Tuesday, December 13, 2011

Best Stocks for 2012

I love this time of year! Family gatherings, Christmas music, holiday plays, decorations, and stock picks. Stock picks? Yes, 'tis the season for stock predictions! Virtually every financial writer will pen an article selecting his or her top stock picks for the upcoming year.

I enjoy reading them and the logic behind the picks. As a long-term buy and hold investor, generally most aren't useful for me; nevertheless, I find them entertaining and sometimes there is a gem to be found. Here are some picks for 2012...

Laszlo Biriny, former head of equity market analysis at Salomon Bros. and current president of  Biriny Associates, reveals his top 5 picks for 2012 in a CNBC interview. His top picks for 2011 are up 16%. Here are his picks for 2012:
Birinyi likes BlackRock (BLK) because, he says, "I want to buy the people who are writing ETFs," referring to exchange-traded funds.

He also likes People's United Financial (PBCT), even though he's not a big fan of bank stocks.

General Motors (GM) makes his list because, Birinyi says, "business is doing a little better than people perceive," even though he said "it's a long shot."

Another long shot is Research in Motion (RIMM). "It's been beaten down. It's a brand, it's got fans, and it's got its products," he said, noting that back in 1998 he told CNBC one of his picks was the nascent Apple (AAPL).

Finally, Birinyi likes Hermes International (HESAY), which he called the "most iconic brand in the world."

Andrew Feinberg manages a New York City–based hedge fund called CJA Partners. In a recent Kiplinger article he shared his top 4 stock picks for 2012. In case you missed it, his 2010 picks produced a 99% average return and his 2011 picks gained an average of 11.5% through November 4. Here are his picks for 2012:

J.C. Penney (JCP): The Sephora cosmetics mini stores located within many Penney locations are helping drive traffic; exclusive offerings from the likes of Liz Claiborne, a brand Penney bought in October, will help as well.

Ashland (ASH): At $54, the shares sell for just 10 times estimated earnings for the fiscal year that ends next September. Moreover, the firm is ripe for a restructuring that would boost the stock.

Motorola Solutions (MSI): Management has cut costs, initiated a dividend (the stock yields 1.9%) and announced a $2 billion share buyback. Activist shareholder Carl Icahn owns 11% of the company, and ValueAct Capital Partners, a hedge fund, owns 6%.

The Brick (BRK.TO) At $3, the stock, which trades in Toronto, sells for just 5.6 times the past year’s cash flow. Why so cheap? The Brick almost went bankrupt in 2009 under previous management, its stock is largely controlled by insiders, and hardly any brokers or money managers follow the firm.

Finally, for those looking for an international flair, Deutsche Bank listed its top 7 European stock picks for 2012 in a recent Forbes article. Deutsche Bank‘s securities unit says Europe will likely fall into a recession, but a range of European stocks that do business all over the world will weather the turmoil in fine shape. Here are seven of Deutsche Bank’s top European stock picks that are traded as ADRs on U.S. exchanges:

SAP AG (SAP) said it plans to acquire SuccessFactors, a U.S. company that provides software that helps businesses manage employees and carry out performance reviews, for $3.4 billion.

Royal Dutch Shell (RDS.A) shares have a three-year average annual return of 16% and they carry a 4.83% projected dividend yield.

SKF (SKFRY) is a Swedish firm with a 3.18% projected dividend yield and its shares have a three-year average annual return of 44%.

William Demant Holdings (WILYY) is a Denmark-based company with a market value of $4.6 billion, engaged in the development, manufacture and sale of sophisticated electronics products and equipment to aid in communication.

Telenor ASA (TELNY) has a three-year average annual return of 48% and carries a 4.29% yield.

AMEC (AMCBF.PK), a 162-year-old U.K.-based construction, engineering and consultancy firm, has a three-year average annual return of 32%, giving it a market value of $3.2 billion.

Swatch Group (SWGAY) is a Swiss watchmaker with a market value of $589 million. It sells fashion watches, jewelry, and watch and electronic components.
As always, be sure to do your own due diligence and determine if any of these stocks fit in your portfolio before buying. Today's choices will help determine how well you live in retirement.

Full Disclosure: No position in the aforementioned securities. See a list of all my dividend growth holdings here.

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(Photo Daniela Baack)