Stock markets all over the world are facing the brunt of investors’ loss of confidence. In such difficult times, I bring to you a list of stocks that I believe are capable of swimming against the current. Strong financial position, growing revenue and low PEG ratio are some of the factors that I took into account while deciding this list of stocks poised to surge higher by 2012:
Joy Global Inc (JOYG) is an $8.2 billion company which is active in the manufacturing and servicing of mining equipment for the extraction of coal, copper, iron ore, oil sands and other minerals. The company’s stock is currently trading at $78.5 and can move higher. Quarterly revenue has grown by 18.60%, as revenues currently stand at $3.83 billion. Similarly, the gross margin and operating margin has been remarkable at 33.92% and 20.54%. Its direct competitors, Caterpillar (CAT) and Metso Corp (MXCY.PK), are trailing behind, with figures of 11.70% and 7.29%, respectively. Price Earnings ratio of 16.10 is a little above the market’s average of 10.7. The five-year expected PEG (Price Earnings to Growth) is 0.67; hence it’s a good time to get this stock now before it shoots up.
Ranked among the top 50 asset management companies, Legg Mason Inc (LM) shares are being traded near the 52-week low of $24.11. However, this stock has all the potential to strike back. Quarterly revenue growth has been 6.40%. Revenues are decent at $2.83 billion. Likewise, gross margin and operating margin of 33.38% and 15.63% illustrate the company’s good profitability. A current ratio of 2.2 puts the company’s liquidity in a very secure place. Investments ratios are all positive. The price to earnings ratio stands at 15.35, lower than the Charles Schwab's (SCHW) 20.45; hence the stock is better valued than its competitors. Add to it the news of insider trading and all the bets are on this stock.
Next we have is a company taking care of our comforts through its line of bedding products. Tempur-Pedic International Inc. (TPX) shares trade on the floor at around $58.07. Tempur’s stock has witnessed a large variation in its price in the last 52 weeks, from as low as $25.56 and as high as $74.81. So why do we think the company’s stock will pop? First, the company registered an 84.90% increase in its income in the last 12 months. Net income is running high with $191.84 accumulated last year. The return on equity is the best being offered in the industry at a staggering 214.02 %. Earnings per share jumped by 65.20%, now at $2.71 vs. its competitor Sealy Corp (ZZ) which witnessed a decline in earnings.. The financials are simply too good, and thus, 2012 can bring some good news for Tempur’s investors.
The NASDAQ OMX Group (NDAQ) is another stock that I feel will outshine this fall. Its revenues are huge, $3.20 billion, and its market capitalization stands at $4.07 billion, the fourth largest in the diversified investments industry. The company has strong fundamentals. Earnings per share could jump from last year’s $1.98 to $2.45 this year. The price earnings to growth ratio of 0.93 is satisfactory. The company seems to have cash flowing in at an excellent pace, as the company’s price/cash flow ratio stands at 7.40, leaving behind the industry average of 4.90 by a noticeable difference. The price earnings ratio is almost similar to its competitors such as Goldman Sachs group (GS). With nothing going unusually wrong at the company, the stock is poised to achieve more than its present performance.
Cree Inc (CREE) is currently trading at a relatively lower side of it last 52-week figures. We feel there is no particular reason for it to stay there. The company operates in the semiconductor equipment and materials industry. The Price Earnings ratio is relatively high, 27.64 compared to its competitors, such as Applied Materials' (AMAT) and Broadcom Corporation’s (BRCM) 9.75 and 19.01, respectively. However, this can be partly attributed to its long-term growth, predicted at a rate of 20.96%. The company has a market capitalization of $4 billion, ranking among one of the largest players in this industry. The margins are pretty good too, the gross margin being 46.98% and the operating margin 21.68%. Although the liquidity ratios are generally higher in this industry, current and quick ratios of 10.4 and 9.1, respectively, are three times higher than the industry average. With the company very safely managing its obligations, and taking into account the financial outlook, Cree (CREE) makes it to our list.
Cameron International Corporation (CAM) seems to be benefiting the most from the oil drilling surge taking place in the U.S. A provider of flow equipment products, systems and services to oil, gas and process industries, the company’s stock has a price of $47.93. Exhibiting a reasonable sales and income growth over the last 12 months, the $11.75 billion market cap company seems all set to experience a stock surge. Quarterly revenue growth stands at 19.90%, while current revenues measure $6.58 billion in absolute terms. price to earnings ratio is 20.95, lower than its competitors, such as Weatherford International (WFT), 74.94. Price earnings to growth ratio is reasonable at 1.17. Generally, the industry is experiencing an up-surge in stock prices and Cameron is expected to show equally pleasing results.
AmerisourceBergen Corporation (ABC) is a drug wholesale company, currently trading at a price of $38.30. The company is the fourth largest in the industry with a market capitalization of $10.31 billion. The earnings per share growth is the best in the industry at 15.80%. The drug wholesale industry is gaining investors’ attention as stocks continue to perform well in the market. A price to earnings ratio of 15.34 is just fine enough while income growth of 24.40% in the last 12-months is an attractive one. Financial ratios are mostly stable as current and quick ratio of 1.1 and 0.6, respectively, are almost the same as the industry averages. Return on equity is a handsome one at 22.8% and a return on assets at 4.9% is in line with industry trends.