The best stocks to invest in 2011

Despite the market’s recent resuscitation, many stocks are still trading at fire-sale prices-no surprise given the immense decline that preceded the advance. But which stocks to invest in 2011?

Between March 9 and May 4, Standard & Poor’s 500-stock index surged 34%. Beaten-down “value” stocks and stocks of smaller companies have been the best performers during the recovery. Examples of revived value stocks are Citigroup (symbol C), which tripled from an intra-day low of 99 cents on March 9 to $3.20 at the May 4 close, and Bank of America (BAC), which skyrocketed from $3 to $10.38. Meanwhile, Morningstar’s small-company-value index rose 22% in April, and its large-company-growth index gained just 8%.

I’m not jumping on the bandwagon. Given the fragility of the markets, the financial system and the economy, I don’t think stocks of small companies or companies with huge problems are the ones to buy. Instead, I think you should put most of your money into the highest-quality blue chips (companies with little or no debt and the ability to generate a lot of cash).

If you’re looking for ideas, Morningstar StockInvestor ($119 annually) is a great resource. According to the authoritative Hulbert Financial Digest, the newsletter’s stock picks returned an annualized 2.6% from the end of 1999 through last February, a period in which the broad-based Dow Jones Wilshire 5000 stock index lost an annualized 5.0%. What’s more, the Morningstar letter is less risky than the index and tends to do little trading; on average, the letter holds stocks for about three years.

Editor Paul Larson says he looks for companies with competitive advantages over their rivals: “My strategy is fairly simple. I focus on high-quality companies, and I buy them when they’re cheap.”

Morningstar’s 100-plus stock analysts estimate “intrinsic value” for every company they cover. They compare intrinsic value to a company’s share price to arrive at a star rating. Larson then draws up two lists — a “tortoise” portfolio and a “hare” portfolio-consisting of about 25 highly rated stocks each.

Larson’s favorite is Warren Buffett’s Berkshire Hathaway (BRK.B)(best stocks to invest in 2011). At $3,114.90 a share on May 4, the stock has shed more than one-third of its value in the past year. But Larson believes that Berkshire’s collection of more than 70 businesses, dominated by insurance, is dirt-cheap. Says Larson: “For a long time, people have been pricing Berkshire as though Buffett were no longer around. But he’s still alive and kicking-and adding value. And the balance sheet is still one of the strongest around, even though the company no longer carries a triple-A debt rating.”

The world’s largest and most diverse health-care company, best stocks to invest in 2011 -Johnson & Johnson (JNJ), is another favorite. Larson says that the company is largely insulated from economic downturns. “People need to take their medicines regardless of what the economy is doing,” he says. J&J is well-managed, has little debt and generates a staggering $1 billion in free cash flow per month (free cash flow is the money left after a company makes the capital expenditures needed to maintain the business). The stock closed at $53.76 on May 4.

Defense giant best stocks to invest in 2011- General Dynamics (GD) is another company that’s built to withstand recessions. It builds ships and armored vehicles, as well as information-technology systems for the military. “The government has a vested interest in maintaining the health of this company,” Larson says. “It came through the Defense Department budget cuts relatively unscathed.” The company boasts a rock-solid balance sheet. The stock closed at $54.00.

Wal-Mart Stores (WMT), the world’s largest retailer, has increased its market share during the economic slump. Its sales of consumer staples at discount prices have been increasing as other retailers have been going out of business. The company’s managers are focusing on cutting costs and satisfying customers. Wal-Mart, one of only two stocks in the Dow industrials to climb last year, closed at $50.84.

As employee benefits grow ever more complex, The best stocks to invest in 2011-Automatic Data Processing (ADP) benefits. It provides such services as payroll processing and benefits administration. Its large scale and respected brand, and the high cost of switching to another vendor, give it a big competitive advantage. The share price: $34.86.

When competitors were spending enormous sums to build up oil-and-gas reserves during last year’s bubble in oil prices, ExxonMobil (XOM) stayed focused on increasing profit margins. Because of that, Exxon can continue to buy back shares, raise its dividend and increase capital spending (at a price of $68.20, the stock yields 2.5%). It’s the world largest integrated oil-and-gas company, and participates in almost every facet of the business.

Best Stocks to Invest in 2011 With High Rate of Returns

Best Stocks to Invest in 2011 With High Rate of Returns — Best-traded stocks may not be the best stocks to invest in for the year. But there are still good stocks to invest in 2011 with high return on investments . It’s up to you to study stock market analyst predictions. In the Philippine Stock Market, Prince Anthony Yeung of AB Capital Securities advises investors who want to start buying good stocks for short-term and long-term investment to look at the banking and utilities sector particularly Security Bank (SECB), RCBC (RCB), Aboitiz Power (AP), Energy Development Corporation (EDC).

* Security Bank (SECB)

http://www.securitybank.com/

Established on June 18, 1951, it has established itself as one of the country’s most stable and best managed financial institution, with more than five decades of corporate success. Security Bank stands firm on a solid reputation as one of the Philippines’ top ten private domestic universal banks in terms of assets, deposits, capital and return on equity. For the 4th straight year Security Bank landed the Best Bank in Philippine Peso Government Bonds based on the results of The Asset Benchmark Survey conducted by The Asset Magazine, a leading finance magazine with a wide readership among global investors specializing in the Asian markets.

*RCBC (RCB)

http://www.rcbc.com/

Rizal Commercial Banking Corporation (RCBC) is the Philippines’ fifth largest private domestic commercial bank with total consolidated assets of about PhP 239 billion as of end of December 2007.

*Aboitiz Power (AP)

http://www.aboitizpower.com/

Aboitiz Power Corporation (AP) is a publicly-owned holding company listed with the Philippine Stock Exchange that, through its subsidiaries and affiliates, is a leader in the Philippine hydroelectric power generation industry and has interests in some of the largest privately-owned distribution utilities in the Philippines. Since its incorporation in 1998, AP has accumulated interests in both hydroelectric power generation facilities and in thermal plants.

* Energy Development Corporation (EDC)

http://www.energy.com.ph/

Energy Development Corporation is a pioneer in the geothermal energy industry with more than three decades of proven business viability. It has helped discover new ways of developing and commercializing renewable energy right at the heart of the resource – wherever the location and whatever the condition.

These stocks are expected to appreciate next year, supported by the strong fundamentals of the companies. With the economy started to show signs of recovering, many are now optimistic of a stock market rally for the whole year in the Philippine Stock Exchange.

Certainly, the equities market is ripe for a rally. And if it happens, be ready in investing in the stock market and looking for the good stocks to invest in with your hard-earned money.

Most of the stocks of these companies are also traded in the best online stock trading companies that will give you opportunities to buy stocks online.

Start planning up on how to take care of your finances for future investments. GoldenTree Asset Management and other firms can assist anybody in dealing such matters.