Ten Stock Picks for 2009 22 comments
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Below are my top ten stock picks for 2009. 2008 was rough and 2009 should be a great year to take advantage of beaten down stocks or stocks that appear to have great potential.
The ten stocks are:
Imax (IMAX) $4.48
Imax is a stock that I own in real life with Sogotrade. I have had the shares for about a year and a half and am waiting patiently for the stock to take off. Shares have traded in the $2-$8 range since I have owned them and currently sit in the middle.
The company had one of its best movie releases last year with The Dark Knight. The lineup this year continues to push away from documentaries into subsequent movie releases. Movies on Imax in 2009 include A Christmas Carol (Jim Carrey), Watchmen, Star Trek, Transformers 2, Avatar (James Cameron first directed movie since Titanic), Under the Sea, and a re-release of The Dark Knight (in time for Oscar season). The company's digital projections should be sent to many of the contracted theaters this year.
Johnson & Johnson (JNJ) $59.83
Johnson & Johnson is a great blue chip stock that has been beaten down. The stock right now has a 3% yield and is down from a 52 week high of $72. The company recently acquired Mentor (a company specializing in plastic surgery), which was one of my favorite out of love stocks. The company owns brands like Tylenol, Band-Aid, Listerine, Neutrogena, and Splenda. The stock should rebound nicely and the dividend will be increased.
Hansen Natural (HANS) $33.53
Hansen Natural is a beverage company best known for its Monster Energy drink. The energy drink is number two in the still growing market behind Red Bull. Monster and Monster Java sell extremely well in grocery stores, convenience stores, and big warehouses. The company recently announced a new partnership with Coca Cola (KO) to distribute Monster with its Coca Cola products. This partnership was signed as a long term deal which I think will eventually lead to a buyout by the larger corporation.
Activision (ATVI) $8.64
This stock, which I own, traded as high as $19 in the past 52 weeks. The company recently merged with Blizzard (World of Warcraft). Activision also makes Call of Duty and Guitar Hero. It may have been a softer Christmas than past but when results come out from the Christmas quarter, shares should rebound slightly. The company also has a new Starfox game, which will be huge in South Korea.
Altria (MO) $15.03
Altria, the domestic smoking company that makes Basic and Marlboro, is all that's left since it split off its international business (Philip Morris International (PM)). The company also owns John Middleton cigars and around a quarter of SABmiller (Miller, Coors). The stock trades at 5x trailing earnings and yields over eight percent.
Dendreon (DNDN) $4.58
Dendreon is a speculative stock that will either blow up or blow up in my face. The company is a biotech with a promising prostate cancer drug. The drug is called Provenge and should be approved this year with supporting results from Phase III trials.
Corning (GLW) $9.53
Corning is a leader in glass making, fiber optics, and LCDs. The company continues to ride the flat screen television boom. The company should also gain from the need for more fiber optics for internet data being transferred from one place to another.
Deere (DE) $38.32
Deere is my one pick to ride out Obama's presidency. The stock yields around three percent. The stock has traded from around $28-$95. This stock should bounce back and ride the infrastructure boom that Obama is going to support with cash. This stock is a great play on Obama and agriculture.
Melco Crown (MPEL) $3.17
Melco Crown is my favorite foreign company. They currently have one casino in Macau called Crown Macau. The company will be opening City of Dreams in Macau this year which will significantly help them gain market share of the most expensive gambling place on earth. The new casino will help them further dominate the VIP market that they have slowly led in. Shares have been trading down from their $15 fifty two week high.
Transocean (RIG) $47.25
Trading at nearly a third of its fifty two week high of $163, shares of Transocean scream bargain. Just because oil prices are down doesn't mean people will quit looking for oil. Transocean is the leader in offshore exploration. The company has a market cap of 16 billion and has a listed enterprise value of over thirty billion. The company trades at just over three times 2009 earnings currently. The company's book value is over $50.00 per share. A company like this should not trade below book value. The hunt for oil will continue to help this stock grow.
Disclosure: Author holds long positions in IMAX, ATVI, MO
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This article has 22 comments:
I would also mention that JNJ is a strong Large Cap stock that I think anyone can jump on. I would still say that DNDN is still very speculative. It will stay cheap until news on the cancer drug breaks. Not an investors stock.
From a sector front, I like energy stocks at these prices (HES and COP would fall here). I also like commodity stocks later in the year to start back to the upside.
Imax may be a hidden gem, especially if the economy stays down (it is a relatively cheap form of entertainment, in a time of dwindling disposable income). The same would hold true for Activision.
The only one that scares me on your list is Corning, as I suspect that it has another 12-18 months of mediocre (if any) earnings growth, so 2009 may be too early to get back in.....
Transocean, Deere, Altria and JnJ are all great picks (ones that I own in various accounts).
Cheers
Larry
eric mindich's eton park capital: www.marketfolly.com/20...
shumway capital partners: www.marketfolly.com/20...
a bunch more too. just search for "HANS" in the search bar on our blog.
However history says that the worst performers in 2008 (financials) will be the best performers in 2009. Also financials tend to lead in any bull market.
Stocks that have held up relatively well in 2008 like JNJ and MO were great picks last year but chances are they will lagg the market in any recovery.
I'll stick with my financials, healthcare and tech for the turnaround.
"The only one that scares me on your list is Corning, as I suspect that it has another 12-18 months of mediocre (if any) earnings growth, so 2009 may be too early to get back in....."
I bought Corning yesterday morning and am already up 10%!
They are the clear leader in digital and 3-D movie theatres - 94% of their theatres (of close to 2300 total) are digital equipped and 502 are 3-D enabled (only ~1300 total in the US)
Hollywood studios are very much behind 3-D, with over 25 films now slated for release before Christmas '10
Also of note:
* This week the BCS College Football Championship is being broadcast live in 3-D at select theatres around the country (81 total theatres, 35 are Carmike's) - first time for national footprint of this magnitude for live sporting event; also planning to do this for Saturday Night Live before NBA All-Star Game in mid-Feb.
* 3-D and other special events allows for incremental pricing (upcharges of $2.50+), increased attendance and better concessions
* CKEC is focused on delevering - stock got weak when they suspended paying dividend late last year, but now free cash flow is going toward paying down bank debt
* Mark Cuban has been accumulating a position (up to 9.4% of the outstanding per recent filing) - announced last week; CKEC has small float - only 12.7 mm shares
* Another investor, Bigfoot Holdings, has also been aggressively buying since filing a 13-G last year and they have over 1.8 mm shares
They sound like they get pretty big returns
www.contrarianprofits....
On Jan 05 02:44 PM Deuce$ wrote:
Would you please kindly tell me if MPEL is a good stock as you mentioned and will have a good future, why the stock has been going down all the time and I have never seen it up since in mid teen ?
I have bought it before and lost money.
Thank you for your response.
Ambeien
> I have owned MPEL and there is nothing but upside potential. Not
> only does the author mention the new City of Dreams but also the
> VIP is becoming a big money maker. If we can get the world economies
> back on board, then you will only see more people back at the casinos.
> Especially VIP's. With LVS and WYNN having a few issues with cash
> flow, MPEL is in a great position for market share.
>
> I would also mention that JNJ is a strong Large Cap stock that I
> think anyone can jump on. I would still say that DNDN is still very
> speculative. It will stay cheap until news on the cancer drug breaks.
> Not an investors stock.
>
> From a sector front, I like energy stocks at these prices (HES and
> COP would fall here). I also like commodity stocks later in the year
> to start back to the upside.
IMAX would need to show it can turn a profit before I'd be willing to invest. Sure, the future looks promising, but the current fundamental analysis tells me to stay away.
JNJ: Yes, I am long on JNJ. They are a predictable company. As far as pharmaceuticals go, I also like PFE (and am long in PFE). To the best of my knowledge, PFE is the only large cap pharmaceutical company that is currently investing in stem cell research.
HANS: I have been long on HANS for some time, but I have to say....it's somewhat of a coward's choice to take Wall Street's best performing stock of the last ten years and put it on your list. I sold 10% of my holding last week to recoup my initial investment.
ATVI: P/E ratio of 165. I could not recommend this stock with a clear conscience.
MO: I can't argue against this one except for my belief that the cigarette industry is evil. Moral obligations keep me from dumping money into a company that had me hooked for decades. You'll probably make a nice profit here, but I'd rather go elsewhere.
DNDN: Definitely a speculative stock, and I'm not much interested in speculation. I like to invest in companies that have shown some penchant for making a profit. The way I look at it is that picking growth companies is like playing the lottery. The odds are against you, and it takes some luck, but it pays off big if you hit.
GLW: I took a quick 50% profit in GLW from December to January, and that is normally not my method of investing. I just needed to recoup some losses in a hurry, and GLW was my method. That said, the fundamentals on this company are solid right now, and I'm looking for a spot to get back in. They have almost $2 per share in cash on hand, and substantially more cash than long term debt. With a stellar P/E ratio, this is one that I'm also recommending for 2009. My target price is about $9.50 per share.
DE: I think there is some risk involved here, but I must also say that our local John Deere dealerships are being over-inundated with orders right now. 2008 was a good year for farmers who locked in futures at all time highs in the spring, and they are spending their money on equipment in time for the growing season. However, I also think that DE, along with similar companies like CAT, will peak before the growing season starts. I am long in CAT, but looking for a place to sell.
MPEL: Another speculative stock that needs to prove that it can turn a profit before I'll recommend it.
RIG: This play tries to combine to badly beaten down sectors into a single stock. While dividend darling FRO was my number one stock of 2008, being I had the sense to get out while the price was still over $45 per share, both of the sectors these companies play into have been eaten alive. Namely, we're talking the shipping sector and the oil sector. Meanwhile, I am preferring to vest my interests in these two industries on mutual funds since almost all of the companies involved are bound to outperform in 2009. For oil, I have a position in DIG as well as a lesser position in the heavily leveraged DXO. For the shipping industry, I am watching the ETF SEA, though have yet to make a purchase (anyone know of any other shipping ETF's?).
As far as my recommendations for 2009 go, take a look at the following:
KHD: Chinese construction company that specializes in concrete and coal. While not directly impacted by Obama's infrastructurial stimulus package, they will likely see an impact on demand worldwide. Plus, they are currently trading lower than cash value.
NTE: This is another Chinese stock that is trading lower than cash value. Plus, I can envision a future where Apple's iPhone has competition that sells for half the price.
AKS: The steel industry was hit particularly hard, and they should also see a nice recovery as a result of Obama's stilumulus package. I like AKS the best not only because of their stellar balance sheet, but also because they have a pseduo-monopoly on United States core steel.
OTTR: Cramer can't seem to make up his mind, but OTTR is one of the biggest wind energy players in the United States. Plus, they are a utility company, so they tend to be relatively stable.
WFC: If there is one financial that is going to survive this mess, WFC will be the one. Personally, I think they are a stellar business because back in 2005/2006, they were steering people away from sub-prime loans and directing them to more stable alternatives.
WMI: An increasing dividend plus a service that people need equals a stock that doesn't involve much risk.
TRN: Play the rails, play wind, and play Obama's infrstructure plans all at the same time. TRN has a stake in the construction of railway cars, road and railway parts, concrete, and the construction of wind towers.
GLW and HANS would be mutual picks. Please be advised that I hold long positions in each of these companie except GLW and KHD.
thanks for your honest commentary
look forward to researching your picks and maybe adding some of them in detail to my website stockworldpicks.blogsp... after I read the annual reports.
I've been looking into a lot of investment newsletters, like www.gryphonfinancial.c... for tips -- so much information it's hard to choose. Yours seems solid - thanks again!