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Best Stocks Investment For 2011 NO.1: Amedysis (AMED)
J. Royden Ward is the editor of Cabot Benjamin Graham Value Letter, a newsletter that -- as its name suggests -- focuses on stocks that meet the criteria of legendary value investor Ben Graham.
For his top pick for 2011, he the advisor looks to Amedisys (NASDAQ: AMED), a provider of home health care and hospice services.
"Despite government e?orts, health care costs continue to rise to unacceptable levels in the U.S. But there are alternatives that o?er dependable care at substantially less cost to patients and to taxpayers, and I believe one option, home health care, will become an important alternative to lengthy hospital and nursing home stays.
"My top stock for 2011 is the largest company in the home health care sector whose impeccable reputation for delivering reliable care is providing the company with exciting new opportunities for exceptional growth.
"Amedisys is a leading provider of home health care and hospice services. The company typically provides skilled nurses or nurse assistants who coordinate health care with the patient’s family and physician.
"The company operates more than 500 Medicare-certified home health agencies and 50 hospice agencies in 37 U.S. states and Puerto Rico. "The company’s home health care services provide assistance to patients recovering improving patients’ quality of life through physical, speech or other therapy.
"For example, the company educates patients on how to avoid falls in the home, which are the leading causes of patients re-entering hospitals. Approximately 87% of Amedisys’ home health care services are covered by Medicare.
"Amedisys also o?ers hospice home care services for terminally ill patients. Hospice services are designed to provide basic care and comfort to patients and support to family members.
"Compared to hospitals and nursing homes, Amedisys can save patients, families and the health care system huge amounts of money. Health care delivered in patients' homes is far less expensive than health services delivered in hospitals and nursing homes.
"The home health care industry is fragmented with 9,200 home health care agencies and 3,000 hospice agencies operating in the U.S. Amedisys is actively acquiring smaller home health care agencies that fit the company’s acquisition plans, as well as opening their own new agencies at a rapid pace.
"The growth opportunities in the home health care industry are obvious. The growing numbers of elderly, and the need for less expensive health care including home health care, will likely create industry growth of 15 to 20% during the next several years and decades.
"Revenues climbed 39% and EPS soared 57% during the 12 months ended 9/30/09. Analysts are forecasting 14% sales growth and 11% EPS growth for the next 12 months, but we believe Amedisys will produce sales and earnings growth exceeding 20%.
"We base our growth projections on the company’s aggressive acquisition program along with its ability to open new agencies e?ciently and profitably. AMED shares are clearly undervalued at 8.3 times our EPS estimate for the next 12-month period."
Best Stocks Investment For 2011 NO.2: American Superconductor (AMSC)
Michael Cintolo, editor of The Cabot Market Letter and Cabot Top Ten Report, looks to the alternative energy sector for his favorite investment idea for 2011. The growth stock expert explains, "I consider this company to be the #1 wind power story in the market today." Here's his review.
"While alternative energy hasn't been a terrific sector for much of 2009, we're beginning to see some great strength in the group as investors discount accelerating growth in the quarters to come. And my favorite stock is sure to benefit from this trend, as it's the #1 wind power story in the market today.
"We're talking about American Superconductor which designs many di?erent wind turbines and then licenses them to customers that want to get into the wind business; customers are obligated by contract to then buy AMSC's wind electrical systems- basically the brains of the wind system. "Its biggest customer (by far) is Sinovel of China, which wasn't even in the wind industry a few years ago, but is set to become a top five turbine maker next year. And many other customers, including Hyundai Heavy Industries (which is going to have a big presence here in the U.S.) are set to ramp up production in 2011.
"Because of all that, revenues have leaped more than 80% in each the past two quarters, earning are ramping up quickly and management has stated it expects fiscal 2011 (ending next March) revenues to grow more than 33%, and earnings of "at least" $1.15 a share.
"Interestingly, because alternative energy stocks have been out of favor, AMSC hasn't done much in the second half of 2009. It spent two months building a launching pad, then broke out powerfully after an earnings report in August.
"But then it spent another four months building a new launching pad! Happily, AMSC has just broken out on the upside, which leads us to believe the buyers are finally ready to push the stock much higher as 2011 arrives."
Best Stocks Investment For 2011 NO.3: American Superconductor (AMSC)
"Looking for a way to bet on a continued rebound in technology stocks, a rise in worldwide demand for energy, and China…all in one?" asks small cap growth stock expert Jim Oberweis, Jr.
The money manager and editor of The Oberweis Report suggests, "Take a look at American Superconductor Corp. (NASDAQ: AMSC), my choice for the top idea for 2011.
"The bulk of their business today comes from the wind power industry, as AMSC designs wind turbines and sells turbine electrical systems that can be customized for each customer.
"AMSC is the leading provider of electrical components to the leading Chinese wind turbine manufacturers, with Sinovel being their largest customer and representing roughly 75% of their revenues.
"Sinovel is the leading player in the Chinese market and continues to successfully take market share from competing players. While Sinovel’s growth is AMSC’s gain and their relationship has only strengthened as of late, sales concentration remains a risk.
"AMSC continues to mitigate this exposure through deals with several new international wind power customers. Hyundai represents another important customer and has already announced orders both in the US and Korea.
"Customer Doosan in Korea has ambitions of becoming a top ten manufacturer as well. AMSC has several other attractive growth opportunities that should help to diversify their business.
"Within the power grid market, the company sells power systems to utilities to help them control power output from renewable sources. With expected growth in electricity usage over the next few decades utilities are planning now to prevent costly power outages.
"AMSC products increase the reliability and capacity of the grid, directly addressing the growing problem of grid voltage instability. The company’s superconductor business represents another exciting growth opportunity.
"As renewable power stations continue to grow, so does the problem of collecting the energy they produce and e?ciently transporting it to the place it is used. "These stations are often erected in rural areas while the demand for their produced power is a good distance away, in more densely populated areas. "The copper wire that is currently used su?ers from an inability to span long distances e?ciently, thus causing power line losses among other costly issues. "AMSC is the leading manufacturer of proprietary high temperature superconductor (HTS) wire, which can carry roughly 150 times the electrical capacity of standard copper wire and will better handle the growing demand for energy usage worldwide.
"The company must win contracts here in order to achieve profitability within this business, but we expect rapid growth both here and abroad.
"The proof is in the pudding, of course. Amidst a weak economic backdrop, the company grew revenues by 85% in their latest reported quarter as they announced their third consecutive quarter of profitability.
"The future looks bright as well. After booking approximately $165 million of orders in their latest reported quarter, AMSC enjoys a backlog of orders valued at roughly $587 million.
"The stock should reward investors in 2010 as AMSC reports continued growth in the final two quarters of their current fiscal year (which ends in March), followed by a near doubling of earnings in the following year."
Best Stocks Investment For 2011 NO.4: Annaly Mortgage (NLY)
"Annaly Mortgage Management (NYSE: NLY) is our favorite investment idea for 2011," says Jack Adamo.
In his Insiders Plus newsletter, he explains, "The company buys only Ginnie Mae, Fannie Mae and Freddie Mac bonds, all of which now have explicit U.S. government guarantees.
"The company uses modest leverage -- about half what banks use -- to increase shareholder returns. With short-term rates likely to remain low for several years, Annaly’s interest-rate spread will be wide and profitable. The company has never had a losing year. "The market is still scared blind by anything that has the word "mortgage" attached to it; so, the shares, which would normally yield about 7%, now yield nearly 15%, and the dividend has been growing!
"That will not always be the case. Since it is a real estate investment trust, it must pay out 90% of its earnings each quarter, so it can’t hold reserves, like corporations do. Hence, the dividend will vary quarter to quarter.
"But using the average payout over the nearly 12 years it has been public, it would yield 10%. Moreover, the shares are less than half as volatile as the market, having a Beta of .45.
"Annaly’s management is among the most savvy I’ve ever seen. They have called the contours of their business, as well as the credit and stock markets with extraordinary accuracy since long before the credit bubble appeared obvious to others.
"And they exploited that knowledge to shareholders’ advantage. As credit markets normalize, I believe more investors will seek the safe income Annaly o?ers, and the shares will rise even more than the 27% they’ve risen this year. We recommend purchase of the stock up to $19 a share."
Best Stocks Investment For 2011 NO.5: AOL (AOL)
"AOL (NYSE: AOL), formerly America Online, is one of the most storied – and bloodied – names in the Internet sector," says Bernie Schae?er.
Referring to skepticism surround its early December spin-o? from Time Warner, the editor ofSchae?er's Research chooses AOL as his top pick for 2011, noting, "From a contrarian perspective, the current pessimism could have positive implications.
"AOL's merger with Time Warner in 2001 was hailed (by some) at the time as an innovative marriage of old and new media. But AOL’s dial-up Internet access model was already under pressure by the time of the merger, and the AOL and Time Warner cultures never meshed.
"The merger is now regarded as one of the most disastrous in U.S. corporate history, losing more than $100 billion in market value. Steve Case, the deal’s architect , resigned the chairmanship of the combined company two years later and left the board in 2005.
"Time Warner has been looking to rid itself of AOL ever since. So it was no surprise that Time Warner’s spin-o? of AOL in early December 2009 was met with a heaping armful of skepticism.
"We have seen multiple media outlets weigh in negatively on AOL, perhaps an indication of how Wall Street is currently viewing the stock. In fact, the shares were initiated at 'underperform' by a major brokerage house in December.
"Moreover, Zacks reports that the stock has earned one 'strong buy' rating, one 'hold,'
and two 'strong sells.' Therefore, we view the upgrade potential on AOL favorably.
"But AOL, with a market cap of only $2.5 billion, argues that it remains a strong brand. Its 80-plus Web sites attract 100 million unique visitors each month. It still generates cash through its Internet access business.
AOL has a new management team led by former Google exec Tim Armstrong. Armstrong wants AOL to di?erentiate itself from competitors by creating original content. Yahoo, Google and others are largely aggregators of others’ content ; AOL generates 80% of its own content.
"Although we emphasize that we are no in way comparing AOL to Google, the skepticism greeting the spin-o? is eerily reminiscent of what we saw around Google just prior to its initial public o?ering in 2004. hen the shares of GOOG quickly outperformed their low expectations, the bears quickly jumped on the stock's bandwagon, pushing it even higher.
"OL's shares so far are bucking the widespread pessimism as they hover above short-term support at the 23 level. From a contrarian perspective, this pessimism could have positive implications if skeptics succumb to better price action."
Best Stocks Investment For 2011 NO.6: Eldorado Gold (EGO)
"While my primary focus is on the international financial markets, it’s the glint of gold that has caught my eye for 2011," says Martin Hutchison.
The contributing editor to both Money Map Report and Money Morning, explains, "Gold – or mining companies like Eldorado Gold (NYSE: EGO) – an especially compelling investment for 2011.
"There hasn’t really been a commodity bubble like the current one since the late 1970s. It will end, as these things always do – but only when the world’s central banks decisively tighten monetary policy and turn o? the spigots flooding the system with cash.
"That’s unlikely to happen until consumer inflation has shown itself rising sharply. In relative terms, gold’s price is still far below its all-time highs – the 1980 top at $875 per ounce is equivalent to $2,400 today, roughly double the current price.
"Supply is also becoming an ever-larger factor – the total global supply of new gold in 2009 was valued at under $90 billion, with another $35 billion or so available from recycling.
"That first number is unlikely to change as mining output has been declining by about 1% per annum in volume terms, in spite of the recent surge in gold’s price.
"This means that if the big boys – such as the hedge funds (global assets of $1.9 trillion) or China (o?cial reserves of $2.3 trillion) – get involved, demand is likely to quickly exceed supply by a huge margin.
"Even though all the gold ever mined is still with us, it has a value of only about $5 trillion – a lot of money, but not huge in light of global investment flows.
"So, if the money really pours into gold, the price could again take o?. After all, $2,400 an ounce is still some distance away, and there’s a lot more speculative capital around today than there was in 1980.
"There’s no money tightening in the works currently. The Fed has kept monetary policy extremely loose for a year now, and has said it has no intention of raising rates in the near term.
"The European Central Bank, the Bank of Japan and the Bank of England have also indicated they do not intend to tighten, while China’s M2 money supply has risen by 29% in the past year.
"Given all this money supply sloshing around, it’s not surprising that gold prices have zoomed upwards – and will continue doing so as long as the Fed and its central bank brothers maintain a loose-money policy.
Rather than gold itself, I’d recommend gold mining shares – first choice, Eldorado Gold – for two reasons:
1 * First, there’s the leverage. A gold mining company with extraction costs of $600 per ounce doubles its profits when gold goes from $900 to $1200.
2 * Second, commodity speculation pushes up share valuations, so chances are you’ll make even more money. After all, the earnings growth rate becomes pretty spectacular, which can make a very simple company look like a Google!
"As a bonus, Eldorado is not just in gold, it’s in Chinese gold – both internally and through a takeover it recently executed.
"That means it benefits not only from any rise in gold prices, but directly from increases in Chinese wealth. Chinese investors, when they buy gold, will naturally turn first to domestic output.
"Eldorado plans to double current production by 2013 (even without its recent acquisition) – no decline here. What’s more, it’s reasonably valued – actually quite cheap – considering its earnings potential.
"The company was founded in 1992, and has come a long way in a relatively short time, building to a recent market capitalization of $5.15 billion.
"It owns the Kisladeg gold mine in Turkey, which produced 58,000 ounces of gold in the third quarter of 2009, and the Tanjanishan gold mine in western China, which produced 31,000 ounces.
"In addition, its Efemcukuru project, with projected reserves of 1.7 million ounces of gold in Turkey, is expected to begin production in the fourth quarter of 2010.
"Eldorado also has gold-development projects in Greece and Brazil and an iron-ore project in Brazil. Its current gold reserves, proved and probable, total 7.6 million ounces.
"In September 2009, Eldorado made an agreed-share-exchange o?er for Sino Gold, the largest international gold mine in China. The o?er values Sino Gold at approximately $2.2 billion and will give Sino shareholders approximately 25% of the combined group.
"Sino has two operating mines in China – Jinfeng, the country’s second-largest mine with production of 151,000 ounces, and the White Mountain Gold Mine, which began production in January 2009. The Eastern Dragon project in Heilongjiang province will become Sino’s third mine.
"The combined companies will have gold reserves of 12.7 million ounces, with annual production expected to reach 850,000 ounces in 2011. In the third quarter, Eldorado earned $30.2 million, or 8 cents a share – up from 5 cents a share in the third quarter of 2008.
"That’s at an average gold price received of $957 per ounce, compared with a total production cost, including overhead, of $430 per ounce. Based on third-quarter earnings, EGO has a P/E ratio of about 35 times – steep, but not excessive given the growth potential.
"That should become obvious in the year-end figures, which will show the rise in gold prices we saw in recent months dropping straight to Eldorado’s bottom line.
"Just estimating, if the gold price for the fourth quarter averages $1,100 an ounce, that will send an extra $150 per ounce or so in profits to shareholders, adding about 35% to EPS and reducing the P/E correspondingly.
"Yes, labor and energy costs could rise a bit, but not much – Eldorado’s costs were only $402 per ounce in the third quarter of 2008, when oil was at $147 a barrel.
"Bottom line: Increasing gold production – check. Contained costs – check. In the middle of the world’s fast-growing Chinese gold market – check. Decent balance sheet and profitability – check. What’s not to like?"
Best Stocks Investment For 2011 NO.7: Emerson Radio (MSN)
"Emerson Radio (NYSE: MSN) is an atttractive, low-priced stock," says Bill Matthews, a specialist in lower-priced issues.
The advisor, who has been publishing The Cheap Investor for nearly 3 decades, suggests, "The stock has the potential for significant appreciation in 2011."
"In this market, we wanted to recommend a quality low priced stock that is relatively safe, has good increasing revenues and outstanding earnings. We are also looking for a stock that is selling at an attractive low price, and has the potential for significant growth and stock appreciation in 2011. Emerson Radio fits these criteria.
"Emerson Radio is a household name. Together with its subsidiaries, it engages in designing, marketing, selling, and licensing various consumer appliance, electronic and house ware products.
"It products are sold in the United States and internationally. Emerson Radio Corp. markets its products under the Emerson and HH Scott brands.
"The company distributes its products primarily through mass merchandisers, discount retailers, toy retailers, and distributors and specialty catalogers in the United States.
"Emerson has an excellent balance sheet with $29 million or $1.06 per share in cash, a book value of $2.25 per share and less than $6 million in debt. Insiders own 65% of the 27 million total shares outstanding and 22 institutions own 17% of the float.
"Emerson has excellent financials for the six-month period ended September 30. Revenues are $107 million up from $97 million a year ago. Net income is $4.3 million or $0.16 a share up from a loss of ($242,000) or (.01) a share verses a year ago.
"If you look at Emerson’s stock chart between June 2002 and June 2003, you’ll see that the price soared from $1.50 to $7.50 because of excellent revenue and earnings increases. We believe, that if Emerson continues its earnings growth, the price could skyrocket again."
Best Stocks Investment For 2011 NO.8: Equinix (EQIX)
"Equinix (NASDAQ: EQIX), the global data center operator, is one of the most tempting growth stock opportunities on the 2011 horizon," says Stephen Quickel.
The editor of US Investment Report explains, "Big banks, market data providers, telecoms and other technology-driven clients use the firm's data center platforms to reduce their own capital expenditures and operating costs.
"The Silicon Valley-based company, barely ten years from startup, has moved quickly to open 45 data full-service centers serving clients in 18 key regions of the U.S., Europe and Asia-Pacific areas.
"These centers provide data management services to global enterprises of all sorts, including content and financial companies and network service providers,. "With demand rising rapidly, Equinix, has been able to lift revenues from $118 million in 2003 to $705 million in 2008, and to an estimated $880 million in recessionary 2009. Analysts project $1.17 billion in 2011—a two-year rise of 67%.
"As for earnings, the rapidly expanding company showed deficits for its first eight years, but reduced them in all but one year. Now firmly in the black and established as a sector leader, its gains could be large over the next few years.
"Rapid expansion of its IBX centers (short for International Business Exchanges) has required considerable debt. The latest available debt/equity ratio is an elevated 1.27.
"But capital spending is leveling o?, and Smith and his managers have kept of tight rein on operating costs.
"Earnings have risen 26 quarters in a row. After tax margins are reportedly at a four-year high. Third quarter 2009 earnings jumped 213% year-over-year, beating analyst estimates by 57%.
"Zacks reports consensus five-year earnings growth projection of 18.4% a year going forward. First Call shows earnings up 26% in 2010 and more than 40% in 2011.
"Those eye-catching numbers have not gone unnoticed. EQIX is not cheap by conventional measures. At 105 in late December (up from 40 in March), it traded at 51 times FC's 2011 earnings projection and 34 times its 2011 estimate.
"But the stock has impressive support. Among 26 brokers—a large following for a young $4-billion market cap stock—15 rated it a Strong Buy in December, 3 a Buy and 8 a Hold, with no Sells.
"Goldman Sachs, altogether, owns 12.5% of the outstanding shares, with Wellington Management and Shumway Capital Partners each holding 8%-plus. Wells Fargo, Barclays, Morgan Stanley and Vanguard also have large positions.
"Of course, the Big Boys bought in at lower levels and have added shares along the way—and will doubtless continue to do so.
"With its high debt and P/E, it’s not the kind of play-it-safe stock that attracted investors in late 2010. But as we head into 2011, few mid-caps have emerged with more fascinating near- and long-term growth possibilities."
Best Stocks Investment For 2011 NO.9: EZchip (EZCH)
"EZchip Semiconductor (NASDAQ: EZCH), a fabless semiconductor company that specializes in network processors," is my top pick for the coming year," says technology sector guru Paul McWilliams.
In his Next Inning newsletter, designed for sophisticated tech investors, he suggests, "I think the upside potential here in 2011 and beyond is significant.
"Its initial market target has been what's termed as CESR (Carrier Network Switching and Routing). EZCH has since expanded its focus to include products that are broadly grouped into what's called the 'Access' market.
"Between organic demand growth in the CESR market and EZCH's expansion into the Access markets, it is estimated the company will be addressing a total available market potential of about $1.5B by 2012.
"That implies substantial upside revenue potential for a company that will report somewhat less than $40M in revenue for calendar 2010.
"In 2011, EZCH will be shipping NP2 and NP3 / NP3C network processors in volume to its CESR customer base. In addition to this, we'll also see the initial revenue generated from its next generation CESR solution, the NP4 and its debut Access product, the NPAx.
"Notable production ramps for the NPA and NP4, which sells for roughly twice the price of a NP3, will begin in 2011. Revenue from its NP2 will likely peak in late 2010 or 2011 as Juniper winds down its demand and replaces the NP2 with an internally designed ASIC.
"However, I believe this will be much more than o?set with the ramp of the NP3 and NP3C, the latter of which is designed into various platforms at Cisco including its new ASR series edge router.
"I believe EZCH's lack of participation in the 2009 tech rally is attributable to two factors. The first is what I think will prove to be a misunderstanding as to when its business at Juniper will peak and the sharpness of the decline following the peak.
"In my view, this peak won't happen until late in 2010 at the earliest and by then it will be much more than o?set by growing business at Cisco; not to mention design wins at other leading networking companies that will ramp in 2011 and beyond.
"The second factor has been the selling of shares by some of EZCH's early venture capitalists (VC's). Due to the fact EZCH initiated a secondary o?ering to liquidate these VC shares in one fell swoop as well as complete the purchase of its a?liated EZchip Technologies operating unit, this selling pressure will soon be eliminated. In my view, with this gone and EZCH poised to post impressive growth in 2011."
Best Stocks Investment For 2011 NO.10: Fidelity Select Health Care (FSPHX)
Jim Lowell is a long-standing expert on mutual funds, which a noted specialty regarding the Fidelity family of funds.
In his The Fidelity Investor, he looks to Fidelity Select Health Care (FSPHX) as his top investment idea for 2011. He suggests, "Investors looking for a one-stop healthcare shop should pick this option.
"Diversification is a good Rx for risk and return. Manager, Eddie Yoon invests in the gamut of healthcare options: pharmaceuticals, biotechnology, medical equipment and systems, and HMOs.
"The trumped up political crisis that has engendered a rush to ‘cure’ our healthcare system has done little to dent the fundamental reasons (from earnings growth, demographics, and innovation) for keeping a core holding in healthcare now.
"As with all the sub-sector health-related Select funds except Select Medical Delivery, there’s a stealthy emerging market dose here, too; foreign stocks make up 13% of the holdings.
"In addition, it should be pointed out that even the companies that aren’t listed as foreign stocks derive increasingly greater amounts of revenue form the burgeoning global marketplace, and from emerging market consumers who are not only upgrading their lifestyle, but their healthcare as well.
"Yoon’s top ten holdings are Covidien, Pfizer, Medco Health Solutions, Allergan, Merck, Express Scripts, Baxter Intl, Amgen, Illumina, and Bard."
Best Stocks Investment For 2011 NO.11: Ford Motor (F)
"Ford Motor Co. (NYSE: F) is in the driver’s seat when it comes to innovation, cutting costs, and building global demand," says Mark Skousen.
In his Forecasts & Strategies, which this month is celebrating its 30th anniversary, he cautions, "I’ve decided to recommend Ford as the best turnaround speculation for 2011. Bear in mind that this is highly speculative, and not recommended for conservative investors.
"Ford shocked Wall Street and Washington two months ago in reporting its first positive cash-flow quarter in more than two years. Of course, it played some accounting games to do it, but the overall direction is up.
"Ford made its first billion by successfully increasing domestic sales for the first time in nearly five years, and boosting market share against its chief rivals, Government Motors (GM) and Crying Chrysler.
"Meanwhile, the #2 auto maker predicted it would turn solidly profitable by 2011 as a result of its cost cutting measures and renegotiations with the unions.
"Ford is the only major US auto maker not begging for a government bailout last year. This isn’t the first time Ford has broken away from the government trough. In the early 1980s, Ford executives opposed the call for import quotas on Japanese cars and took on their competitors by raising quality standards.
"I’ve been a long-time buyer of Ford cars, including two Mustangs, an Explorer truck, and a Lincoln Town Car. I have enjoyed relatively maintenance free service for years.
"Maybe my experience is exceptional, but most car rating services, such as Consumer Reports, rank Ford ahead of its domestic competitors. The company is innovative. The hot-selling Ford Taurus just won Kelly Blue Book’s '2011 Best Redesigned Vehicle.'
"Its engineers have developed the first robot (named RUTH) to scientifically test the feel and appearance of switches and surfaces in their automobiles. And Ford's Quick Lane Tire and Auto Centers are expanding rapidly across the country.
"Ford isn’t out of the woods yet. It still carries an incredible (gulp) $103 billion in debt (it blundered by borrowing billions to buy back its stock at much higher prices) and has been forced to restructure its debt again. Unions are refusing to cut back any further their generous medical and pension benefits.
"CEO Alan R. Mulally, a turnaround executive from Boeing, deserves high marks for Ford’s latest success. If anyone can make an elephant dance, he can.
"The stock price has already tripled in price in 2009, but it is still way below its previous high of $40 a share in the late 1990s, so it has lots of room to grow. It’s selling at 20 times next year’s earnings, and has over $32 billion in cash.
"We're adding Ford Motor Co. to our growth stock portfolio, with the caveats that the stock does not pay a dividend and is considered high risk. As such, it may not be for everybody."
Best Stocks Investment For 2011 NO.12: FPL (FPL)
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 looks to utility stock FPL (NYSE: FPL) as a top selection for 2011.
"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 comin year, I like FPL Group is 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 2011, 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%."
Best Stocks Investment For 2011 NO.13: Gafisa (GFA)
"My pick for the top stock of 2011 is Gafisa (NYSE: GFA), a Brazilian homebuilder and developer," says emerging markets specialist Paul Goodwin.
In his Cabot China & Emerging Markets Report, he explains, "This is an experienced growth company in a country with an excellent economic engine." Here's the advisor's review.
"Gafisa has been growing fast and has a huge future. Brazil doesn’t get much publicity in an investing world focused on China, but its economy is also growing at a sustainable 5% a year and it’s a lot less dependent on exports than China. "Gafisa has completed nearly 1,000 projects and the company is active in 21 of Brazil’s 26 states as it moves outside its traditional markets of Rio de Janeiro and Sao Paulo.
"Brazilian interest rates have been coming down and the middle class is growing—up 24% in just the last four years—which will boost demand for housing.
"Gafisa reported a 358% surge in earnings in Q3 on a 128% jump in revenue and the backlog of developments on the board is strong.
"As for the stock, GFA has made a strong recovery from its late-2008 lows, but the stock’s P/E ratio of 21 is still quite reasonable for a strong growth issue.
"The stock has been trading sideways since August 2009, perambulating in a range with a core of support at 30. It looks like an excellent base for a new rally, and 2011 should see the breakout.
"This is an experienced growth company in a country with an excellent economic engine and the stock pays a small dividend—that’s an attractive package!"
Best Stocks Investment For 2011 NO.14: General Mills (GIS)
"General Mills (NYSE: GIS) looks especially tasty for total returns in 2011," says Chuck Carlson, a leading expert on dividend reinvestment plans -- a low cost strategy for loong-term investors to accumulate shares of a particular stock directly from the company.
On his The DRIP Investor, he explains, "There is a transition taking place in the stock market toward high-quality, dividend-paying stocks. General Mills plays into this trend very nicely.
"Profits for the leading food company should show nice gains in 2011, which should provide support to the stock price. Also, the stock o?ers certain defensive characteristics should the market become more tumultuous.
"Its stable of strong brand names, focus on costs, and overseas growth opportunities should drive profits higher in the near and long term. I like the stock for all seasons.
"General Mills owns some of the strongest brands on your grocer’s shelves, including Green Giant vegetables, Old El Paso Mexican food, Haagen-Dazs ice cream, Yoplait yogurt, and Cheerios and Wheaties cereals.
"Finally, General Mills has pricing power that could be very useful should inflationary fears increase among investors. The stock's yield of 2.7% is an added bonus. I look for the stock to outperform the overall market in 2011.
"I think the stock will continue to put up decent gains should the market rally continue. And I would expect the 'defensive' qualities of the stock to fuel above- average price resiliency should the overall market turn down.
"Investors should note that General Mills o?ers a direct-purchase plan whereby any investor may buy the first share and every share directly from the company. The minimum initial investment is $250. For information on the direct-purchase plan call (800) 670-4763."
Best Stocks Investment For 2011 NO.15: Jinpan Int'l (JST)
"Jinpan International Limited (NYSE: JST), a manufacturer of transformers, is the top pick for 2011 from Tracey Ryniec.
The value stock strategist for Zacks.com explains, "The company is positioned to benefit from the trillions of dollars of government stimulus around the world, as much of it is going into infrastructure.
"China has been an investing hotspot for several years. Even the great recession of 2008 and 2009 did little to slow down investor interest as the Chinese government injected massive stimulus into its economy which has propelled growth.
"In 2009, the Shanghai Composite Index surged over 70%, far outperforming the stock markets of the United States and most of Europe.
"Questions abound about whether China is too hot to handle and is a bubble waiting to burst. But I believe investors should look at each company individually, whether it is in China or not.
"While macroeconomic and political issues shouldn't be ignored, some companies will be better suited to ride out any rough patches. One of those companies is Jinpan International, one of only two UL certified cast resin transformer manufacturers in the world.
"While it has its headquarters and manufacturing facilities in China and generates a majority of its business in China, Jinpan is actually an American company held by a British Virgin Islands holding company. It is also not a newbie on the Chinese stage. Jinpan has been in business since 1993.
"The company manufactures medium voltage transformers (10-25 kV.) That doesn't sound too glamorous, but the transformers are used in large infrastructure projects like factories and real estate developments as well as in municipal transportation projects like airports and subway systems.
"Jinpan is positioned to benefit from the trillions of dollars of government stimulus around the world, as much of it is going into infrastructure. International sales have been growing. In the third quarter, sales outside of China rose 40% to $8.1 million and accounted for 18.5% of net sales, up from 13% a year ago.
"International customers were ordering cast resin transformers for wind power applications, along with the more traditional orders for use in airports, subways, and data centers.
"Orders for wind applications were 18% of net sales in the third quarter. The company's recently opened Shanghai manufacturing facility now handles the growing wind energy products business.
"In October 2009, Jinpan expanded in the U.S. opening a New Jersey o?ce and warehouse. Clearly, international sales are key to Jinpan's growth in 2011 and beyond.
"Despite a big jump in the stock in 2009 (what didn't rally in 2009?), Jinpan has attractive valuations. The company is trading at about 13 times forward earnings. It has a low PEG ratio of just 0.64. Analysts polled by Zacks project earnings growth of 42% in 2010 and, so far, just 3.19% in 2011.
"But the company has had two big earnings surprises in the second and third quarters of 2009 so there is reason to think that growth will be much hotter than current projections. Analysts are bullish on the long term outlook, expecting earnings growth to average 20% over the next 5 years.
"Jinpan has an excellent 1-year return on equity of 24.75%. The company also shows its support to shareholders by paying a dividend, unusual for a Chinese-based company, which is yielding about 0.50%."
Best Stocks Investment For 2011 NO.16: Keegan Resources (KGN)
"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 looks to a small gold exploration and development company as his top pick for 2011: 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 o?er 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 o?ers for the company.
"While I know of no indications that any o?ers 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."
Best Stocks Investment For 2011 NO.17: Kinder Morgan (KMP)
For her top pick for 2011, income specialist Amy Calistri looks to Kinder Morgan Energy Partners L.P. (NYSE: KMP).
The editor of The Daily Paycheck explains, "I always look for the gift that keeps on giving; that's how I view this master limited partnership, which produces a steady stream of income each and every quarter.
"Kinder Morgan Energy Partners is one of the largest owners and operators of energy- product pipelines and storage facilities in the United States.
"Formed in 1992, KMP is structured as a publicly-traded master limited partnership (MLP). MLPs are an important asset class for income investors because they are legally required to distribute most of their taxable income and cash flow to shareholders (known as 'unitholders').
"KMP's extensive pipeline systems carry products such as gasoline and heating oil from the Gulf Coast to the East and West Coasts.
"KMP also owns and operates a network of carbon-dioxide (CO2) pipelines, which are used in a process known as enhanced oil recovery. These pipes carry CO2 to old oil fields where it is injected into the fields to increase productivity. These enhanced recovery techniques become more popular as oil prices rise.
"And KMP is continuing to grow its pipeline revenues through expansion. This past November , the Rockies Express Pipeline became fully operational.
"KMP owns a 50% stake in the 1,679-mile project, which carries natural gas from the Rocky Mountains to the Pennsylvania/Ohio border.
"Although KMP is an energy-related company, its revenues are relatively insensitive to energy prices. The partnership earns fees based on the amount -- not the price -- of gas, oil or refined products it processes and transports.
"Many of its interstate pipelines charge rates that are regulated by the Federal Energy Regulatory Commission. These regulated rates are set to allow Kinder Morgan a steady, reliable return on invested capital.
"Further, the partnership has already locked in guaranteed capacity from a few shippers on its pipes. KMP appears to be on track to not only deliver, but also continue to grow, its distributions.
"And when it comes to distributions, KMP has a stellar track record, having made quarterly payments like clockwork since October 1992.
"KMP also has a very consistent record of dividend growth, boosting distributions nearly every year since its inception. The partnership has increased its distributions at an annualized rate of +7.5% in the last five years alone.
"KMP currently pays a quarterly dividend of $1.05 per unit, equivalent to $4.20 per year for a yield of approximately 7% at current prices. It should be noted that MLPs are best held in taxable accounts as most of their distributions are classified as 'return of capital'."
Best Stocks Investment For 2011 NO.18: Nabi Biopharmaceuticals (NABI)
"Nabi Biopharmaceuticals (NASDAQ: NABI) is a small $250 million market cap company has a unique product with obvious benefits for a giant market," says growth stock specialist Dave Dyer.
In his Dave Dyer's Newsletter, he explains "The company has developed a vaccine against nicotine. Smoking is the world’s largest preventable cause of death, but current treatments are ine?ective because it is so easy to relapse.
"Nicotine is addictive and that next cigarette will provide a dose of it no matter what program or treatment you have been on. Failure rates for treatment can be as high as 95%. And, the existing competitors are ine?ective.
"NABI has developed a vaccine against nicotine that makes it impossible for the nicotine molecules to reach the nicotine receptors in the brain; you can still smoke if you want but you won’t get any pleasure from it and you can’t get addicted to it.
"The vaccine produces an antibody that attaches to the nicotine molecule and makes it so large that it can’t pass through the blood/brain barrier to reach the nicotine receptors.
"The vaccine is given in a shot that is e?ective for one year and there don’t seem to be any negative side e?ects. It is harder to relapse because the addictive power is blocked for a year.
"Most of the analysis and testing has been done on using this product to help people stop smoking, but I think the far larger opportunity is to use it to prevent smoking in the first place.
"Who would not want their kids to have this vaccine? They would take it once a year like flu shot. Also, since smoking causes so much medical expense, I can easily imagine the insurance companies providing large discounts to people who take the vaccine.
"The product is currently in Phase III clinical trials and NABI has cut a $500 million marketing deal with Glaxo SmithKline that depends on final FDA approval and other milestones.
"There is always a chance that it will not pass, but I’m willing to take that risk. And, the existing competitors are ine?ective."
Best Stocks Investment For 2011 NO.19: Noble (NE)
Value investor Charles Mizrahi looks to Noble Corporation (NYSE: NE) as his top investment idea for the coming year.
In his Hidden Values Alert, the advisor o?ers his bullish assessment for the company, a Cayman Islands-based company involved in o?shore drilling contracting for the oil and gas industry.
"Noble Corp. has a fleet of 63 mobile o?shore drilling units located worldwide. Its fleet consists of 13 semisubmersibles, four dynamically positioned drillships, 43 jackups and three submersibles. The fleet count includes five units under construction.
"Some 87% of its fleet is deployed in areas outside of the United States, principally in the Middle East, India, Mexico, the North Sea, Brazil, and West Africa.
"The company generated more than $1.6 billion in free cash flow over the past twelve months. NE has a $9.6 billion backlog that goes all the way out to 2016. It employs very little leverage and returned a hefty 29% return on equity.
"Overall, Noble is a well-run business, and a price of $42 or lower per share represents a very good value.
"If Noble Corp. can grow its earnings at only 5% per annum and maintain a price to earnings multiple of 9, then the stock will handsomely reward investors during the next five years."
Best Stocks Investment For 2011 NO.20: Oceaneering International (OII)
"Oil recently su?ered a pullback, but we think it's temporary," says Brandon Clay, who turns to the oil sector for his top pick for 2011.
The editor of Invest with an Edge suggests, "One stock that should pull out of congestion when energy moves again in 2011 is Oceaneering International (NYSE: OII), a company involved in deepwater drilling services.
"The Texas-based oil and gas services company gets most of its revenue by providing goods and services to companies that are drilling for oil and gas o?shore. One of their specialties is deepwater remotely-operated vehicles (ROVs), or 'robots' in layman's terms.
"Oceaneering has turned a profit every year since 1999, including a record $3.65 a share in 2009. Analysts are forecasting a drop to $3.38 a share for 2010, but they also expect a nice rebound to $3.51 a share in 2011.
"The shares still appear inexpensive at just 16 times forward earnings. The firm's balance sheet is in good shape with just $140 million in debt and nearly $96 million in free cash.
"Oceaneering fills a unique niche in its industry. They help oil and gas explorers drill in deep water locations hundreds of miles o?shore. Its services are expensive, but producers like Chevron and ExxonMobil have little choice if they want to replace their reserves.
"OII is in a market sweet spot. For an indirect play on rebounding crude prices, go with oil services performer Oceaneering International."
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