the market has always grown over time.
Penny Stock Investing
If you are looking for hot stock tips, you will probably run into many penny stock investing opportunities. These are abundant, especially online. They tout really cheap stocks and how you can get in on the ground floor.
Historically, many frauds have come from penny stock investments. They are hard to catch or even see on the radar because they are so small. The SEC has a hard enough time watching the big blue chips let alone tiny IPO’s. In addition, many of them are based outside of the US, which also helps them fly under the radar.
All I have to say here is to be careful of penny stock investing. The only smart way to do it is if you know the company personally or can walk down to their operations and see with your own eyes that it is a legitimate company.
The other problem is that liquidity is horrible on these stocks. That means you won’t get the optimal entry and exit prices on these stocks.
5 Stocks Under $5 That Insiders Love to invest in 2012
Penny stocks have a solid reputation for being a risky investment; however, if the potential rewards excite you, then the list below might provide an interesting starting point for your search.
To create the following list, we took a universe of penny stocks (priced under $5 per share) and searched for names with a market cap over $300 million experiencing significant levels of insider buying over the past six months.
Here are some of the things we looked at when compiling the list of penny stocks:
5 Stocks Under $5 That Insiders Love to invest in 2012 - Market Capitalization (Market Cap): Market capitalization, commonly referred to as market cap, is the total market value of a company’s outstanding shares. It can be thought of as a measure of a company’s size. Market cap can be calculated by multiplying the number of shares by the current price of the shares. Companies with higher market cap are considered to have more trustworthy information because they have greater histories of profitability and data.
5 Stocks Under $5 That Insiders Love to invest in 2012 - Insider Trading: Many analysts follow insider buying trends because, after all, insiders know more about their companies than anyone else. Their investment activity is closely monitored and can tell us a lot about where they feel the business is heading. Insider buying is represented as a percentage of the share float. Companies experiencing insider buying over the past six months provide an indicator that insiders think the stock is undervalued at current levels. Inversely, insider selling serves as a negative indicator.
Now that you’re armed with information, take a look at the following list of penny stocks that insiders seem to think are good values. Use this list as a starting point for your own analysis, and always keep in mind that a low share price does not mean low risk. Companies below $5 are there for a reason. Use caution and stop losses at all times.
5 Stocks Under $5 That Insiders Love to invest in 2012 - Opko Health, Inc. (AMEX:OPK) is in the medical appliances and equipment industry and has a market cap of $1.16 billion. Net insider shares purchased over the current quarter comes in at 6.85 million, which is 5.03% of the company’s 136.31 million-share float.
The stock is a short squeeze candidate, with a short float at 9.47% (equivalent to 10.83 days of average volume). The stock has had a couple of great days, gaining 10.74% over the last week.
5 Stocks Under $5 That Insiders Love to invest in 2012 - MannKind Corp. (NASDAQ:MNKD) is in the biotechnology industry with a market cap of $335.28 million. Net insider shares purchased over the current quarter comes in at 3.48 million, which is 4.39% of the company’s 79.29 million-share float.
The stock is a short squeeze candidate, with a short float at 28.55% (equivalent to 25.89 days of average volume). The stock has had a couple of great days, gaining 6.67% over the last week.
5 Stocks Under $5 That Insiders Love to invest in 2012 - Vantage Drilling Company (AMEX:VTG) is in the oil and gas drilling and exploration industry with a market cap of $363.33 million. Net insider shares purchased over the current quarter come in at 5.35 million, which is 3.22% of the company’s 166.05 million-share float.
This is a risky stock that is significantly more volatile than the overall market (beta = 2.08). The stock has performed poorly over the last month, losing 23.78%.
5 Stocks Under $5 That Insiders Love to invest in 2012 - TransAtlantic Petroleum Ltd. (AMEX:TAT) is in the oil and gas drilling and exploration industry with a market cap of $387.33 million. Net insider shares purchased over the current quarter comes in at 1.67 million, which is 0.81% of the company’s 205.75 million-share float. The stock has performed poorly over the last month, losing 27.4%.
Mueller Water Products, Inc. (NYSE:MWA) is in the industrial equipment and components industry with a market cap of $342.30 million. Net insider shares purchased over the current quarter comes in at 125,000, which is 0.09% of the company’s 132.60 million-share float.
This is a risky stock that is significantly more volatile than the overall market (beta = 2.48). The stock is a short squeeze candidate, with a short float at 7.27% (equivalent to 6.24 days of average volume). The stock has had a couple of great days, gaining 7.84% over the last week.
To create the following list, we took a universe of penny stocks (priced under $5 per share) and searched for names with a market cap over $300 million experiencing significant levels of insider buying over the past six months.
Here are some of the things we looked at when compiling the list of penny stocks:
5 Stocks Under $5 That Insiders Love to invest in 2012 - Market Capitalization (Market Cap): Market capitalization, commonly referred to as market cap, is the total market value of a company’s outstanding shares. It can be thought of as a measure of a company’s size. Market cap can be calculated by multiplying the number of shares by the current price of the shares. Companies with higher market cap are considered to have more trustworthy information because they have greater histories of profitability and data.
5 Stocks Under $5 That Insiders Love to invest in 2012 - Insider Trading: Many analysts follow insider buying trends because, after all, insiders know more about their companies than anyone else. Their investment activity is closely monitored and can tell us a lot about where they feel the business is heading. Insider buying is represented as a percentage of the share float. Companies experiencing insider buying over the past six months provide an indicator that insiders think the stock is undervalued at current levels. Inversely, insider selling serves as a negative indicator.
Now that you’re armed with information, take a look at the following list of penny stocks that insiders seem to think are good values. Use this list as a starting point for your own analysis, and always keep in mind that a low share price does not mean low risk. Companies below $5 are there for a reason. Use caution and stop losses at all times.
5 Stocks Under $5 That Insiders Love to invest in 2012 - Opko Health, Inc. (AMEX:OPK) is in the medical appliances and equipment industry and has a market cap of $1.16 billion. Net insider shares purchased over the current quarter comes in at 6.85 million, which is 5.03% of the company’s 136.31 million-share float.
The stock is a short squeeze candidate, with a short float at 9.47% (equivalent to 10.83 days of average volume). The stock has had a couple of great days, gaining 10.74% over the last week.
5 Stocks Under $5 That Insiders Love to invest in 2012 - MannKind Corp. (NASDAQ:MNKD) is in the biotechnology industry with a market cap of $335.28 million. Net insider shares purchased over the current quarter comes in at 3.48 million, which is 4.39% of the company’s 79.29 million-share float.
The stock is a short squeeze candidate, with a short float at 28.55% (equivalent to 25.89 days of average volume). The stock has had a couple of great days, gaining 6.67% over the last week.
5 Stocks Under $5 That Insiders Love to invest in 2012 - Vantage Drilling Company (AMEX:VTG) is in the oil and gas drilling and exploration industry with a market cap of $363.33 million. Net insider shares purchased over the current quarter come in at 5.35 million, which is 3.22% of the company’s 166.05 million-share float.
This is a risky stock that is significantly more volatile than the overall market (beta = 2.08). The stock has performed poorly over the last month, losing 23.78%.
5 Stocks Under $5 That Insiders Love to invest in 2012 - TransAtlantic Petroleum Ltd. (AMEX:TAT) is in the oil and gas drilling and exploration industry with a market cap of $387.33 million. Net insider shares purchased over the current quarter comes in at 1.67 million, which is 0.81% of the company’s 205.75 million-share float. The stock has performed poorly over the last month, losing 27.4%.
Mueller Water Products, Inc. (NYSE:MWA) is in the industrial equipment and components industry with a market cap of $342.30 million. Net insider shares purchased over the current quarter comes in at 125,000, which is 0.09% of the company’s 132.60 million-share float.
This is a risky stock that is significantly more volatile than the overall market (beta = 2.48). The stock is a short squeeze candidate, with a short float at 7.27% (equivalent to 6.24 days of average volume). The stock has had a couple of great days, gaining 7.84% over the last week.
Top 5 Emerging Growth Stocks to Buy for January in 2012
If you have cash to invest this month, I highly recommend these five below. Here they are, in no particular order:
Taiwan-based Silicon Motion Technology (NASDAQ:SIMO) has its hand in lots of hot markets and is a big player in flash memory storage — flash memory cards, USB flash drives, card readers and solid-state hard drives. In fact, most of the NAND flash and next-generation flash products on the market — whether produced by Samsung (PINK:SSNLF), SanDisk (NASDAQ:SNDK), Toshiba, Micron (NASDAQ:MU) or Intel (NASDAQ:INTC) — are supported by Silicon Motion controllers. Silicon Motion also produces multimedia chips including embedded graphics processors, image processors and TV tuners. Lastly, it has been increasingly focused on controllers for smartphones, tablets and notebook PCs, as well as wireless transceivers for 4G LTE smartphones and tablets.
In the third quarter, Silicon Motion’s sales rose 25% to $63.2 million compared with $50.5 million in the second quarter. Looking forward, the analyst community is expecting annual fourth-quarter sales growth of 51% and 88.9% earnings growth. In the past three months, the analyst community has revised their consensus earnings estimate 32% higher — a phenomenon that typically precedes blowout earnings surprises.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Questor Pharmaceuticals (NASDAQ:QCOR) likes a challenge. As a specialist of difficult-to-treat central nervous system disorders, the company has been particularly successful with its multiple sclerosis treatment, H.P. Acthar Gel. The company also makes Doral, which is used for the treatment of insomnia. In the massive biotechnology industry, Questcor is top-notch in terms of earnings per share growth and return on equity.
For the fourth quarter, the analyst community is expecting 127.4% annual sales growth and 265.7% earnings growth of 38 cents per share. In the past three months, the analyst community has revised their consensus earnings estimate 32.6% higher. Typically, such positive analyst earnings revisions precede future earnings surprises.
Top 5 Emerging Growth Stocks to Buy for January in 2012 -Hansen Natural (NASDAQ:HANS) is the mastermind behind Monster, a dominant energy drink in the U.S. Looking at a can of Monster Energy drink, the flashy staple of sleep-deprived college students, one wouldn’t think that the company’s humble beginnings stem back to just one father and three sons working with a juicer in Southern California. In fact, although Hansen sells supercharged drinks like Monster and Java Monster, most of its drink roster is actually very wholesome. For example, it has 30 real fruit and spice soda flavors, a number of immune system-boosting drinks, vitamin waters and an array of teas and lemonades.
In recent quarters, Hansen Natural has reported “monster” sales and profit growth. Third-quarter sales jumped 24% from $381.5 million last year to $474.7 million this quarter. Over the same period, net income also rose 24% to $82.4 million, or 88 cents per share. Plus, speculation is heating up that Monster might be an acquisition target by Red Bull or one of the major soft drink companies. With Red Bull’s recent decision to pull out of NASCAR as a sponsor, a “monster” acquisition might be just what the energy drink maker needs to capture additional U.S. market share.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Spectrum Pharmaceuticals Inc. (NASDAQ:SPPI) is familiar pharmaceutical company I once discussed in the Top 5 Emerging Growth Stocks for December. Spectrum specializes in oncology — the treatment of cancer — and currently has two cancer treatments on the market: Fusilev, a treatment for advanced colon cancer, and Zevalin, a treatment for a type of lymphoma.
But what really excites me about this company is what it has in its pipeline: Spectrum has more than 10 drugs in either late-stage development or development! This includes Apaziquone, a treatment for bladder cancer, Belinostat, another lymphoma treatment and Ozarelix, a treatment of prostate cancer. This is a midsize biotechnology company already at the top of the industry — in terms of return on equity — and is about to experience blowout growth.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Jazz Pharmaceuticals Inc. (NASDAQ:JAZZ) has two flagship drugs — Xyrem, the only narcolepsy treatment approved by the World Anti-Doping Agency, and Luvox CR, its obsessive compulsive disorder treatment. But there are a number of exciting developments on the near horizon, including Jazz’s massive buyout of Dublin-based Azur Pharma Ltd., which should close within the next couple of weeks, and the company’s subsequent moving of its headquarters to Dublin. After the move, Jazz will be able to take advantage of Ireland’s competitive tax rate.
The company’s sales climbed 63.3% and earnings surged 115.6% in the third quarter, and for the fourth quarter, the analyst community is expecting 54% annual sales growth and 70.5% earnings growth. Jazz Pharmaceuticals is flush with cash and recently prepaid $33 million in long-term debt, and I’m excited to see how developments play out in the company’s next earnings release. Also, despite those who might think that Jazz Pharma’s bullish run looks tapped out, I remain optimistic.
Taiwan-based Silicon Motion Technology (NASDAQ:SIMO) has its hand in lots of hot markets and is a big player in flash memory storage — flash memory cards, USB flash drives, card readers and solid-state hard drives. In fact, most of the NAND flash and next-generation flash products on the market — whether produced by Samsung (PINK:SSNLF), SanDisk (NASDAQ:SNDK), Toshiba, Micron (NASDAQ:MU) or Intel (NASDAQ:INTC) — are supported by Silicon Motion controllers. Silicon Motion also produces multimedia chips including embedded graphics processors, image processors and TV tuners. Lastly, it has been increasingly focused on controllers for smartphones, tablets and notebook PCs, as well as wireless transceivers for 4G LTE smartphones and tablets.
In the third quarter, Silicon Motion’s sales rose 25% to $63.2 million compared with $50.5 million in the second quarter. Looking forward, the analyst community is expecting annual fourth-quarter sales growth of 51% and 88.9% earnings growth. In the past three months, the analyst community has revised their consensus earnings estimate 32% higher — a phenomenon that typically precedes blowout earnings surprises.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Questor Pharmaceuticals (NASDAQ:QCOR) likes a challenge. As a specialist of difficult-to-treat central nervous system disorders, the company has been particularly successful with its multiple sclerosis treatment, H.P. Acthar Gel. The company also makes Doral, which is used for the treatment of insomnia. In the massive biotechnology industry, Questcor is top-notch in terms of earnings per share growth and return on equity.
For the fourth quarter, the analyst community is expecting 127.4% annual sales growth and 265.7% earnings growth of 38 cents per share. In the past three months, the analyst community has revised their consensus earnings estimate 32.6% higher. Typically, such positive analyst earnings revisions precede future earnings surprises.
Top 5 Emerging Growth Stocks to Buy for January in 2012 -Hansen Natural (NASDAQ:HANS) is the mastermind behind Monster, a dominant energy drink in the U.S. Looking at a can of Monster Energy drink, the flashy staple of sleep-deprived college students, one wouldn’t think that the company’s humble beginnings stem back to just one father and three sons working with a juicer in Southern California. In fact, although Hansen sells supercharged drinks like Monster and Java Monster, most of its drink roster is actually very wholesome. For example, it has 30 real fruit and spice soda flavors, a number of immune system-boosting drinks, vitamin waters and an array of teas and lemonades.
In recent quarters, Hansen Natural has reported “monster” sales and profit growth. Third-quarter sales jumped 24% from $381.5 million last year to $474.7 million this quarter. Over the same period, net income also rose 24% to $82.4 million, or 88 cents per share. Plus, speculation is heating up that Monster might be an acquisition target by Red Bull or one of the major soft drink companies. With Red Bull’s recent decision to pull out of NASCAR as a sponsor, a “monster” acquisition might be just what the energy drink maker needs to capture additional U.S. market share.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Spectrum Pharmaceuticals Inc. (NASDAQ:SPPI) is familiar pharmaceutical company I once discussed in the Top 5 Emerging Growth Stocks for December. Spectrum specializes in oncology — the treatment of cancer — and currently has two cancer treatments on the market: Fusilev, a treatment for advanced colon cancer, and Zevalin, a treatment for a type of lymphoma.
But what really excites me about this company is what it has in its pipeline: Spectrum has more than 10 drugs in either late-stage development or development! This includes Apaziquone, a treatment for bladder cancer, Belinostat, another lymphoma treatment and Ozarelix, a treatment of prostate cancer. This is a midsize biotechnology company already at the top of the industry — in terms of return on equity — and is about to experience blowout growth.
Top 5 Emerging Growth Stocks to Buy for January in 2012 - Jazz Pharmaceuticals Inc. (NASDAQ:JAZZ) has two flagship drugs — Xyrem, the only narcolepsy treatment approved by the World Anti-Doping Agency, and Luvox CR, its obsessive compulsive disorder treatment. But there are a number of exciting developments on the near horizon, including Jazz’s massive buyout of Dublin-based Azur Pharma Ltd., which should close within the next couple of weeks, and the company’s subsequent moving of its headquarters to Dublin. After the move, Jazz will be able to take advantage of Ireland’s competitive tax rate.
The company’s sales climbed 63.3% and earnings surged 115.6% in the third quarter, and for the fourth quarter, the analyst community is expecting 54% annual sales growth and 70.5% earnings growth. Jazz Pharmaceuticals is flush with cash and recently prepaid $33 million in long-term debt, and I’m excited to see how developments play out in the company’s next earnings release. Also, despite those who might think that Jazz Pharma’s bullish run looks tapped out, I remain optimistic.
Top Ten Best Stocks to Invest in India
Top Ten Stocks to Buy in India
How do select a stock to invest to get Multibagger profits, Stock Selection in Stock Market is not a easy job. Thousands of companies listed and available for trading and investment. Retail investors have no chance to made best investment without Fundamental Research and Technical Analysis. This post provides a short list of “Top Ten Stocks” to invest for 2011 and 2012 years in India. This post provides list of stocks and sector based on fundamental equity research reports, but reports data can’t provide here for lot of stocks.Following table provides Top Ten Shares, a mix of strong fundamental stocks and some high risk scrips. For example, In “Portfolio Management” large caps yield low returns with low volatile in bear market means protects capital. High risk stocks having high beta values may earn high profits in bull market means appreciation of capital. Following “Portfolio Stocks” may subject to change based on Performance of Stocks and Equity Market conditions. Investors consider the following scrips to add to Investment Portfolio. Stocks selected from Small and Mid caps.
Stocks data update every month to choose Best Top Ten Stocks. Following stocks selected based on various Company News and Equity Research reports.
| No: | Name of Stock | Sector | Best Stocks, Why? |
|---|---|---|---|
| 1 | NTPC | Power | Low risk low return, Shock absorber to portfolio in volatile markets. |
| 2 | Patel Engineering | Infrastructure | One of the fundamental pick with lot of subsidiaries and Business model can add value to Money. |
| 3 | SEL Manufacturing | Textiles | High risk scrip with low price earning, May turns Multibagger, single risk to this counter is high interest expenditure. |
| 4 | NDTV | Media | One of the top Media scrip with growth potentials. |
| 5 | SBI | Banking | Leading nationalized bank with sufficient capitalized. |
| 6 | HDIL | Realty | High risk and High return scrip, can zoom in bull market with high beta value. |
| 7 | Hindustan Unilever Limited | FMCG | Leading Consumer player. Highest population and Purchasing capacity can maintains company profits. FMCG sector is shock absorber when markets fall. |
| 8 | Torrent Pharmaceuticals Limited | Pharma | Now a days need of new drugs is necessary. |
| 9 | Reliance Broadcast | Media | Major expansion plans on card to place in one of the top broadcaster. |
| 10 | Career Point Info | Education and Training | Education is a Fast growing sector and lot of space available for future developments. |
Invest 2012: Best Energy Companies to invest in
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Aug/11
Invest 2012: Best Energy Companies to invest in
by admin under best gold stock for 2012, best shares to invest in 2012, best silver stocks to buy 2012, best stocks to buy now for 2012, best stocks to hold 2012, best stocks to invest, Best stocks to invest in 2011, Best stocks to invest right now, best stocks to pick up, best way to invest in 2012, best-penny-stocks, Chinese stocks to invest in 2012
Invest 2012: Best Energy Companies to invest in
Best Energy El Paso Pipeline Partners, L.P. (EPB)
El Paso Pipeline Partners are a growth-oriented Delaware limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines, storage and other midstream assets. Their initial assets consist of Wyoming Interstate Company, Ltd., or WIC, a wholly-owned interstate pipelinetransportation business primarily located in Wyoming and Colorado and ten percent general partner interests in two interstate pipeline transportation businesses: Colorado Interstate Gas Company, or CIG, which is located in the U.S. Rocky Mountains, and Southern Natural Gas Company, or SNG, which is located in the southeastern United States.
Best Energy Companies to invest 2012: Dresser-Rand Group Inc. (DRC)
Dresser-Rand Group is among the largest global suppliers of rotating equipment solutions to the worldwide oil, gas, petrochemical and process industries. Their services and products are used for a wide range of applications, including oil and gas production, high-pressure field injection and enhanced oil recovery, pipelines, refinery processes, natural gas processing, and petrochemical production.
Best Energy Companies to invest 2012: Delta Natural Gas Co. Inc. (DGAS)
Delta Natural Gas Company, Inc. is a regulated public utility. As a result of acquisitions and expansions of its customer base within its existing service areas, Delta provides retail gas distribution service to customers in central and southeastern Kentucky and, additionally, provides transportation service to industrial customers and interconnected pipelines located in the area.
Best Energy Companies to invest 2012: Linn Energy, LLC (LINE)
Linn Energy, LLC is an independent oil and gas company focused on the development and acquisition of long-lived properties which complement its asset profile in producing basins within the United States. Its goal is to provide stability and growth in distributions to our unitholders through a combination of continued successful drilling and acquisitions.
Aug/11
Invest 2012: Best Energy Companies to invest in
by admin under best gold stock for 2012, best shares to invest in 2012, best silver stocks to buy 2012, best stocks to buy now for 2012, best stocks to hold 2012, best stocks to invest, Best stocks to invest in 2011, Best stocks to invest right now, best stocks to pick up, best way to invest in 2012, best-penny-stocks, Chinese stocks to invest in 2012
Invest 2012: Best Energy Companies to invest in
Best Energy El Paso Pipeline Partners, L.P. (EPB)
El Paso Pipeline Partners are a growth-oriented Delaware limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines, storage and other midstream assets. Their initial assets consist of Wyoming Interstate Company, Ltd., or WIC, a wholly-owned interstate pipelinetransportation business primarily located in Wyoming and Colorado and ten percent general partner interests in two interstate pipeline transportation businesses: Colorado Interstate Gas Company, or CIG, which is located in the U.S. Rocky Mountains, and Southern Natural Gas Company, or SNG, which is located in the southeastern United States.
Best Energy Companies to invest 2012: Dresser-Rand Group Inc. (DRC)
Dresser-Rand Group is among the largest global suppliers of rotating equipment solutions to the worldwide oil, gas, petrochemical and process industries. Their services and products are used for a wide range of applications, including oil and gas production, high-pressure field injection and enhanced oil recovery, pipelines, refinery processes, natural gas processing, and petrochemical production.
Best Energy Companies to invest 2012: Delta Natural Gas Co. Inc. (DGAS)
Delta Natural Gas Company, Inc. is a regulated public utility. As a result of acquisitions and expansions of its customer base within its existing service areas, Delta provides retail gas distribution service to customers in central and southeastern Kentucky and, additionally, provides transportation service to industrial customers and interconnected pipelines located in the area.
Best Energy Companies to invest 2012: Linn Energy, LLC (LINE)
Linn Energy, LLC is an independent oil and gas company focused on the development and acquisition of long-lived properties which complement its asset profile in producing basins within the United States. Its goal is to provide stability and growth in distributions to our unitholders through a combination of continued successful drilling and acquisitions.
Markets Need to Get Off the Juice
In recent weeks, I’ve been focusing all my efforts on large- and mid-cap stocks, especially those with strong balance sheets and consistent free cash flow. Many of these rock-solid companies offer a degree of stability in this choppy market and are currently trading at outstandingly cheap values. In effect, they allow you to play offense while being defensive.
On the flip side, small- and micro-cap stocks are far less resilient. As investors continue their “flight to quality,” these stocks are being deeply shunned. Until we have a clear sense of the potential duration and depth of a possible looming recession, investors will keep selling off smaller company stocks.
But there’s a curious twist to this oft-repeated cycle. When the recession finally arrives (which is still not a given), small stocks tend to actually outperform. We’re now cycling through the 20-year anniversary of just such a move, and you need to watch for signs of another breakout.
Back in 1990, the U.S. economy was quickly losing steam when gross domestic product (GDP) growth fell from a robust 4.2% in the first quarter to -3.5% in the fourth quarter. This should have spooked small-cap investors. Instead, they started to buying aggressively, anticipating the eventual economic rebound.
The Russell 2000 Index of small-cap stocks bottomed out at the end of the third quarter of 1990 at 119, but it would hit 144 by year-end (even though the economy slumped badly that quarter), and would hit 178 by the following May. That’s a 50% gain in just seven months, even though the economic data painted a bleak picture. (The index went up to about 200 by the end of 1991, even though GDP growth didn’t prove to be robust until the first quarter of 1992.)
The key takeaway: small caps represent great buying opportunities, even when the economy looks scary, so it pays to keep a watch list prepared. Here are three small-cap stocks that could double or even triple in value when the Russell 2000 finally rebounds. It may take a few years for this to fully play out, but the upward move may come sooner than you think.
1. Power One (Nasdaq: PWER)
This is a solid company stuck in a tough industry. Power One makes a range of power conversion and power-management components. The company has had notable recent success with inverters that help solar panels and wind turbines convert their variable power generation into energy flow that is suitable to feed into electricity grids. This has proved to be a choppy business, because the renewable fuels industry has seen major peaks and valleys. Still, Power One is taking market share from rivals, maintaining sales levels while rivals see sharp drops.
Power One is likely to post flat sales this year of $1 billion. Earnings per share (EPS) are expected to fall about 20% to around $0.90 this year. Growth is likely to resume in 2012 at a moderate double-digit pace as stalled power projects finally come to fruition. Meanwhile, shares trade for just five times trailing earnings. As business moves back up onto a growth trajectory, look for the multiple to move up into the low teens, implying at least a double for this beaten-down name.
2. Exide Technologies (Nasdaq: XIDE)
In keeping with the energy/power theme, this auto battery maker has been too sharply discounted. (I recently suggested Exide could be part of a paired trade strategy.) The company had seen profits slump as lead prices surged. Lead is Exide’s biggest raw material expense.
The company belatedly pushed through price increases for its batteries, which should help profits rebound. As a further tailwind, lead prices are finally in retreat. They peaked above $1.30 a pound in the spring, and are now $1.05. As those factors finally hit the income statement, look for much better quarterly results. In a stable pricing environment, Exide’s annual operating income could hit $200 million, which is more than half of the stock’s current market value. Simply applying a multiple of five on normalized operating income would make this stock triple.
3. KIT Digital (Nasdaq: KITD)
This is a very promising — and hugely frustrating — company. KIT has built an impressive suite of products to help companies develop sophisticated video services on a wide range of platforms. Thanks to an acquisition spree, the company now has a broad set of tools to offer, which is fueling 100% sales growth this year and projected 40% sales growth (to $300 million) in 2012. To pay for these deals, the company has raised fresh capital several times. The number of shares outstanding keeps rising — from 7 million in 2009 to a recent 33 million — and shares take a big hit every time another capital raise is announced.
Management is expected to finally stop issuing fresh equity, which should enable investors to focus on the attractive core business. Recent major contract wins with John Malone’s Liberty Global and Korea’s LG should help KIT to post very solid growth metrics in coming quarters. This sub-$10 stock could move north of $20 when quarterly results are more robust and investors finally can trust that no more capital raises will be needed. A $20 target price implies a target 2012 EBITDA (earnings before interest, debt, depreciation and amortization) multiple of just 10, which is quite reasonable for a high-growth stock like this.
On the flip side, small- and micro-cap stocks are far less resilient. As investors continue their “flight to quality,” these stocks are being deeply shunned. Until we have a clear sense of the potential duration and depth of a possible looming recession, investors will keep selling off smaller company stocks.
But there’s a curious twist to this oft-repeated cycle. When the recession finally arrives (which is still not a given), small stocks tend to actually outperform. We’re now cycling through the 20-year anniversary of just such a move, and you need to watch for signs of another breakout.
Back in 1990, the U.S. economy was quickly losing steam when gross domestic product (GDP) growth fell from a robust 4.2% in the first quarter to -3.5% in the fourth quarter. This should have spooked small-cap investors. Instead, they started to buying aggressively, anticipating the eventual economic rebound.
The Russell 2000 Index of small-cap stocks bottomed out at the end of the third quarter of 1990 at 119, but it would hit 144 by year-end (even though the economy slumped badly that quarter), and would hit 178 by the following May. That’s a 50% gain in just seven months, even though the economic data painted a bleak picture. (The index went up to about 200 by the end of 1991, even though GDP growth didn’t prove to be robust until the first quarter of 1992.)
The key takeaway: small caps represent great buying opportunities, even when the economy looks scary, so it pays to keep a watch list prepared. Here are three small-cap stocks that could double or even triple in value when the Russell 2000 finally rebounds. It may take a few years for this to fully play out, but the upward move may come sooner than you think.
1. Power One (Nasdaq: PWER)
This is a solid company stuck in a tough industry. Power One makes a range of power conversion and power-management components. The company has had notable recent success with inverters that help solar panels and wind turbines convert their variable power generation into energy flow that is suitable to feed into electricity grids. This has proved to be a choppy business, because the renewable fuels industry has seen major peaks and valleys. Still, Power One is taking market share from rivals, maintaining sales levels while rivals see sharp drops.
Power One is likely to post flat sales this year of $1 billion. Earnings per share (EPS) are expected to fall about 20% to around $0.90 this year. Growth is likely to resume in 2012 at a moderate double-digit pace as stalled power projects finally come to fruition. Meanwhile, shares trade for just five times trailing earnings. As business moves back up onto a growth trajectory, look for the multiple to move up into the low teens, implying at least a double for this beaten-down name.
2. Exide Technologies (Nasdaq: XIDE)
In keeping with the energy/power theme, this auto battery maker has been too sharply discounted. (I recently suggested Exide could be part of a paired trade strategy.) The company had seen profits slump as lead prices surged. Lead is Exide’s biggest raw material expense.
The company belatedly pushed through price increases for its batteries, which should help profits rebound. As a further tailwind, lead prices are finally in retreat. They peaked above $1.30 a pound in the spring, and are now $1.05. As those factors finally hit the income statement, look for much better quarterly results. In a stable pricing environment, Exide’s annual operating income could hit $200 million, which is more than half of the stock’s current market value. Simply applying a multiple of five on normalized operating income would make this stock triple.
3. KIT Digital (Nasdaq: KITD)
This is a very promising — and hugely frustrating — company. KIT has built an impressive suite of products to help companies develop sophisticated video services on a wide range of platforms. Thanks to an acquisition spree, the company now has a broad set of tools to offer, which is fueling 100% sales growth this year and projected 40% sales growth (to $300 million) in 2012. To pay for these deals, the company has raised fresh capital several times. The number of shares outstanding keeps rising — from 7 million in 2009 to a recent 33 million — and shares take a big hit every time another capital raise is announced.
Management is expected to finally stop issuing fresh equity, which should enable investors to focus on the attractive core business. Recent major contract wins with John Malone’s Liberty Global and Korea’s LG should help KIT to post very solid growth metrics in coming quarters. This sub-$10 stock could move north of $20 when quarterly results are more robust and investors finally can trust that no more capital raises will be needed. A $20 target price implies a target 2012 EBITDA (earnings before interest, debt, depreciation and amortization) multiple of just 10, which is quite reasonable for a high-growth stock like this.
Large Cap Stocks Hitting 52-Week Low Prices as Dow Jones Sets New Low
Wall St. Watchdog reveals information about 50 stocks that hit 52-week lows in today’s trading. Note that this list excludes all stocks with a market capitalization less than $10 billion:
1. Agilent Technologies Inc.(NYSE:A): Up 5.48% to $31.01. Agilent Technologies, Inc. provides core bio-analytical and electronic measurement solutions to the communications, electronics, life sciences and chemical analysis industries. The Company’s operations include electronic measurement, bio-analytical measurement, semiconductor and board testing.
2. ABB Ltd.(NYSE:ABB): Up 1.77% to $16.71. ABB Limited provides power and automation technologies. The Company operates under segments that include power products, power systems, automation products, process automation and robotics.
3. Archer Daniels Midland Company(NYSE:ADM): Up 1.86% to $24.61. Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities and products. The Company processes oilseeds, corn, milo, oats, barley, peanuts, and wheat. Archer-Daniels-Midland also processes produce products which have primarily two end uses including food or feed ingredients.
4. Agrium Inc.(NYSE:AGU): Up 1.37% to $64.97. Agrium Inc. supplies nitrogen, potash and phosphate for agricultural, industrial, and specialty use. The Company operates throughout the America’s while it markets its products globally.
5. American International Group, Inc.(NYSE:AIG): Up 0.44% to $20.55. American International Group, Inc. is a holding company which, through its subsidiaries provides a varied range of insurance and insurance-related activities in the United States and abroad. The Company’s main activities include both general insurance and life insurance & retirement services operations as well as financial services and asset management.
6. Applied Materials Inc.(NASDAQ:AMAT): Up 4.26% to $10.27. Applied Materials, Inc. develops, manufactures, markets, and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry. The Company’s customers include semiconductor wafer and integrated circuit manufacturers, flat panel liquid crystal displays, solar photovoltaic cells and modules and other electronic devices manufacturers.
7. America Movil S.A.B. de C.V.(NYSE:AMX): Up 1.53% to $21.83. America Movil SAB de C.V. provides wireless communications services in all regions of Mexico. The Company also participates in telecommunications joint ventures in several other South American countries as well as in the United States.
8. Apache Corp.(NYSE:APA): Up 3.03% to $78.82. Apache Corporation is an independent energy company. The Company explores for, develops, and produces natural gas, crude oil, and natural gas liquids. The Company has operations in North America, onshore Egypt, offshore Western Australia, offshore the United Kingdom in the North Sea (North Sea), and onshore Argentina, as well as on the Chilean side of the island of Tierra del Fuego.
9. Air Products & Chemicals Inc.(NYSE:APD): Up 3.57% to $76.51. Air Products and Chemicals, Inc. produces industrial gas and related industrial process equipment. The Company also produces and markets polymer chemicals, performance chemicals, and chemical intermediates. Air Products recovers and distributes oxygen, nitrogen, argon, hydrogen, carbon monoxide, carbon dioxide, synthesis gas, and helium, as well as medical and specialty gases.
10. AngloGold Ashanti Ltd.(NYSE:AU): Down 1.2% to $40.21. AngloGold Ashanti Limited is a holding company for a group of companies which explore for and mine gold internationally. The Group has operations in the Vaal River and West Witwatersrand areas of South Africa as well as Namibia, Mali, Brazil, Argentina, Australia, Tanzania and the United States.
11. Bank of America Corporation(NYSE:BAC): Up 4.16% to $5.76. Bank of America Corporation accepts deposits and offers banking, investing, asset management, and other financial and risk-management products and services. The Company has a mortgage lending subsidiary, and an investment banking and securities brokerage subsidiary.
12. Brookfield Asset Management Inc.(NYSE:BAM): Down 1.55% to $25.96. Brookfield Asset Management Inc is a global asset management company focused on property, infrastructure and renewable power. The Company owns office buildings in major business centers. Brookfield also owns and operates power generating plants, ports, railways, utilities and timberlands, and invests on behalf of third parties.
13. Banco Bradesco S.A.(NYSE:BBD): Up 2.36% to $14.75. Banco Bradesco S.A. attracts deposits and offers commercial banking services. The Bank offers business loans, personal credit, mortgages, lease financing, mutual funds, securities brokerage, and Internet banking services. Bradesco operates in Brazil and Argentina, the United States, the Cayman Islands, and the United Kingdom. Bradesco offers credit cards, insurance, and pension funds.
14. BHP Billiton plc(NYSE:BBL): Up 4.8% to $53.76. BHP Billiton Plc is an international resources company. The Company’s principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.
15. Becton, Dickinson and Company(NYSE:BDX): Up 2.12% to $72.34. Becton, Dickinson and Company manufactures and sells a variety of medical supplies and devices and diagnostic systems. The Company’s products are used by health care professionals, medical research institutions, and the general public. Becton’s products are marketed worldwide.
16. Franklin Resources Inc.(NYSE:BEN): Up 5.79% to $95.61. Franklin Resources, Inc. provides investment advisory services to mutual fund, retirement, institutional/separate accounts and high net worth investors. The Company manages various asset classes including domestic, international/global and emerging markets equity, domestic, international and municipal fixed income, money funds, alternative investments, and hedge funds.
17. BHP Billiton Ltd.(NYSE:BHP): Up 4.02% to $67.01. BHP Billiton Limited is an international resources company. The Company’s principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.
18. The Bank of New York Mellon Corporation(NYSE:BK): Up 6.21% to $18.82. Bank of New York Mellon Corporation (BNY Mellon) is a global financial services company. The Company provides financial services for institutions, corporations and high-net-worth individuals, providing asset management and wealth management, asset servicing, issuer services, clearing services and treasury services.
19. BlackRock, Inc.(NYSE:BLK): Up 3.83% to $147.20. BlackRock, Inc. provides diversified investment management services to institutional clients and to retail investors through various investment vehicles. The Company offers the BlackRock Funds and Blackrock Liquidity Funds, and also provides risk management services to fixed income institutional investors.
20. Bank of Montreal(NYSE:BMO): Down 0.43% to $53.85. Bank of Montreal, doing business as BMO Financial Group, is a Canadian chartered bank which operates throughout the world. The Bank offers commercial, corporate, governmental, international, personal banking, and trust services. Bank of Montreal also offers full brokerage, underwriting, investment, and advisory services.
21. The Bank Of Nova Scotia(NYSE:BNS): Down 2% to $47.48. Bank of Nova Scotia provides retail, commercial, international, corporate, investment and private banking services and products.
22. BP plc(NYSE:BP): Up 0.57% to $35.42. BP plc is an oil and petrochemicals company. The Company explores for and produces oil and natural gas, refines, markets, and supplies petroleum products, generates solar energy, and manufactures and markets chemicals. BP’s chemicals include terephthalic acid, acetic acid, acrylonitrile, ethylene and polyethylene.
23. The Blackstone Group(NYSE:BX): Up 5.31% to $11.91. The Blackstone Group LP is a global alternative asset manager and provider of financial advisory services. The firm’s asset management businesses include the management of corporate private equity funds, real estate funds, mezzanine funds, proprietary hedge funds and closed-end mutual funds. Blackstone also provides M&A and reorganization advisory, as well as private placement services.
24. Citigroup, Inc.(NYSE:C): Up 5.54% to $24.39. Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers around the world. The Company’s services include investment banking, retail brokerage, corporate banking, and cash management products and services.
25. Caterpillar Inc. (NYSE:CAT): Up 2.82% to $72.54. Caterpillar Inc. designs, manufactures, and markets construction, mining, agricultural, and forestry machinery. The Company also manufactures engines and other related parts for its equipment, and offers financing and insurance. Caterpillar distributes its products through a worldwide organization of dealers.
1. Agilent Technologies Inc.(NYSE:A): Up 5.48% to $31.01. Agilent Technologies, Inc. provides core bio-analytical and electronic measurement solutions to the communications, electronics, life sciences and chemical analysis industries. The Company’s operations include electronic measurement, bio-analytical measurement, semiconductor and board testing.
2. ABB Ltd.(NYSE:ABB): Up 1.77% to $16.71. ABB Limited provides power and automation technologies. The Company operates under segments that include power products, power systems, automation products, process automation and robotics.
3. Archer Daniels Midland Company(NYSE:ADM): Up 1.86% to $24.61. Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities and products. The Company processes oilseeds, corn, milo, oats, barley, peanuts, and wheat. Archer-Daniels-Midland also processes produce products which have primarily two end uses including food or feed ingredients.
4. Agrium Inc.(NYSE:AGU): Up 1.37% to $64.97. Agrium Inc. supplies nitrogen, potash and phosphate for agricultural, industrial, and specialty use. The Company operates throughout the America’s while it markets its products globally.
5. American International Group, Inc.(NYSE:AIG): Up 0.44% to $20.55. American International Group, Inc. is a holding company which, through its subsidiaries provides a varied range of insurance and insurance-related activities in the United States and abroad. The Company’s main activities include both general insurance and life insurance & retirement services operations as well as financial services and asset management.
6. Applied Materials Inc.(NASDAQ:AMAT): Up 4.26% to $10.27. Applied Materials, Inc. develops, manufactures, markets, and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry. The Company’s customers include semiconductor wafer and integrated circuit manufacturers, flat panel liquid crystal displays, solar photovoltaic cells and modules and other electronic devices manufacturers.
7. America Movil S.A.B. de C.V.(NYSE:AMX): Up 1.53% to $21.83. America Movil SAB de C.V. provides wireless communications services in all regions of Mexico. The Company also participates in telecommunications joint ventures in several other South American countries as well as in the United States.
8. Apache Corp.(NYSE:APA): Up 3.03% to $78.82. Apache Corporation is an independent energy company. The Company explores for, develops, and produces natural gas, crude oil, and natural gas liquids. The Company has operations in North America, onshore Egypt, offshore Western Australia, offshore the United Kingdom in the North Sea (North Sea), and onshore Argentina, as well as on the Chilean side of the island of Tierra del Fuego.
9. Air Products & Chemicals Inc.(NYSE:APD): Up 3.57% to $76.51. Air Products and Chemicals, Inc. produces industrial gas and related industrial process equipment. The Company also produces and markets polymer chemicals, performance chemicals, and chemical intermediates. Air Products recovers and distributes oxygen, nitrogen, argon, hydrogen, carbon monoxide, carbon dioxide, synthesis gas, and helium, as well as medical and specialty gases.
10. AngloGold Ashanti Ltd.(NYSE:AU): Down 1.2% to $40.21. AngloGold Ashanti Limited is a holding company for a group of companies which explore for and mine gold internationally. The Group has operations in the Vaal River and West Witwatersrand areas of South Africa as well as Namibia, Mali, Brazil, Argentina, Australia, Tanzania and the United States.
11. Bank of America Corporation(NYSE:BAC): Up 4.16% to $5.76. Bank of America Corporation accepts deposits and offers banking, investing, asset management, and other financial and risk-management products and services. The Company has a mortgage lending subsidiary, and an investment banking and securities brokerage subsidiary.
12. Brookfield Asset Management Inc.(NYSE:BAM): Down 1.55% to $25.96. Brookfield Asset Management Inc is a global asset management company focused on property, infrastructure and renewable power. The Company owns office buildings in major business centers. Brookfield also owns and operates power generating plants, ports, railways, utilities and timberlands, and invests on behalf of third parties.
13. Banco Bradesco S.A.(NYSE:BBD): Up 2.36% to $14.75. Banco Bradesco S.A. attracts deposits and offers commercial banking services. The Bank offers business loans, personal credit, mortgages, lease financing, mutual funds, securities brokerage, and Internet banking services. Bradesco operates in Brazil and Argentina, the United States, the Cayman Islands, and the United Kingdom. Bradesco offers credit cards, insurance, and pension funds.
14. BHP Billiton plc(NYSE:BBL): Up 4.8% to $53.76. BHP Billiton Plc is an international resources company. The Company’s principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.
15. Becton, Dickinson and Company(NYSE:BDX): Up 2.12% to $72.34. Becton, Dickinson and Company manufactures and sells a variety of medical supplies and devices and diagnostic systems. The Company’s products are used by health care professionals, medical research institutions, and the general public. Becton’s products are marketed worldwide.
16. Franklin Resources Inc.(NYSE:BEN): Up 5.79% to $95.61. Franklin Resources, Inc. provides investment advisory services to mutual fund, retirement, institutional/separate accounts and high net worth investors. The Company manages various asset classes including domestic, international/global and emerging markets equity, domestic, international and municipal fixed income, money funds, alternative investments, and hedge funds.
17. BHP Billiton Ltd.(NYSE:BHP): Up 4.02% to $67.01. BHP Billiton Limited is an international resources company. The Company’s principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.
18. The Bank of New York Mellon Corporation(NYSE:BK): Up 6.21% to $18.82. Bank of New York Mellon Corporation (BNY Mellon) is a global financial services company. The Company provides financial services for institutions, corporations and high-net-worth individuals, providing asset management and wealth management, asset servicing, issuer services, clearing services and treasury services.
19. BlackRock, Inc.(NYSE:BLK): Up 3.83% to $147.20. BlackRock, Inc. provides diversified investment management services to institutional clients and to retail investors through various investment vehicles. The Company offers the BlackRock Funds and Blackrock Liquidity Funds, and also provides risk management services to fixed income institutional investors.
20. Bank of Montreal(NYSE:BMO): Down 0.43% to $53.85. Bank of Montreal, doing business as BMO Financial Group, is a Canadian chartered bank which operates throughout the world. The Bank offers commercial, corporate, governmental, international, personal banking, and trust services. Bank of Montreal also offers full brokerage, underwriting, investment, and advisory services.
21. The Bank Of Nova Scotia(NYSE:BNS): Down 2% to $47.48. Bank of Nova Scotia provides retail, commercial, international, corporate, investment and private banking services and products.
22. BP plc(NYSE:BP): Up 0.57% to $35.42. BP plc is an oil and petrochemicals company. The Company explores for and produces oil and natural gas, refines, markets, and supplies petroleum products, generates solar energy, and manufactures and markets chemicals. BP’s chemicals include terephthalic acid, acetic acid, acrylonitrile, ethylene and polyethylene.
23. The Blackstone Group(NYSE:BX): Up 5.31% to $11.91. The Blackstone Group LP is a global alternative asset manager and provider of financial advisory services. The firm’s asset management businesses include the management of corporate private equity funds, real estate funds, mezzanine funds, proprietary hedge funds and closed-end mutual funds. Blackstone also provides M&A and reorganization advisory, as well as private placement services.
24. Citigroup, Inc.(NYSE:C): Up 5.54% to $24.39. Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers around the world. The Company’s services include investment banking, retail brokerage, corporate banking, and cash management products and services.
25. Caterpillar Inc. (NYSE:CAT): Up 2.82% to $72.54. Caterpillar Inc. designs, manufactures, and markets construction, mining, agricultural, and forestry machinery. The Company also manufactures engines and other related parts for its equipment, and offers financing and insurance. Caterpillar distributes its products through a worldwide organization of dealers.
Top Stock Picks For 2012
Top Stock Picks For 2012: Yongye International
by Jim Trippon, editor Global Profits Alert
Yongye International (YONG) is a leading developer, manufacturer, and distributor of plant and animal nutrient products in the People's Republic of China.
Its plant nutrient product can significantly increase the plant's output and nutritional value and improve its taste.
As a result of receiving greater value in the marketplace, Yongye says its product helps increase farmers' incomes and improves their living standards. Directly addressing the need for greater e#ciency and more environmentally friendly require?
ments in the agricultural sector, Yongye's products dramatically increase the quality of crops and yields, and improve the health of livestock, according to the firm. The company is striking for its valuation with a bargain basement PEG ratio of only 0.15 Yongye has impressive financials with gross margins above 57 percent and a profit margin of 24.86 percent. Earnings per share are expected to climb 43 percent next year.
While the company has only been in operation a short amount of time, its predecessor, Inner Mongolia Yongye Company, had over 15 years' operational history which it has passed on to Yongye.
From this experience, Yongye International says it aims to inherit its predecessor com?pany's managerial experience and corporate culture to continue emulating its long-term success.
Learn more about this financial newsletter at Jim Trippon's Global Profits Alert.
Top Stock Picks For 2012: Uranium Resources
by Brendan Coffey, editor of Cabot Green Investor
Zero emissions is the holy grail of green technology as the world looks to grapple with the converging pressures of tight fossil fuel supplies, air quality issues and global warming.
I see the push for zero emissions reviving a technology once largely written o": nuclear power. In light of this, my top pick for 2011 is Uranium Resources (URRE). At this moment, some 60 nuclear plants are under construction worldwide. In the U.S., where nuclear plant construction has been dormant for decades, as many as eight new plants are scheduled to be built by 2020.
China, the fastest growing energy user in the world, should be a major driver in the market: It's building 30 nuclear reactors right now to add to its existing 12 and has an additional 157 planned.
In the next 20 years, global annual uranium demand is projected to double and the supply pressure is already starting to be seen.
From May to December 2010, uranium prices rocketed up 50% and appear set for a stronger 2011 as the market prepares for the end of the Megatons to Megawatts program in 2012.
Uranium Resources is a small uranium miner in Texas, which has produced 8 million pounds of the commodity in its 33 years of operation.
The real value in URRE isn't in its mining abilities however—it's a relatively high-cost producer, and it stopped mining for the first part of 2010 due to soft prices. Rather, over the years it has amassed parcels in New Mexico that hold over 101 million pounds of uranium, giving URRE the eighth-largest uranium reserves in the world.
By comparison, industry leader Cameco has just nine times the reserves of Uranium Resources but 50 times the market value.
That makes URRE ripe for a takeover. Until then, its share price tends to trade in tandem with uranium's price, meaning the coming year should benefit shareholders regardless of whether a takeover bid materializes.
Learn more about this financial newsletter at Brendan Coffey's Cabot Green Investor.
Top Stock Picks For 2012: Scientific Games
by Jason Shade, editor Texting Trader
As is the case with most of my trades and recommendations, my stock prediction for 2011 is a company that many of my peers are not giving much attention.
Scientific Games (SGMS) is a turnaround story that intrigues me and I select owning it as my top stock idea of 2011.
SGMS is an $882 million global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations worldwide.
Scientific Games' integrated array of products and services include instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming machines. Scientific Games serves customers in approximately 50 countries.
After peaking at a high of $40 in 2007, this legalized gaming services provider has seen its shares collapse during the recent economic crisis.
The stock bottomed out earlier this year at $6.58 following a weak quarterly earnings report in which the company reported a .04 a share miss with revenues that also were on the light side.
Whether it was this earnings report or the prior three years of underperformance, the board and investors decided to reinstate SGMS's Chairman and former CEO Lorne Weil as CEO of the company.
Weil was at the helm during the stock's last major run from 2000 to 2005 and his returning to lead the firm is a positive catalyst for the success of SGMS and its potential return to prosperity.
Investors also can take heart in the recent binge of insider buying that accompanied Weil's return to the C-suite.
In December, management and insiders accumulated more than 4 million shares of company stock between the prices of $7.89 and $9.75 a share. One buyer of particular interest is long-time Wall Street investor Ron Perelman. Perelman now owns more than 30 million shares of the company stock. Most of his ownership is at much higher prices, including a large purchase of 400,000 shares at $14.26 a share last March.
Finally, you can't have a good corporate turnaround story without improving business fundamentals. Herein lies the challenge to management, the company and its stock. The last earnings report was anemic, but there are encouraging signs demonstrating that SGMS is committed into cleaning up its balance sheet and positioning the firm for sustainable growth in the coming years.
At the end of November, the company retired nearly $80 million in short term debt by issuing Senior Subordinated Notes due in 2018.
SGMS already boasts an 80% market share in the U.S. lottery market. Thus, the real growth engine for the firm will come from emerging markets.
SGMS is already focusing on growing these markets by working on gaining a larger footprint in the China market where its instant ticket retail sales have posted an impressive 28% gain in the latest quarter.
Following this success is a recent agreement signed between SGMS and China Sports Lottery Printing which o"ers great growth opportunities for this fast-expanding market. I find this even more intriguing as we have seen gaming stocks such as Wynn Resorts and Las Vegas Sands provide investors with huge gains based on their sales growth in Macau.
At some point, I expect analysts and investors alike to begin waking up to the Asian growth story happening at SGMS.
Like all companies, SGMS does face competitive pressures in all markets. In fact, last year the firm reported operating margins of 23%, a 5 year low for the company. This will need to be monitored over the next couple of quarters along with EPS and revenue growth.
Nevertheless, I see the recent management shakeup, swell of insider buying and market expansion in Asia to o"er investors a compelling turnaround story worth gambling on. I have a 12-month price target of $17 on SGMS.
Top Stock Picks For 2012: Seadrill
by Elliott Gue, editor The Energy Strategist
Seadrill (SDRL) is the best-placed contract driller in my coverage universe. The company doesn't produce or explore for oil and natural gas; rather, it is in the business of owning drilling rigs that are leased out to major producers for a daily fee known as a day rate.
There are three major reasons to buy Seadrill. First, the company has the youngest and most advanced ?eet of drilling rigs of any of the major contractors.
Second, Seadrill's rigs are primarily booked under long-term contracts at attractive rates for several years into the future, providing a guaranteed backlog of cash how regardless of the path of commodity prices.
And finally, Seadrill has a policy of paying out sizeable quarterly dividends supported by its backlog of rig contracts.
In the most recent quarter, Seadrill paid $0.65 per share, equivalent to an annualized yield of approximately 8 percent at the current price.
I see the company boosting its payout to around $0.75 per quarter by the fourth quarter of 2011; given strong investor preference for income-paying stocks, a growing dividend will continue to drive further upside in the stock.
Seadrill owns a feet of sixteen deepwater drilling rigs including ten semi-submersibles and six drillships.
The average operating Seadrill rig is less than five years old and that only includes the 13 rigs currently working on contracts.
The remaining 10 rigs in the feet were all built between 2008 and 2010 and are of the most modern and capable design.
All are ultra-deepwater rigs able to drill in waters more than 10,000 feet deep and are powerful enough to complete wells more than 6 miles in length.
Deepwater operations are only going to get more complex in coming years; as a result, producers need the most advanced, state-of-the-art rigs In addition to its deepwater feet, Seadrill also owns around 20 shallow-water jackup rigs and 17 tender rigs that are used to ferry people and equipment and to support o "shore drilling operations.
Seadrill has a backlog of over $8.5 billion in contracts covering its deepwater rigs, $2 billion covering its jack-ups and $1.5 billion for tender rigs.
Since these revenues are essentially guaranteed under long-term deals signed with major oil and gas producers, this represents a highly visible stream of cash?ow over the next few years.
With a ?eet that's ideal for the current market, a growing 8 percent yield and opportunities to grow via new rig construction, the stock rates a buy under $38.
Top Stock Picks For 2012: Siga Technologies
by Dennis Slothower, editor Stealth Stocks
Last year for my favorite stock pick, I recommended IMAX which more than doubled. This year I would like to recommend Siga Technologies Inc. (SIGA), a bio-defense company that o"ers the same kind of upside potential for 2011.
In 2004, the US started an initiative called Project BioShield, which gave the government the right to purchase and stockpile vaccines and drugs to fight anthrax, smallpox and other potential agents of bio-terror.
SIGA is a leader in the development of pharmaceutical agents to fight potential bio-warfare pathogens and their ST-246 drug is considered to be the only known cure for smallpox, which the government is keenly interested in.
Recently, BARDA has stated their intent to award SIGA a $500 million contract, with options that potentially could be as high as $2.8 billion in orders. However, SIGA is being challenged in court by a competitor as being too big as a company to qualify for the government contract.
In fairness, BARDA has announced plans for a market survey to determine, whether there are any qualified small businesses with the capacity to produce an adequate supply of smallpox antiviral medication for the National Strategic Stockpile. It is unlikely that a small company will be able to meet the government's needs as the drugs expire and need to be constantly replaced.
It is expected that SIGA will win this contract and if so investors could be rewarded with a double or triple in appreciation.
Top Stock Picks For 2012: PMC Sierra
by Paul McWilliams, editor Next Inning
PMC Sierra (PMCS) is a top speculative investment for the coming year. The company is a leader in the field of integration. By integrating more functions into a single chip, the company has doubled its market share in the SAS storage market as the industry moved from 3Gbs to 6Gbs."
The company is also building significant traction with its single-chip "RAID on a Chip" solution and has leveraged its integration talent to become one of the dominant suppliers in the FTTx space serving both GPON and EPON requirements.
Most recently, PMCS announced its acquisition of Israeli based Wintegra -- a private company and the world leader in network processors for access networks. "
The market for network processors in access applications, which includes broadband wireless backhaul, is just now building traction, and Wintegra will likely dominate the market for at least the next few years."" As I see it, the acquisition makes a ton of sense from many perspectives." First, as I noted, Wintegra is the leader in a market that is set to expand rapidly during the next few years. "
Second, once we factor in the Wintegra balance sheet and PMCS minority ownership (yes, PMCS was a venture" investor in Wintegra), PMCS paid only about $205M net for the company. "
Third, PMCS and Wintegra" have worked together for years and in many of the design wins you'll find a PMCS and a Wintegra chip sitting side-by-side. "
This means there is a very good integration opportunity for PMCS to put the functions of both chips into a single chip, and by doing so extend competitive advantages and lower costs.
The short story is that in spite of the fact that the company has topped the earnings consensus for six out of the last seven quarters, and equaled it for the" seventh, Wall Street still insists on slapping the stock with a huge risk discount. "
I believe as PMCS maintains this practice of topping Wall Street projections the risk discount will be removed, and with that, the forward price to earnings (valuation multiple) will rise considerably.
Top Stock Picks For 2012: PowerShares DB Agriculture ETF
by Gene Inger, editor The Inger Letter
One of the easiest ways to participate in the long-term demand for corn, wheat, cotton etc. is with a soft commodity-based exchange traded fund.
We recommend the PowerShares DB Agriculture ETF (DBA), our top pick for 2011. We believe the economy is entering a period of 'hyper-stag?ation', where prices for life's necessities -- such as gasoline, food and utility rates -- will rise persistently over time.
The owerShares DB Agriculture ETF -- soft commodity-oriented exchange traded fund -- is one of the easiest ways to participate in the long-term demand for corn, wheat, cotton etc. is
This ETF has shown fairly steady progression over time. Given steady in?ation in food costs, soft commodities are likely to rise, with periodic bouts of selling and volatility. We think an investment retained over time in 'soft commodities', is relatively low risk contrasted to volatility in markets such as Oil, or the extended Gold market for now. Why? With Asian demand bound to increase over time, soft-commodity demand will too.
Nevertheless we caution investors against chasing strength; rather, one strategy to avoid timing is to scale into one's position over time. If you scale-in, you get benefits of ensuing pullbacks while holding an initial stake.
Top Stock Picks For 2012: Canadian Oil Sands Trust
by David Dittman, contributing editor Canadian Edge
Canadian Oil Sands Trust (COSWF) has clearly lagged broad-based and energy-sector benchmarks alike over the trailing 12 months. A series of unplanned turnarounds at the Syncrude operation, of which Canadian Oil Sands owns 36.7 percent, have analysts questioning whether rising costs will ever allow Canadian Oil Sands to really benefit from elevated oil prices.
And the very skeptical wonder if actual output will ever match Syncrude's capacity potential. All in all, after years of hype and outperformance the bar is now set rather low for Canadian Oil Sands. The stock is likely to revert back to its usual pattern of trading in sympathy with crude oil prices, a relationship that did break down in 2010.
New demand from Asia, old demand in the developed world and a desire from investor for hard assets will keep the per barrel price of oil elevated over the next 12 months.
Canadian Oil Sands will restrain the excruciating growth of unplanned turnaround costs, and Syncrude will get on the path to realizing its potential.
At the new rate of CAD0.20 per share per quarter, the stock will yield about 3 percent. The stock has taken a hit in the second half of 2010, and management has shown it will boost the payout to re?ect upside oil-price surprises. Soon-to-convert Canadian Oil Sands Trust is a solid total return play on one of the world's most intriguing resource stories, set up for capital appreciation as well as dividend growth. Buy it up to $28.
Top Stock Picks For 2012: Catlin Group
by Vivian Lewis, editor Global Investing
Insurers benefit when things go wrong. That explains our latest pick, Catlin Group (CNGRY). Incorporated and regulated in Bermuda, listed primarily in London as CGL, the stock's ADR is equal to two British shares.
It is the largest syndicator at Lloyd's of London, the reinsurance business. It's also a favorite holding of institutional investors.
It very conservatively invests its premiums, in cash and fixed income with only 2.5% in hedge funds, yet it managed to produce a return on equity of 1.8% in H1 and of 2.9% in 2009 and Q3.
It keeps raising its dividend, more steadily if you buy in sterling than the ADR. Given its current yield of 6% I'm satisfied with the payout but Citigroup analysts say it will go to 7.7%..
It's a family businees, under CEO Steve Catlin, established as a Lloyd's underwriter in 1984.
It's green, funding the Catlin Arctic Survey to measures the thickness and density of ice foes in the Arctic Sea and carbon dioxide absorption (ocean acidification). Nice but not why to buy.
Rather, you should buy because Catlin is a globally diversified insurance business operating 88-89% in US dollars. It is quick to develop new businesses to benefit from macro-economic trends.
It shifted its casualty lines from insuring British solicitors and surveyors, to hot button more profitable US insurance lines: medical malpractice; directors and o#cers (D&O) insurance; cover for architects, engineers, and construction and design professions; and environment risk.
Catlin justifies these new lines (priced by its experienced actuaries) as "short tail" controlled latent risk cover for underserved niches.
Longer-tail risk is very selectively underwritten by Catlin based on claims made. (Tails refer to the extremes of a normal curve, the unexpected events. Longer-tails mean unexpected payouts.)
"Crysalis" is innovative oil production insurance, launched in Feb for oil and gas drillers. New business is booming post-Gulf of Mexico, and not just from US drillers.
BP's disaster explains the rush for Crysalis cover. BP had a Bermuda "captive" (self-financed) insurance firm.
What it will be able to collect for its captive, say industry sources, is $1.5-3.5 bn. Against this, the economic loss from the Gulf disaster is $40 bn. And since the Macondo sank, BP shareholders losses from the stock's drop topped $73 bn, a compelling argument for buying insurance. Crysalis standard contracts cap the amount of cover per event at $200 mn, and per company at $100 mn, shortening the tail.
Not everything went Catlin's way. Its first half earnings were nipped 8% from prior year by Chilean earthquake claims and the Gulf of Mexico. However, we had a benign hurricane season.
And for all the dollar's appeal, getting a decent investment return is not easy in the present QE2 environment.
If in?ation takes o", claims will be higher and coverage from investment income lower. But then Catlin can raise its premiums. And it may have shifted the policies it o"ers into another currency.
Citi expects the total payout next year for this "undervalued" (rated low risk, high return) share to come to 23.4% in sterling, and 16.6% in dollars at its target price of $12.80. Citi's 2010 profit forecast is $369 million, vs $243.8 million in 2009 and $384.9 million in 2008. (Per share, the hit was even greater in 2009 because Catlin did a rights o "ering to invest more during the crisis.).
Its Sept. quarter saw Catlin premium income up 9% and earned income up 13%. Market cap is $1.982 billion, with the ADR stock at $11.50. It has an A.M. Best A rating from the insurance watchdog.
Its combined ratio, a key metric, is 97% -- meaning expenses are 97% of premium income so underwriting was 3% to the good before any investment income. Buy CNGRY.
Top Stock Picks For 2012: Aflac
by Richard Moroney, editor Dow Theory Forecasts
Aflac (AFL) represents a top year-ahead pick based on its solid operating momentum and modest valuation. In our proprietary ranking system (known as Quadrix), the stock earns an Overall score of 99. At 10 times trailing earnings, the shares trade 33% below the five-year average P/E ratio of 15.
The insurer's sales rose 13% in the first nine months of this year, while free cash how rose 12%. At 10 times trailing earnings, shares trade 32% below the three-year average P/E ratio. Arac continues to grow in Japan (about 75% of sales), but growth in the U.S. (roughly 25%) has been tougher to find.
Management remains cautious about its U.S. outlook, but it should benefit as small companies, which make up a large portion of the domestic business, begin to hire again. A?ac -- yielding 2.2% -- is a Focus List Buy and a holding on our Long-Term Buy list.
Top Stock Picks For 2012: Allot Communications
by Ian Wyatt, editor Small Cap Investor PRO
The smartphone revolution -- with web-browsing, video-watching, music-streaming mobile devices -- has made bandwidth a scarce resource.
That's where Allot Communications (ALLT) comes in. Allot is an Israeli company that develops deep packet inspection (DPI) technology specifically designed to manage bandwidth use Consumers want phones that let them listen to music, surf the web, watch video, and access a wide array of applications. Maybe even occasionally make a call or two. Allot's solutions are critical for Internet Service Providers (ISP), cable companies, landline operators, mobile phone companies, businesses and governments.
The company has consistently grown overseas in Europe, Asia, and South America. The U.S. still represents a huge growth market, if and when regulations permit carriers to implement Allot's technology. Allot's third quarter was a good one. The company increased revenue by 36 percent to $14.7 million year-over-year.
Quarter-over-quarter revenue also increased, by 8 percent, marking the sixth consecutive quarter of sequential revenue growth. On a GAAP basis, Allot earned $0.03 per share, a nice improvement over a $0.10 loss in the third quarter of 2009.
But what I really like here is that the company ended the quarter with $56.2 million in cash and essentially zero debt. Allot is a play on the future growth of smartphones, and the near certainty that service providers will segment bandwidth in order to design service plans tailored to customer behavior.
What's more, this tiny company is a potential takeout candidate and management has shown an ability to orchestrate acquisitions in the past.
Top Stock Picks For 2012: Cisco Systems
by Lou Basenese, editor White Cap Research
One a theme that hasn't worked in, well, forever - large cap technology stocks; many large cap tech are trading at historically low valuations.
As a contrarian, I'm picking the most contrarian large cap technology stock out there: Cisco Systems (CSCO), which could be a top-performer in 2011. Cisco also happens to be one of the cheapest of the large cap tech stocks.
I'm well aware the network equipment maker isn't exactly enjoying halcyon days. After all, when the company reported third quarter results, it lowered guidance. And investors dumped the stock en masse. Shares fell 16% in a single day. Mind you, that's a colossal move for a $100 billion market cap company.
Here's the thing - the shares are dirt cheap, trading at almost a 40% discount to their historical price-to-earnings ratio. In fact, at 14 times earnings, Cisco's the cheapest it's been in over a decade.
Not only that, it remains the dominant player in the space. Its Ethernet switches, which move data along local networks, control 70% of the market.
Meanwhile, its closest competitor only boasts a 10% market share. Cisco's routers, which move data across long distances, also enjoy similar market share advantages. I'm sorry, folks. Internet tra#c is only headed in one direction. Straight up By as much as 50% per year, according to some estimates.
And such a steady increase all but guarantees steady demand for Cisco's products. Especially since switching costs in the industry are high. In short, this dominant market leader, which expects to grow earnings up to 15% per year, is just too darn cheap.
While most investors fear buying stocks bouncing around their 52-week lows, don't fear this one. A historically low valuation, $39 billion cash pile and a newly announced $10 billion worth of stock repurchases provide ample downside protection.
by Jim Trippon, editor Global Profits Alert
Yongye International (YONG) is a leading developer, manufacturer, and distributor of plant and animal nutrient products in the People's Republic of China.
Its plant nutrient product can significantly increase the plant's output and nutritional value and improve its taste.
As a result of receiving greater value in the marketplace, Yongye says its product helps increase farmers' incomes and improves their living standards. Directly addressing the need for greater e#ciency and more environmentally friendly require?
ments in the agricultural sector, Yongye's products dramatically increase the quality of crops and yields, and improve the health of livestock, according to the firm. The company is striking for its valuation with a bargain basement PEG ratio of only 0.15 Yongye has impressive financials with gross margins above 57 percent and a profit margin of 24.86 percent. Earnings per share are expected to climb 43 percent next year.
While the company has only been in operation a short amount of time, its predecessor, Inner Mongolia Yongye Company, had over 15 years' operational history which it has passed on to Yongye.
From this experience, Yongye International says it aims to inherit its predecessor com?pany's managerial experience and corporate culture to continue emulating its long-term success.
Learn more about this financial newsletter at Jim Trippon's Global Profits Alert.
Top Stock Picks For 2012: Uranium Resources
by Brendan Coffey, editor of Cabot Green Investor
Zero emissions is the holy grail of green technology as the world looks to grapple with the converging pressures of tight fossil fuel supplies, air quality issues and global warming.
I see the push for zero emissions reviving a technology once largely written o": nuclear power. In light of this, my top pick for 2011 is Uranium Resources (URRE). At this moment, some 60 nuclear plants are under construction worldwide. In the U.S., where nuclear plant construction has been dormant for decades, as many as eight new plants are scheduled to be built by 2020.
China, the fastest growing energy user in the world, should be a major driver in the market: It's building 30 nuclear reactors right now to add to its existing 12 and has an additional 157 planned.
In the next 20 years, global annual uranium demand is projected to double and the supply pressure is already starting to be seen.
From May to December 2010, uranium prices rocketed up 50% and appear set for a stronger 2011 as the market prepares for the end of the Megatons to Megawatts program in 2012.
Uranium Resources is a small uranium miner in Texas, which has produced 8 million pounds of the commodity in its 33 years of operation.
The real value in URRE isn't in its mining abilities however—it's a relatively high-cost producer, and it stopped mining for the first part of 2010 due to soft prices. Rather, over the years it has amassed parcels in New Mexico that hold over 101 million pounds of uranium, giving URRE the eighth-largest uranium reserves in the world.
By comparison, industry leader Cameco has just nine times the reserves of Uranium Resources but 50 times the market value.
That makes URRE ripe for a takeover. Until then, its share price tends to trade in tandem with uranium's price, meaning the coming year should benefit shareholders regardless of whether a takeover bid materializes.
Learn more about this financial newsletter at Brendan Coffey's Cabot Green Investor.
Top Stock Picks For 2012: Scientific Games
by Jason Shade, editor Texting Trader
As is the case with most of my trades and recommendations, my stock prediction for 2011 is a company that many of my peers are not giving much attention.
Scientific Games (SGMS) is a turnaround story that intrigues me and I select owning it as my top stock idea of 2011.
SGMS is an $882 million global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations worldwide.
Scientific Games' integrated array of products and services include instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming machines. Scientific Games serves customers in approximately 50 countries.
After peaking at a high of $40 in 2007, this legalized gaming services provider has seen its shares collapse during the recent economic crisis.
The stock bottomed out earlier this year at $6.58 following a weak quarterly earnings report in which the company reported a .04 a share miss with revenues that also were on the light side.
Whether it was this earnings report or the prior three years of underperformance, the board and investors decided to reinstate SGMS's Chairman and former CEO Lorne Weil as CEO of the company.
Weil was at the helm during the stock's last major run from 2000 to 2005 and his returning to lead the firm is a positive catalyst for the success of SGMS and its potential return to prosperity.
Investors also can take heart in the recent binge of insider buying that accompanied Weil's return to the C-suite.
In December, management and insiders accumulated more than 4 million shares of company stock between the prices of $7.89 and $9.75 a share. One buyer of particular interest is long-time Wall Street investor Ron Perelman. Perelman now owns more than 30 million shares of the company stock. Most of his ownership is at much higher prices, including a large purchase of 400,000 shares at $14.26 a share last March.
Finally, you can't have a good corporate turnaround story without improving business fundamentals. Herein lies the challenge to management, the company and its stock. The last earnings report was anemic, but there are encouraging signs demonstrating that SGMS is committed into cleaning up its balance sheet and positioning the firm for sustainable growth in the coming years.
At the end of November, the company retired nearly $80 million in short term debt by issuing Senior Subordinated Notes due in 2018.
SGMS already boasts an 80% market share in the U.S. lottery market. Thus, the real growth engine for the firm will come from emerging markets.
SGMS is already focusing on growing these markets by working on gaining a larger footprint in the China market where its instant ticket retail sales have posted an impressive 28% gain in the latest quarter.
Following this success is a recent agreement signed between SGMS and China Sports Lottery Printing which o"ers great growth opportunities for this fast-expanding market. I find this even more intriguing as we have seen gaming stocks such as Wynn Resorts and Las Vegas Sands provide investors with huge gains based on their sales growth in Macau.
At some point, I expect analysts and investors alike to begin waking up to the Asian growth story happening at SGMS.
Like all companies, SGMS does face competitive pressures in all markets. In fact, last year the firm reported operating margins of 23%, a 5 year low for the company. This will need to be monitored over the next couple of quarters along with EPS and revenue growth.
Nevertheless, I see the recent management shakeup, swell of insider buying and market expansion in Asia to o"er investors a compelling turnaround story worth gambling on. I have a 12-month price target of $17 on SGMS.
Top Stock Picks For 2012: Seadrill
by Elliott Gue, editor The Energy Strategist
Seadrill (SDRL) is the best-placed contract driller in my coverage universe. The company doesn't produce or explore for oil and natural gas; rather, it is in the business of owning drilling rigs that are leased out to major producers for a daily fee known as a day rate.
There are three major reasons to buy Seadrill. First, the company has the youngest and most advanced ?eet of drilling rigs of any of the major contractors.
Second, Seadrill's rigs are primarily booked under long-term contracts at attractive rates for several years into the future, providing a guaranteed backlog of cash how regardless of the path of commodity prices.
And finally, Seadrill has a policy of paying out sizeable quarterly dividends supported by its backlog of rig contracts.
In the most recent quarter, Seadrill paid $0.65 per share, equivalent to an annualized yield of approximately 8 percent at the current price.
I see the company boosting its payout to around $0.75 per quarter by the fourth quarter of 2011; given strong investor preference for income-paying stocks, a growing dividend will continue to drive further upside in the stock.
Seadrill owns a feet of sixteen deepwater drilling rigs including ten semi-submersibles and six drillships.
The average operating Seadrill rig is less than five years old and that only includes the 13 rigs currently working on contracts.
The remaining 10 rigs in the feet were all built between 2008 and 2010 and are of the most modern and capable design.
All are ultra-deepwater rigs able to drill in waters more than 10,000 feet deep and are powerful enough to complete wells more than 6 miles in length.
Deepwater operations are only going to get more complex in coming years; as a result, producers need the most advanced, state-of-the-art rigs In addition to its deepwater feet, Seadrill also owns around 20 shallow-water jackup rigs and 17 tender rigs that are used to ferry people and equipment and to support o "shore drilling operations.
Seadrill has a backlog of over $8.5 billion in contracts covering its deepwater rigs, $2 billion covering its jack-ups and $1.5 billion for tender rigs.
Since these revenues are essentially guaranteed under long-term deals signed with major oil and gas producers, this represents a highly visible stream of cash?ow over the next few years.
With a ?eet that's ideal for the current market, a growing 8 percent yield and opportunities to grow via new rig construction, the stock rates a buy under $38.
Top Stock Picks For 2012: Siga Technologies
by Dennis Slothower, editor Stealth Stocks
Last year for my favorite stock pick, I recommended IMAX which more than doubled. This year I would like to recommend Siga Technologies Inc. (SIGA), a bio-defense company that o"ers the same kind of upside potential for 2011.
In 2004, the US started an initiative called Project BioShield, which gave the government the right to purchase and stockpile vaccines and drugs to fight anthrax, smallpox and other potential agents of bio-terror.
SIGA is a leader in the development of pharmaceutical agents to fight potential bio-warfare pathogens and their ST-246 drug is considered to be the only known cure for smallpox, which the government is keenly interested in.
Recently, BARDA has stated their intent to award SIGA a $500 million contract, with options that potentially could be as high as $2.8 billion in orders. However, SIGA is being challenged in court by a competitor as being too big as a company to qualify for the government contract.
In fairness, BARDA has announced plans for a market survey to determine, whether there are any qualified small businesses with the capacity to produce an adequate supply of smallpox antiviral medication for the National Strategic Stockpile. It is unlikely that a small company will be able to meet the government's needs as the drugs expire and need to be constantly replaced.
It is expected that SIGA will win this contract and if so investors could be rewarded with a double or triple in appreciation.
Top Stock Picks For 2012: PMC Sierra
by Paul McWilliams, editor Next Inning
PMC Sierra (PMCS) is a top speculative investment for the coming year. The company is a leader in the field of integration. By integrating more functions into a single chip, the company has doubled its market share in the SAS storage market as the industry moved from 3Gbs to 6Gbs."
The company is also building significant traction with its single-chip "RAID on a Chip" solution and has leveraged its integration talent to become one of the dominant suppliers in the FTTx space serving both GPON and EPON requirements.
Most recently, PMCS announced its acquisition of Israeli based Wintegra -- a private company and the world leader in network processors for access networks. "
The market for network processors in access applications, which includes broadband wireless backhaul, is just now building traction, and Wintegra will likely dominate the market for at least the next few years."" As I see it, the acquisition makes a ton of sense from many perspectives." First, as I noted, Wintegra is the leader in a market that is set to expand rapidly during the next few years. "
Second, once we factor in the Wintegra balance sheet and PMCS minority ownership (yes, PMCS was a venture" investor in Wintegra), PMCS paid only about $205M net for the company. "
Third, PMCS and Wintegra" have worked together for years and in many of the design wins you'll find a PMCS and a Wintegra chip sitting side-by-side. "
This means there is a very good integration opportunity for PMCS to put the functions of both chips into a single chip, and by doing so extend competitive advantages and lower costs.
The short story is that in spite of the fact that the company has topped the earnings consensus for six out of the last seven quarters, and equaled it for the" seventh, Wall Street still insists on slapping the stock with a huge risk discount. "
I believe as PMCS maintains this practice of topping Wall Street projections the risk discount will be removed, and with that, the forward price to earnings (valuation multiple) will rise considerably.
Top Stock Picks For 2012: PowerShares DB Agriculture ETF
by Gene Inger, editor The Inger Letter
One of the easiest ways to participate in the long-term demand for corn, wheat, cotton etc. is with a soft commodity-based exchange traded fund.
We recommend the PowerShares DB Agriculture ETF (DBA), our top pick for 2011. We believe the economy is entering a period of 'hyper-stag?ation', where prices for life's necessities -- such as gasoline, food and utility rates -- will rise persistently over time.
The owerShares DB Agriculture ETF -- soft commodity-oriented exchange traded fund -- is one of the easiest ways to participate in the long-term demand for corn, wheat, cotton etc. is
This ETF has shown fairly steady progression over time. Given steady in?ation in food costs, soft commodities are likely to rise, with periodic bouts of selling and volatility. We think an investment retained over time in 'soft commodities', is relatively low risk contrasted to volatility in markets such as Oil, or the extended Gold market for now. Why? With Asian demand bound to increase over time, soft-commodity demand will too.
Nevertheless we caution investors against chasing strength; rather, one strategy to avoid timing is to scale into one's position over time. If you scale-in, you get benefits of ensuing pullbacks while holding an initial stake.
Top Stock Picks For 2012: Canadian Oil Sands Trust
by David Dittman, contributing editor Canadian Edge
Canadian Oil Sands Trust (COSWF) has clearly lagged broad-based and energy-sector benchmarks alike over the trailing 12 months. A series of unplanned turnarounds at the Syncrude operation, of which Canadian Oil Sands owns 36.7 percent, have analysts questioning whether rising costs will ever allow Canadian Oil Sands to really benefit from elevated oil prices.
And the very skeptical wonder if actual output will ever match Syncrude's capacity potential. All in all, after years of hype and outperformance the bar is now set rather low for Canadian Oil Sands. The stock is likely to revert back to its usual pattern of trading in sympathy with crude oil prices, a relationship that did break down in 2010.
New demand from Asia, old demand in the developed world and a desire from investor for hard assets will keep the per barrel price of oil elevated over the next 12 months.
Canadian Oil Sands will restrain the excruciating growth of unplanned turnaround costs, and Syncrude will get on the path to realizing its potential.
At the new rate of CAD0.20 per share per quarter, the stock will yield about 3 percent. The stock has taken a hit in the second half of 2010, and management has shown it will boost the payout to re?ect upside oil-price surprises. Soon-to-convert Canadian Oil Sands Trust is a solid total return play on one of the world's most intriguing resource stories, set up for capital appreciation as well as dividend growth. Buy it up to $28.
Top Stock Picks For 2012: Catlin Group
by Vivian Lewis, editor Global Investing
Insurers benefit when things go wrong. That explains our latest pick, Catlin Group (CNGRY). Incorporated and regulated in Bermuda, listed primarily in London as CGL, the stock's ADR is equal to two British shares.
It is the largest syndicator at Lloyd's of London, the reinsurance business. It's also a favorite holding of institutional investors.
It very conservatively invests its premiums, in cash and fixed income with only 2.5% in hedge funds, yet it managed to produce a return on equity of 1.8% in H1 and of 2.9% in 2009 and Q3.
It keeps raising its dividend, more steadily if you buy in sterling than the ADR. Given its current yield of 6% I'm satisfied with the payout but Citigroup analysts say it will go to 7.7%..
It's a family businees, under CEO Steve Catlin, established as a Lloyd's underwriter in 1984.
It's green, funding the Catlin Arctic Survey to measures the thickness and density of ice foes in the Arctic Sea and carbon dioxide absorption (ocean acidification). Nice but not why to buy.
Rather, you should buy because Catlin is a globally diversified insurance business operating 88-89% in US dollars. It is quick to develop new businesses to benefit from macro-economic trends.
It shifted its casualty lines from insuring British solicitors and surveyors, to hot button more profitable US insurance lines: medical malpractice; directors and o#cers (D&O) insurance; cover for architects, engineers, and construction and design professions; and environment risk.
Catlin justifies these new lines (priced by its experienced actuaries) as "short tail" controlled latent risk cover for underserved niches.
Longer-tail risk is very selectively underwritten by Catlin based on claims made. (Tails refer to the extremes of a normal curve, the unexpected events. Longer-tails mean unexpected payouts.)
"Crysalis" is innovative oil production insurance, launched in Feb for oil and gas drillers. New business is booming post-Gulf of Mexico, and not just from US drillers.
BP's disaster explains the rush for Crysalis cover. BP had a Bermuda "captive" (self-financed) insurance firm.
What it will be able to collect for its captive, say industry sources, is $1.5-3.5 bn. Against this, the economic loss from the Gulf disaster is $40 bn. And since the Macondo sank, BP shareholders losses from the stock's drop topped $73 bn, a compelling argument for buying insurance. Crysalis standard contracts cap the amount of cover per event at $200 mn, and per company at $100 mn, shortening the tail.
Not everything went Catlin's way. Its first half earnings were nipped 8% from prior year by Chilean earthquake claims and the Gulf of Mexico. However, we had a benign hurricane season.
And for all the dollar's appeal, getting a decent investment return is not easy in the present QE2 environment.
If in?ation takes o", claims will be higher and coverage from investment income lower. But then Catlin can raise its premiums. And it may have shifted the policies it o"ers into another currency.
Citi expects the total payout next year for this "undervalued" (rated low risk, high return) share to come to 23.4% in sterling, and 16.6% in dollars at its target price of $12.80. Citi's 2010 profit forecast is $369 million, vs $243.8 million in 2009 and $384.9 million in 2008. (Per share, the hit was even greater in 2009 because Catlin did a rights o "ering to invest more during the crisis.).
Its Sept. quarter saw Catlin premium income up 9% and earned income up 13%. Market cap is $1.982 billion, with the ADR stock at $11.50. It has an A.M. Best A rating from the insurance watchdog.
Its combined ratio, a key metric, is 97% -- meaning expenses are 97% of premium income so underwriting was 3% to the good before any investment income. Buy CNGRY.
Top Stock Picks For 2012: Aflac
by Richard Moroney, editor Dow Theory Forecasts
Aflac (AFL) represents a top year-ahead pick based on its solid operating momentum and modest valuation. In our proprietary ranking system (known as Quadrix), the stock earns an Overall score of 99. At 10 times trailing earnings, the shares trade 33% below the five-year average P/E ratio of 15.
The insurer's sales rose 13% in the first nine months of this year, while free cash how rose 12%. At 10 times trailing earnings, shares trade 32% below the three-year average P/E ratio. Arac continues to grow in Japan (about 75% of sales), but growth in the U.S. (roughly 25%) has been tougher to find.
Management remains cautious about its U.S. outlook, but it should benefit as small companies, which make up a large portion of the domestic business, begin to hire again. A?ac -- yielding 2.2% -- is a Focus List Buy and a holding on our Long-Term Buy list.
Top Stock Picks For 2012: Allot Communications
by Ian Wyatt, editor Small Cap Investor PRO
The smartphone revolution -- with web-browsing, video-watching, music-streaming mobile devices -- has made bandwidth a scarce resource.
That's where Allot Communications (ALLT) comes in. Allot is an Israeli company that develops deep packet inspection (DPI) technology specifically designed to manage bandwidth use Consumers want phones that let them listen to music, surf the web, watch video, and access a wide array of applications. Maybe even occasionally make a call or two. Allot's solutions are critical for Internet Service Providers (ISP), cable companies, landline operators, mobile phone companies, businesses and governments.
The company has consistently grown overseas in Europe, Asia, and South America. The U.S. still represents a huge growth market, if and when regulations permit carriers to implement Allot's technology. Allot's third quarter was a good one. The company increased revenue by 36 percent to $14.7 million year-over-year.
Quarter-over-quarter revenue also increased, by 8 percent, marking the sixth consecutive quarter of sequential revenue growth. On a GAAP basis, Allot earned $0.03 per share, a nice improvement over a $0.10 loss in the third quarter of 2009.
But what I really like here is that the company ended the quarter with $56.2 million in cash and essentially zero debt. Allot is a play on the future growth of smartphones, and the near certainty that service providers will segment bandwidth in order to design service plans tailored to customer behavior.
What's more, this tiny company is a potential takeout candidate and management has shown an ability to orchestrate acquisitions in the past.
Top Stock Picks For 2012: Cisco Systems
by Lou Basenese, editor White Cap Research
One a theme that hasn't worked in, well, forever - large cap technology stocks; many large cap tech are trading at historically low valuations.
As a contrarian, I'm picking the most contrarian large cap technology stock out there: Cisco Systems (CSCO), which could be a top-performer in 2011. Cisco also happens to be one of the cheapest of the large cap tech stocks.
I'm well aware the network equipment maker isn't exactly enjoying halcyon days. After all, when the company reported third quarter results, it lowered guidance. And investors dumped the stock en masse. Shares fell 16% in a single day. Mind you, that's a colossal move for a $100 billion market cap company.
Here's the thing - the shares are dirt cheap, trading at almost a 40% discount to their historical price-to-earnings ratio. In fact, at 14 times earnings, Cisco's the cheapest it's been in over a decade.
Not only that, it remains the dominant player in the space. Its Ethernet switches, which move data along local networks, control 70% of the market.
Meanwhile, its closest competitor only boasts a 10% market share. Cisco's routers, which move data across long distances, also enjoy similar market share advantages. I'm sorry, folks. Internet tra#c is only headed in one direction. Straight up By as much as 50% per year, according to some estimates.
And such a steady increase all but guarantees steady demand for Cisco's products. Especially since switching costs in the industry are high. In short, this dominant market leader, which expects to grow earnings up to 15% per year, is just too darn cheap.
While most investors fear buying stocks bouncing around their 52-week lows, don't fear this one. A historically low valuation, $39 billion cash pile and a newly announced $10 billion worth of stock repurchases provide ample downside protection.
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