My Top Ten Stocks for 2011
This article marks the third consecutive year of picking ten stocks for the year. The results from the past two years have been great and can be found here:
Below are my top ten stock picks (listed alphabetically by company name) followed by honorable mentions and also several ETFs to keep an eye on. Prices are as of close on December 31st, 2010.
Why: Ameresco went public in October of 2010 and is up only about 10% since that first day of trading. I stumbled upon this company the other day and am glad that I did. The company has a market cap of around $650 million, making it the smallest of my top ten stock picks. The company makes buildings more energy efficient, with major contracts from governments and schools. The company trades at a price divided by sales of 1 and is also trading below enterprise value right now. This is a great green play and as the company is a small cap it has plenty of room to run this year and in the future.
BAC-Bank of America
Why: The financial market is still on the upswing from its lowest levels. Bank of America trades close to its 52 week low at year end. The company still trades below book value and enterprise value. Bank of America scared investors off with its rumored Wikileaks target. Look for the larger banks to buyout smaller banks in 2011. Look for the bigger banks like Bank of America and Citigroup to continue to get past their debt problems and strengthen their balance sheets.
CNH-Case New Holland
Why: The Case and New Holland brands are great brands in the agricultural and construction industries. The company also owns the Kobelco and Steyr brands. The company always plays third wheel to John Deere and Caterpillar. Fiat owns 89% of the Case New Holland company. If Fiat decides to split off the company or sell part of its stake the company becomes a huge takeout target. The stock should rise to $60 by the year end as it is currently trading at 1.5x book and less than 1.0 price divided by sales.
Why: Cisco is an absolute value play here at these levels. Cisco continues to buy out rivals and expand into new industries. The company is involved in several technology industries and is involved in the Cloud technology that will dominate the talk of 2011. The company has been buying back shares and announced it will begin paying a dividend in 2011. At these levels I have to recommend the stock and think it should hit $28 to $30 by the end of the year.
Why: Corning makes glass components used in everything from televisions, laptops, phones, and tablets. The company continues to expand and be used by more and more large technology companies. The company originally was dependant on television sales throughout the world but now with its Gorilla Glass technology (glass which is scratch resistance) it continues to expand rapidly throughout the tablet and mobile phone industry. Shares are trading at 10x 2011 earnings and the company pays a dividend of around 1% as well.
Why: Dreamworks had a good 2010 with the releases of Megamind, Shrek 4, and How to Train Your Dragon. These movies did not perform as well at the box office as investors had hoped for and the stock got punished pushing it down close to its 52 week low to end the year. The company trades with no debt and at about 13x 2011 earnings. The company will release Kung Fu Panda 2 and The Guardians in 2011. The Guardians deals with Santa, the Easter Bunny, the Tooth Fairy, and Sandman fighting together against the Boogeyman while Kung Fu Panda 2 is the sequel to a movie that made over $630 million worldwide at the box office. The company continues to expand its relationship licensing its characters out to companies and also has been expanding its television presence as well. The company releases five movies every two years. Look to buy under $30.
Why: EMC competes in the high growth highly competitive network storage industry. As internet traffic increases this is a company that will benefit. The company also has a great presence in the Cloud industry which is a leading topic of 2011 investing. EMC owns 80% of VMWare as well. In network storage EMC competes with Dell, IBM, and Hewlett Packard. The company trades at cheap levels on its own and investors are getting the stake in VMWare for next to nothing. Technology remains a place to be for 2011 and this is my favorite tech play for the year.
Why: hhgregg is a consumer electronics specialty store. The store sells large ticket items like televisions and washers and dryers. These large ticket items are not likely purchases from internet and items that customers like seeing in person. Most items are offered with same day delivery. The company currently has 131 stores in 11 states. The 2011 plans are to open 40 to 45 stores. Net sales and profit have continually rose for this company and should continue to rise as the company expands its presence into other states. Investors will take note as this company could replace the vacancy left by Circuit City and start to take market share away from Best Buy.
Why: Pricesmart is the Costco/Sam’s Club of the emerging market world. The company has 28 locations in Central and Latin America represented by 11 countries, with plans to open a 29th in Columbia in 2011. The 30th location will also open in the Dominican Republic, which will be its fifth in the country. The company continues to beat analysts expectations every quarter and with same store sales reports every month. Analysts continually raise earnings estimates and the shares are already headed higher at the end of 2010. Pricesmart was founded by Sol Price who already sold a business to Costco. Part of their sale agreement was that he would not open another warehouse company in the United States, so instead he is in the growing Latin American market. This company could also be a buyout target by Costco or Wal Mart at some point down the road.
SIRI-Sirius XM Radio
Why: It’s hard to recommend a stock that traded at its 52 week high at the end of the year normally. However, when the stock has everything going for it, like Sirius does, it doesn’t seem like such a bad idea. Sirius just resigned a contract with Howard Stern, which this time around includes a mobile deal. The company also signed a deal with the NFL. These two contracts were the biggest things weighing the stock down in my opinion. The subscription numbers and automobile industry have already proved positive for the company. The company is starting to pay off debt and doesn’t seem to have any future problems with payments, as it has had in past. This company has risen from the brink of bankruptcy to future star. The company does have competition from Pandora, Ipods, and other listening devices but should continue to beat them and gain subscribers based on their offerings of talk radio, comedy, and sports that others can’t offer. I own shares of Sirius and continue to recommend them and would be happy to keep accumulating shares under $1.75.
Stock has been beaten down to Dreamliner delays. Look for a 2011 rebound back to $75
Coach continues to open new stores and expand its presence into China.
DISCA-Discovery Communications $41.70
Discovery own Animal Planet, Discovery Channel, TLC, and the new OWN channel. This would be a play on the creation of the Oprah Winfrey Network which should have strong viewership from women and be a great way for the company to increase its advertising revenue.
FO-Fortune Brands $60.25
Fortune is splitting its company and I would wait to buy until after this. Its spirit division headed by Jim Beam will be a great target for Diageo or someone else to acquire as Jim Beam and Jack Daniels are the top two whiskeys.
Liveperson provides web support to major retailers and companies on their websites. A rival was bought out this past year by Oracle.
MSG-Madison Square Garden $25.78
The company owns New York Knicks, New York Rangers, New York Liberty, and the famous Madison Square Garden. The New York Knicks are playing well this year and could make the playoffs and also could acquire Carmello Anthony which would bring in ticket sales and merchandise sales not currently seen.
SMT-Smart Technologies $9.44
Stock is near a 52 week low. Company sells interactive whiteboards which should increase use in classrooms and offices.
These stocks that were picked are the opinions of the author. Please do your own investment research before investing in them. Good luck in 2011.