Wall Street All-Stars That Can Make You Money

by: Investment Underground

Which stock will Wall Street salivate over next? We took a look at a few names that could become the next all star of Wall Street and maybe make you money. As always, use the list below as a starting point for your own due diligence.

Sirius XM (NASDAQ:SIRI): This underdog just broke $2.00 per share. We think it will hold. Evaluation of Sirius broadcasting options relative to FM radio and the growing number of alternatives is subjective. We do think SIRI has a key first-mover advantage in vehicles given that it has by far the most contracts with major manufacturers to place it consoles.

Additionally, SIRI management appears to have learned a lot over the last few years by pushing its products into the used car market. Potential subscriber growth should show in SIRI's numbers over the next year. Already, SIRI has earned 20 million subscribers, and has a potential base of 3 million subscribers each quarter (based off of Q1 2011) auto sales to which we apply a 55% penetration rate.

We think that concerns of competition from other technologies, including plug-in streaming devices, Pandora (NYSE:P) and old-fashioned FM radio are overblown.

LinkedIn (NYSE:LNKD): This IPO could turn out to be a fallen angel, but we wouldn't bet on it. LinkedIn is a business-related social networking site that has over 100 million users making it the largest site of its kind in the world. Users create profiles and "connections" with people they have met. The goal the average user is to have an easy and professional way to utilize networking for future employment and hiring purposes.

LinkedIn differentiates itself from most other social networking sites, such as Facebook, by having a professional profile fit for current and future employers to view showing strengths and valuable career skills gained throughout one’s experiences. Facebook has become, for most people, a tool for enjoyment and has a fun feel which makes many people nervous about connecting and networking with business professionals due to the content on their profiles. This makes LinkedIn a must-have even for people already very connected in the social-networking world. In utter simplicity, LinkedIn is your suit and other sites such as Facebook are your everyday clothes in the world of social networking.

LinkedIn is currently adding a user every second to their current base of over 100 million users. They are getting great publicity from all of the talk of the recent IPO which is only fueling more users to join who may have never considered LinkedIn as a valuable asset, myself being one of them. This fast user adoption pace is incredible, but will for obvious reasons eventually slow down. They currently have two large competitors, Viadeo and XING, who boast 35 and 10 million user respectively. These competitors are far behind LinkedIn in users, and neither has grabbed a large portion of users from the United States as they have primarily been adopted in Europe and Asia. Viadeo recently opened an office in San Francisco and plans to work on gaining success in the U.S., but will not be a threat in the near future especially since most people in the U.S. use LinkedIn and do not want two networking sites that complete the same objective.

Pandora (P): We are surprised that anyone has bought shares in Pandora. Aside from the fact that Pandora is not yet making money, Pandora has no competitive barriers and is facing huge competition by Google (NASDAQ:GOOG), Apple (OTC:APPL), and Amazon (NASDAQ:AMZN). With no lock-in factors, Pandora could see its customers leaving for the next best thing.

Google Music, Apple’s iCloud, and Amazon’s music cloud all have the potential to draw a devastating amount of Pandora listeners away. The new push towards the cloud by these three technology giants signaled for me a shift away from basic Internet radio and towards a cloud music experience. There have also been a lot of comparisons between Pandora and Sirius XM Radio. I believe that this comparison was brought about by Pandora's attempt to be pre-installed in automobiles and Blu-Ray players. I still believe that Pandora falls short of satellite radio because of the lack of live content, sports reporting and talk shows.

AT&T (NYSE:T): AT&T stands to benefit from its spectrum expansion if it can swallow T-Mobile successfully.In the latest chapter of the telecom merger saga between AT&T and Deutsche Telecom's T-Mobile (OTCQX:DTEGY), a host of giant tech companies and venture capital firms sent letters to the FCC. From its website and public relations mouthpieces, Microsoft (NASDAQ:MSFT) appears to have spear-headed the effort and enlisted the likes of Avaya, Brocade (NASDAQ:BRCD), Blackberry-maker Research in Motion (RIMM), software giant Oracle (NASDAQ:ORCL), CDMA technology juggernaut QUALCOMM (NASDAQ:QCOM), Facebook, and even search engine competitor Yahoo! (NASDAQ:YHOO).

The thrust of the argument is that the national network needs bandwidth for all of the new applications and services coming to wireless consumers' smartphones. AT&T is relatively new to the 4G playing field and can tap substantial bandwidth through the T-Mobile network to support the mushrooming number of applications. In this way, wireless consumers will actually be able to use the services available to them. Additionally, market penetration will increase and allow more applications to reach consumers on AT&T's giant network

Apple (NASDAQ:AAPL): Apple keeps rolling out best-in-class products. With dominate numbers compared to industry average and really only jumping on to the scene in 2005, it looks like AAPL still has room to grow if it can continue to take advantage of their ingenious marketing and slick products. Here are the numbers that separate AAPL from almost every competitor in the same industry: AAPL, in the last three years, has grown earnings per share by 56.8%, the industry average for the same time period is a shocking -0.2%. In the same period, AAPL has grown its revenue by 39.5%, while the industry average is only 6.7%. This industry domination is insane since, only half a decade ago, AAPL was just considered a niche computer company that had a stock price of roughly 55 dollars. AAPL has a current price to earnings of 15, and a future price to earnings ratio 11.9.

Intel (NASDAQ:INTC): Intel is about to ride the next demand wave for its products. We believe Intel ultimately holds onto its title as king chip maker. According to CEO Paul Otellini, the impressive first quarter revenue growth was fueled by "double digit annual revenue growth in every major product segment and across all geographies." Clearly, Intel has been doing something right. For one, it holds more than its share of the market. Intel still produces around 80% of the world's CPUs. Also, Intel's extremely strong cash flow and large dividends are extremely attractive to investors.

Maxim (NASDAQ:MXIM) and Linear Technology (NASDAQ:LLTC) both have higher gross margins, but seeing that they are not focusing primarily on the consumer markets, they don't pose a real threat. Advanced Micro Devices (NYSE:AMD) is Intel's most similar competitor, but Intel has exponentially greater funds to sink into research and development, which should ultimately allow Intel to continue to push the boundaries of technological innovation.

Ford (NYSE:F): Ford has big quarters ahead of it. Ford is no longer in survival mode, as these executives claim; but rather in growth mode. Astonishingly, a whopping 55% of Ford sales will come from small cars by mid-decade. Large SUVs and popular Ford pick-up trucks have dominated Ford sales and profitability for the last decade. Back in 2006, Mulally came into his job with a meeting of 300 of Ford's top executives and famously demonstrated through pie charts that Ford was lacking in the small car department. That appears to be changing quickly.

This spring's market share gains by U.S. automakers, including Ford and General Motors (NYSE:GM), will leave a lasting mark at the expense of Toyota (NYSE:TM). Ford is still trading at a very low $14-15 per share, well below where it could trade a year from now. On a discounted cash flow basis, shares will be worth just under $30 apiece in 2012. EPS for 2011 is forecast at 113% with a five-year projection of nearly 13%. Broad trends suggest that Ford is stealthily improving its position in the competitive landscape: a consolidation of brands, a gain in market share over the past year and the shedding of debt.

The big question mark at Ford is the luxury Lincoln brand. Most Ford dealers were combined Lincoln-Mercury outfits, but Mercury was axed by Ford in its effort to refocus on its flagship brand. We think the upside surprise will in fact be Lincoln as it goes head to head with Toyota's Lexus luxury brand. One-third of Lincoln dealers are likely to be cut, with significant investment needed at dealerships to upgrade the Lincoln brand image beyond the Lincoln Town Car. The last big hit out of Lincoln came with the launch of the Navigator in 1999. Sales have slumped steadily since that year.

Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B): While Buffett's best days are probably behind him, we think Berkshire is still on a road paved with gold. Berkshire is Warren Buffett's baby, which owns over 70 firms and has stakes in more than a dozen others. If there is one Graham disciple who stands above all others, it is Buffett with his focus on providing value to investors. Berkshire’s book value per share has increased an average of 20% per year over the last 40-plus years, but we do see slowing in that growth rate due to Berkshire's large size.

The company’s fourth quarter earnings were up year over year, helped significantly by the recent acquisition of railroad company Burlington Northern Santa Fe. The firm also sat on a mountain of cash at the turn of the new year (about $35 billion), and that doesn’t include the cash it received from Swiss Re (OTC:SWCEY) and Goldman Sachs (NYSE:GS) for investments during the financial crisis. The crises in Australia, New Zealand and Japan hit Berkshire hard, but we expect the firm to recover as soon as next quarter.

Oracle (ORCL): Microsoft's dominance as the best software vendor is waning. This gives Oracle a shot at being a Wall Street darling. This technology giant’s low yield leaves the average investor wanting. But ORCL just started making payments in April of 2009 and the payouts appear to be up and coming. For 8 quarters it has held its payout at $.05 a share, until earlier this year when it was bumped up a penny.

Not quite there yet, but a 20% dividend increase is rarely a bad sign, particularly since this growth rate can continue for many years. Add in the 13% payout ratio and ORCL is a definite candidate for future growth. The P/E ratio of around 23 looks high but is slightly below what it was 5 years ago. 37 brokers are looking for a targeted 1-year upside of about 6%, which is consistent with our trading projections. Overall, we think ORCL is the best software maker and vendor out there, and represents a better buy when compared with Microsoft.

Google (GOOG): Google has beaten Yahoo! and Microsoft to the punch in search and online advertising at every meeting. Moreover, according to S&P, U.S. online advertising revenues increased by 3% in 2009, and 15% in 2010, and forecasts are for growth of 10% in 2011. S&P believes that the U.S. accounts for a third of the online advertising market. Google is also seeking to cast a wide net in the mobile Internet arena, which provides another driver of growth as more Internet-ready phones come into use.

A catalyst pointed out by Credit Suisse is that non-GAAP EBIT margins as a percent of net revenues can stabilize at pre-recession levels of around 50% in 2012 and beyond. This provides an added source of EPS growth.

Disclosure: I am long F.