Below is the list of my top ten stock picks for 2010.
All start prices listed are December 31st, 2009.
The ten picks are my attempt to outperform the S&P500.
For a review of my 2009 picks go here: Review of 2009
My 2009 results were amazing, and I can not guarantee that type of return this year.
S&P500 2009 End: $1115.10
2010 Picks in Alphabetical Order.
Why: I hate picking Apple as a top ten stock because it is one of the best performing stocks of the last decade. The company will grow in 2010. Several analysts even predict that the company will beat earnings estimates all four quarters. The company has a history of beating earnings and the more I think about this, I think it is a really likely event. The highly anticipated tablet will make its debut this coming year, barring any setbacks. The anticipation of the tablet is already growing and will increase. As long as Steve Jobs remains healthy, look for an easy play here.
Why: American Tower is trading close to its fifty two week high and has plenty of room to play. As the Smartphone and wireless market grows, companies will need to license towers, which will benefit American Tower. American Tower generates revenue just by leasing its towers out. The company owns towers overseas and will continue to acquirer smaller companies to dominate every country it enters.
BRK.B-Berkshire Hathaway B Shares
Why: This seems like an easy pick, banking on Warren Buffett, the master of investing. The once beloved Berkshire traded at 5,000 back in 2007. While I don't see it approaching that level, I do see it going back up to 4,000 or that area. The investments the company holds remain strong as do its owned businesses such as Dairy Queen, Geico, Fruit of the Loom, Netjets, and many others. The company announced that for the first time it would be splitting its stock. This would price the company at around $66 a share. This will make the stock affordable to many who could not touch it before and will also help it gain entrance into mutual and index funds that it could not before. After the split, the stock will see a nice increase, and will beat the S&P 500, which it is not a part of.
Why: Disney's acquisition of Marvel made me really believe in this company again. The company has a strong slate of 2010 movies like Toy Story 3, Cars 2, and Iron Man 2. The televeision segment remains strong and will grow with its ability to turn Marvel characters into animated television shows aimed at boys. ESPN continues to be the dominant leader in sports coverage on television and online and will help with ad revenue for the company. Look for Disney to start out strong with the Marvel acquisition and waste no time announcing cartoons and movies with the characters.
Why: Fomento Mexicano is my foreign play for 2010. The company, better known as Femsa, operates in three main segments: Coca-Cola (KO) Femsa, Femsa Cerveza, and Femsa Comerico. The company operates in Mexico, South America, and Central America. The company is currently exploring options to sell its beer unit to focus on the other two segments. This would give the company cash to acquire companies and expand into other countries. The company has also announced plans to open 850 Oxxo stores, the convenience store/gas stations, that operate in Mexico. The company should outpace the S&P 500 in 2010.
Why: Gilead, trading near its fifty two week low is a great play on the medical boom likely to happen in 2010. The company is the premier HIV pill player. Gilead's pipeline remains strong and it continues to make cocktail drugs that are more profitable. In the works is a quad drug that would combine all Gilead owned drugs and cut its dependance on other companies. Tamiflu, licensed to Roche (RHHBY.PK), sales will remain strong and help out on the cash flow side. The company has a cystic fibrosis drug coming to the market soon.
Why: McKesson is a great play on the medical industry. McKesson operates in many segments: pharmacy management, drug distribution, hospital software, and many others. The stimulus bill from 2009 still has money allocated for hospitals to switch to electronic software. McKesson is one company that will benefit from this. The company with a market cap of over $16 billion is also a potential acquirer for a major pharmacy company.
Why: Several analysts believe Netflix will be bought out in 2010. I do believe that Netflix will be acquired, although it may have to be hostile. I don't see Netflix wanting to give in to any acquirer as the company believes it has more growth to come on its own. I believe the company will be bought out by mid 2011. Potential suitors include Amazon (AMZN), Microsoft (MSFT), Apple, and Google (GOOG). Any of these giant companies would love to have this amazing brand as part of its ever expanding portfolio of products. Netflix could attempt to expand on its own through an acquisition like Gamefly, the online game rental company. Either way look for the stock to outperform the S&P500.
Why: Smart Balance, best known for its butter, is a player in the butter, milk, peanut butter, sour cream, popcorn, cheese, and mayonnaise industries. The company is aimed at health conscious people, which grow in numbers every year. The stock is a good way to play organic growth. The company's new milk brand is being expanded into more stores. The company trades below book value and has very manageable debt. With a market cap of under four hundred million, this stock has room to run and will increase sales in 2010.
Why: Verizon, with its acquisition of Alltell finally has everything going for it. The company grows with its partnership with the Droid phone. The company will gain many subscribers when Apple's new Iphone is made for Verizon customers. Many people are only with AT&T (T) because of its iPhone partnership. The stock yields over five percent and also has some pretty good commercials going for it too.
GMCR-Green Mountain Coffee Roasters
The honorable mention stocks includes two more plays (MDRX, ESRX) with McKesson in the electronic medical records which I believe will be dominant in 2010. I did not want to pick more than one for 2010 and went with McKesson since it is more diversified.
Disclosure: I do not own any of the stocks mentioned as of writing. An account I manage owns SYY and VZ. I will be looking at adding several of these stocks over the next week.
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