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80 Favorite Stocks for 2010
Looking for a shopping list of new stock ideas for 2010? Each year for 27 years, TheStockAdvisors.com has turned to the nation's most respected and well-known newsletter advisors and asked them for their single favorite stock or fund ideas for the coming 12 months.
With 80 leading financial advisors participating in this year's survey, there's something for every type of investor, from high quality blue chips to speculative home runs.
Below are excerpts from Steven Halpern's Annual Survey, 80 Favorite Stocks for 2010.
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Keegan Resources:
Brien Lundin's top stock for 2010
"Gold will be the primary beneficiary of the massive bailout and stimulus plans enacted by not only the United States, but every industrialized nation across the globe," forecasts Brien Lundin.
The mining stock specialist and editor of The Gold Newsletter, www.goldnewsletter.com, looks to a small gold exploration and development company as his top pick for 2010: Keegan Resources (ASE: KGN).
"Because of the deflationary influences of higher productivity, moribund economic growth and cheap labor in developing nations, we won't see the kind of price inflation that characterized the 1970s.
"But we will see galloping monetary inflation - or much more currency in circulation - and the result will be higher prices for assets such as commodities and equities.
"So if gold is going to lead the pack, what's the best gold investment? In my opinion, smaller gold exploration and development companies will offer valuable leverage to gold, and one of the best is Keegan Resources.
"Keegan controls the Esaase gold project, a major mine-in-the-making located in the investor-friendly nation of Ghana, in west Africa.
"The company has made quick work of the project, going from field exploration to drilling to resource definition and pre-feasibility studies in a span of just three years.
"Now, Keegan finds itself sitting on top of a near-surface, open-pittable deposit that contains 3.47 million ounces of gold according to the most recent resource estimate.
"As impressive as that total is, it has the potential to grow significantly larger. The outlined resource remains open both along trend and at depth, and it lies within a country that hosts some of the world's largest gold deposits.
"Whether Keegan can unearth a resource of similar size at Esaase remains to be seen, but most analysts feel the next resource estimate will show the total gold holdings to have increased to at least five million ounces.
"And with the company tying up new ground along trend, there's literally no telling how large this find could grow.
"Frankly, I don't expect Keegan to develop Esaase into a mine - that job will likely devolve to the major mining company that buys Esaase, or Keegan itself.
"The company's management team knows this as well, and they are guaranteeing the best price by advancing steadily toward production.
"Keegan was among the highest of the high flyers during gold's fall rally. Although the share price has therefore come back fairly hard during the subsequent correction, the closing of a recent financing essentially opened a door to potential take-out offers for the company.
"While I know of no indications that any offers are forthcoming, there is the possibility that a bid, or a bidding war, could emerge at any time. In light of this, and considering the dip in its share price, Keegan is one of my top gold stock recommendations."
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Goldcorp: Curtis Hesler's top stock for 2010
Curtis Hesler, in his The Professional Timing Service, www.protiming.com, suggests, "It is time to focus on upcoming buying opportunities in precious metals." Here, he looks at Goldcorp (NYSE: GG) as his top pick for 2010.
"On December 8, my U.S. dollar timing model kicked in with a buy signal. I had been writing about the likelihood of a rally in the dollar for several weeks, and that signal was the key indicator I had been waiting for. The signal indicated the dollar was going to rally.
"There is a defensive aspect to this as well as an offensive play. I have been a gold bull and dollar bear since late 1999, but the long-term secular trend has been interrupted from time to time.
"This was one of those times when stops needed to be put in place to protect gold profits and new opportunities evaluated. We raised cash by taking profits in many of our gold positions, and we have parked that money in cash for the time being.
"However, that is all water under the bridge at this point. It is time to look for the next opportunity to put this cash back to work.
"Although you will be hearing about a new bull move in the dollar, the dollar rally is temporary. Gold and the mining shares will come o• as a consequence, but only in the short term. It is time to focus on upcoming buying opportunities in precious metals. "There are a lot of mining operations to choose from, but there is one company that must be at the core of your precious metals investment - Goldcorp.
"Goldcorp is simply the best gold miner on the planet. They are one of the world's largest gold mining companies with the strongest growth profile among all of the big producers. They are also the lowest cost and fastest growing senior gold producer in North America.
"The time is now to focus on acquiring gold as the emotional folks that bought at the recent highs become discouraged and sell their positions. I always give my readers simple specifics in this regard. Buy Goldcorp at $34.50 or better."
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PepsiCo: Jim Stack's
Top Stock for 2010
"PepsiCo (NYSE: PEP), my top pick for 2010, remains underrated by the market," says Jim Stack.
The money manager and editor of InvesTech Market Analyst. www.investech.com, suggests, "All too often, it's viewed as a stodgy soft drink company, fully reliant on its namesake soda line. That's a misconception." Here, the sets the record straight.
"In reality, PepsiCo owns some of the most sought after brands in the world, including Gatorade, Tropicana, Frito-Lay, and Doritos. It does business in more than 200 countries worldwide, including key emerging market economies like China and India.
"Perhaps most important of all, it's a growth company with analysts expecting longterm future earnings growth of 10-12% per year.
"In recent months, PepsiCo has taken another major step forward with the pending acquisition of its two primary bottlers - Pepsi Bottling Group and PepsiAmericas.
"The acquisition provides the potential to eliminate an estimated $500 million to $1 billion in redundant costs. If those cost savings are transferred directly to the bottom line, shareholders could see a significant increase in net income of 10% to 20%.
"Of perhaps even greater benefit, the purchase brings 80% of North American beverage distribution 'in-house.' This move will bring management one step closer to its final customers - injecting a level of flexibility into operations not often seen with a company of PepsiCo's size.
"The acquisition further ties together the Pepsi story - a well run company with market leading growth positions and an attractive valuation.
"The executive suite neatly combines the beverage 'megabrands' such as Pepsi, Gatorade, Tropicana, and Mountain Dew with the world's largest snack food company, Frito-Lay.
"Management then leverages these brands into international growth markets such as Latin America and Asia where sales volume increased more than 20% in 2008, and despite the most challenging world economy in decades, has seen high single-digit growth so far in 2009.
"On top of all this, Pepsi is currently trading at valuation levels not seen in 15 years. And although it's a growth company, Pepsi still offers the dividend yield (3.0%) of a stalwart.
"Bottom line, Pepsi remains underrated by the market in general, and the bottler acquisition only enhances the company's outlook."
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Monsanto: Street Smart's
Top Stock for 2010
"Monsanto (NYSE: MON) is my top investment idea for 2010," says Sy Harding, an advisor well-known for his seasonal timing strategies.
In his Street Smart Report, www.StreetSmartReport.com, he observes, "Monsanto is the world's leading provider of biotech-advanced seeds and agricultural products for growers; seeds for corn, soybeans, cotton, fruit, and vegetables, which are produced by its genomics division.
"Monsanto experiences high grower demand for such seeds, which are genetically engineered to provide increased crop yields, increased quality, insect and disease resistance, and drought tolerance.
"The company recently introduced two new products, SmartStax for corn, and Roundup Ready-2-Yield soybeans, which are potential drivers for significant growth going forward.
"The company said it expects to plant 8 to 10 million acres of Roundup Ready-2-Yield soybeans in 2010, along with a more than 4 million acre launch of SmartStax seed corn, both significantly higher than earlier projections for the new products.
"The company has also introduced two versions of a lower cost genetic corn seed, VT Double Pro, and VT Triple Pro.
"The goal of those products is to let growers test the advantages of farming with genetically engineered seeds without having to move all the way to the higher-priced SmartStax seeds.
"The lower price products were introduced in anticipation that the growers will be so impressed with their extra yield, quality, and profits that they will move up to SmartStax the following year.
"The company invests roughly 10% of revenues back into research and development of new products, and has also demonstrated an ability to make meaningful acquisitions, which in recent years have included DeKalb, Asgrow, and DeltaPine, which add to its technology and product base, while at the same time eliminating some competitors.
"The company has received import approval for its Roundup Ready-to-Yield soybeans in China, which potentially will result in demand from growers in South America, who export large quantities of soybeans to China. "The risks include that consumers are not completely sold on genetically altered foods, and growers will only grow from biotech-advanced seeds that percentage of their crops that they know they can sell. And of course Monsanto's sales are influenced seasonally by weather and commodity grain prices.
"We believe higher prices lie ahead for MON. Our upside target is $100 a share. We suggest a trailing 'mental' protective stop at $69.40."
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Dividend expert eyes
a five-pack of favorites for 2010
Vita Nelson is well-known as a leading expert on dividend reinvestment plans.
With the caveat that she always recommends portfolio diversification, the editor of The MoneyPaper, www.directinvesting.com, submitted a package of 5 favorite stocks for 2010.
"We make a point of recommending that people don't pin their hopes on just one stock (which might underachieve in the short-run).
"Nevertheless, as a top pick for the coming year, I like FPL Group (NYSE: FPL), the parent of Florida Power & Light, a utility that engages in the generation, transmission, and distribution of electricity to 4.5 million customers in a 27,650 square mile area of eastern and southern Florida.
"Its NextEra Energy Resources subsidiary is a non-regulated power generator that produces electricity from nuclear, natural gas, solar, and wind generation.
"It owns 48 wind farms in 15 states producing 4,100 megawatts and could double that output within the next four years.
"The company is expected to earn about $4.15 per share this year and $4.57 in 2010, compared with $3.84 in 2008.
"The dividend has been increased for 15 consecutive years and the annual payout now stands at $1.90 per share, for a yield of about 3.4%."
"Cracker Barrel Old Country Store (Nasdaq: CBRL) headquartered in Tennessee, operates nearly 600 combination full-service restaurant and gift shops in 41 states.
"Most are company owned, not leased, and can be found along major highways. The restaurants, which feature home-style country cooking menus, accounted for 79.2% of revenues in fiscal 2009. (Fiscal year ends last Friday in July.)
"The gift shops feature rocking chairs, apparel, toys, cookware, ceramics, and an array of food items.
"The company reported a 37% increase in first-quarter (October) earnings per share and consensus estimates call for it to earn about $3.23 per share in the fiscal year that ends next July and $3.47 in fiscal 2011, compared with $2.89 in fiscal 2009.
"The stock sports a price/earnings ratio of about 12 and its 80 cent-per-share annual payout results in a yield of 2.1%.
"Founded in 1847, Cliffs Natural Resources (NYSE: CLF) - the former Cleveland-Cliffs - is the largest producer of iron ore pellets in North America, accounting for almost 45% of the market.
"Since acquiring Alpha Natural Resources in 2008, a significant producer of metallurgical coal for the steel-making industry. It operates six iron ore mines in Michigan, Minnesota, and Eastern Canada and coalmines in West Virginia and Alabama.
"The company also owns an Australian iron ore mining company and has interests in a Brazilian iron ore facility and an Australian coal mining operation.
"CLF is a cyclical company whose shares declined from a 2008 high of $121 before rebounding from $11.80 to a recent $41.30.
"Consensus estimates call for it to earn about 70 cents per share this year and $2.73 in 2010, compared with $6.57 in 2008. But Value Line projects earnings per share of over $4 in 3-5 years.
"The shares split 2-for-1 in 2005, 2006, and 2008. With a dividend yield of just 0.8%, the primary goal of CLF investors is capital appreciation.
"General Electric (NYSE: GE) operates as a technology, media, and financial services company worldwide.
"Its Energy Infrastructure segment produces gas, steam, and aeroderivative gas turbines; generators; and combined cycle systems, and provides water treatment services and equipment.
"The Technology Infrastructure segment manufactures jet engines, aerospace systems and equipment. The Consumer & Industrial segment produces various household appliances, lighting products, and electrical equipment and control products.
"GE was founded in 1892. The stock currently trades at a price/earnings ratio of less than 15 and its dividend provides a 2.5% yield.
"Founded in 1885, Johnson & Johnson (NYSE: JNJ) is a major health-care products company that derived about 49% of its $63.7 billion in 2008 sales from overseas.
"Its consumer brand names include Band-Aid, Monistat, Neutrogena, Tylenol, Stayfree, and Reach.
"Typically, the company spends at least 12% of its revenue on research and development.
"Earnings per share were $4.57 in 2008, compared with $4.15 in the previous year, and consensus estimates call for the company to earn about $4.58 in 2009 and $4.93 in 2010.
"The annual dividend has been increased for 47 consecutive years, and now stands at $1.96 per share, providing a yield of 3.12%."
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Global Crossing:
George Putnam's Top Stock for 2010
"Global Crossing (Nasdaq: GLBC) was started in 1997 to build a worldwide fiber optic cable network; revenues grew very slowly, and the company was forced to file for Chapter 11 in January 2002," explains turnaround specialist George Putnam.
Now, however, the editor of The Turnaround Letter, www.turnaroundletter.com, suggests, "The potential of that network is finally beginning to be fulfilled.
"Global Crossing raised billions of dollars of capital, mostly debt, and used the money to lay thousands of miles of fiber optic cable spanning the globe.
"The initial strategy seems to have been 'if you build it, they will come'. Global Crossing built the network, but as the telecom bubble burst around 2000, nobody came.
"Global Crossing emerged from Chapter 11 in December 2003. Once again the market showed enthusiasm for the story. The new stock went as high as 36 shortly after it began trading. When it later dropped in price, several high-profile investors accumulated sizable positions.
"Unfortunately, there was still considerable overcapacity in worldwide networks, and Global Crossing's results continued to lag expectations. The stock hit a low of 5 earlier this year before beginning to recover.
"The network is still built - it connects 690 cities in 60 countries around the world - and it appears that the revenues are finally beginning to come.
"Over the last three fiscal years revenues grew from $1.87 billion in 2006 to $2.26 billion in 2007 to $2.59 billion in 2008 and were at $1.88 billion for the first three quarters of 2009.
"It appears that the tremendous growth in data, voice and video traffic is finally beginning to fill up some of the capacity in worldwide networks. The company has also developed a successful marketing strategy focusing on mid-sized to large companies with far flung operations.
"Since much of the cost of the business is fixed (and incurred years ago when the cables were first laid), a large part of any increase in revenues will drop straight to the Global Crossing bottom line.
"In addition, Global Crossing has been able to cut its overhead over the last few years, further increasing operating profits.
"Because the company is still depreciating many of its assets for book purposes, it may continue to show net losses for a while. However, it is now generating free cash flow for the first time in its history.
"Even though Global Crossing reduced its leverage significantly through the Chapter 11 filing, there is still a fair amount of debt on the balance sheet. But it has no significant debt maturities for several years, and if current trends continue, it should have no trouble refinancing that debt.
"We think Global Crossing's current stock price gives you the opportunity to buy into a very valuable communications network at a tiny fraction of its original cost and at a time when the potential of that network is finally beginning to be fulfilled."
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