Four Favorite Stocks for 2011

by: Pradeep Kandasamy
Below are some of my expectations for 2011 on a few specific stocks. All the stocks are part of my portfolio.
1) Chesapeake Energy Corporation (NYSE:CHK)
I expect CHK to appreciate substantially in 2011. The triggers will be:
  • Two new joint ventures will be signed which will again highlight the value of the assets with CHK holds.
  • Increase in natural gas liquids production, which will increase margins.
  • New regulations subsidising natural gas usage in transportation and power generation.
  • Natural gas price to rise a bit (not expecting anything big here).
Expect CHK to end the year around 40. This is still cheap compared to their net asset value of over 70. I think the bottom is at 24 around where Carl Icahn bought in.
2) National Bank of Greece (NBG)
I have been buying NBG around 2 and think it's one of the cheapest banks in the market. I see one major catalyst in Q1 which can move this stock higher. This catalyst is the proposed part sale of Finansbank's stake in Turkey.
Finansbank has a market cap of around USD 8.07 billion and 90% of it is owned by NBG. NBG’s stake is valued more than USD 7 billion. NBG’s market cap itself is only a bit over USD 8 billion. The proposed 20% sale should bring in around USD 1.6 billion which should force the market to take note of the value of NBG’s Turkish asset.
At current valuation of NBG, the Greek business and other European business (except Turkey) comes at USD 1 billion. This is too cheap. I expect NBG to move higher post the stake sale.
3&4) China Media Express Holdings (OTCPK:CCME) and Orient Paper Inc (NYSEMKT:ONP)
Chinese RTO space is very exciting and there is lot of money to be made if one can pick the genuine ones from the frauds. I believe there are enough pointers that CCME and ONP are genuine. I was lucky enough to pick up some of them in the sell off.
CCME to me is the most investor friendly Chinese RTO stock out there and I believe is genuine because of the following reasons
  • CCME is audited by a big 4 company.
  • CCME has announced a buy back program.
  • CCME has announced a dividend program.
  • CFO bought recently at 15 handle.
When they announce Q4 results, I expect them to announce a dividend and also give details on how much stock they have bought back. This should trigger shorts to cover once and for all.
I expect CCME to be near 40 by the end of 2011.
ONP has come out clean in the audit report. Deloitte was on the audit committee. This makes me believe ONP is not a fraud, which means it's trading too cheap and will move up eventually.
ONP has guided an EPS of 1.33 to 1.46 for 2011. By the end of 2011, the utilization rate of the corrugating medium paper production line is expected to be only 67%. A lot of growth will be left in ONP beyond 2011.
I expect ONP to double from here in 2011.
Merry Christmas and happy new year all.

Disclosure: I am long CHK, NBG, CCME, ONP.

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