It appears that the "Holiday Season Rally" has begun with a big BANG. The old adage, "A rising tide lifts all boats" will likely hold true as the stock markets rebound.
The month of November has been especially brutal on global equity values. According to Bloomberg News about $4.7 trillion has been "wiped out". Beginning Monday, November 28th, 2011, that "wipe out" has begun its "come-back".
Which Stocks Will Benefit The Most?
By December 30th we will know the answers. The sectors that are very likely to do well are Basic Materials, Technology, Services, and the Big Surprise Sector....the Financials!
You can play each sector with ETFs. But if you're in the mood to focus on one or two stocks from each of these 4 sectors. In fact, I'll give you 5 stock ideas now.
Let's begin with the surprise. The financial sector may pop the most as the world's central banks do all they can to accommodate the worldwide banking crisis.
F.N.B. Corp (FNB) is a regional bank in Pennsylvania that's "banking" on the energy boom in the Marcellus shale areas.
F.N.B. Corporation, through its subsidiaries, provides various financial services to consumers and small to medium-sized businesses.
The company operates in four segments: Community Banking, Wealth Management, Insurance, and Consumer Finance.
They are acquiring banks throughout what some are calling "the new capital of America's energy industry".
I'm going to see if I can buy some FNB below $9.80. It's Oct.4th, 2011 intra-day low price of $8.06 would be even nicer, but if the markets are going to rally from here, that price may only be attainable next year.
Iamgold Corp. (IAG) would be my favorite play in the Basic Materials and Precious Metals sector. It's current pricing below $18.50 means it is trading around 8 times current earnings and around 12 times forward earnings.
IAG has no debt and over $1 billion of total cash. Its PEG ratio (5 year expected) is an incredibly low 0.44. That indicates its at bargain basement pricing.
It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas.
Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador.
It wouldn't surprise me to see this stock soar to close to $30-per-share over the next 12 months, and that may be a modest projection.
Netgear (NTGR) shot up almost 10% on Monday on above average volume. NTGR uses third-party manufacturers to engage in the design, development, and marketing of networking products.
The company offers networking, storage, and security solutions to commercial businesses; home networking, storage, and digital media products to home users to connect people to the Internet via communication, computing, and entertainment devices; and whole home networking solutions to broadband service providers for use by their business and home subscribers.
Its products include commercial business networking products consisting of Ethernet switches, wireless controllers, Internet security appliances, and network attached storage devices; broadband access products, including routers, gateways, IP telephony products, and media servers; and network connectivity products, such as wireless access points, wireless network interface cards and adapters, Ethernet network interface cards and adapters, media adapters, powerline adapters and bridges, and multimedia over coax alliance standard adapters and bridges.
Take a look at the 6 month chart for NTGR. The stock plunged big-tie from early July through mid-October. Then it rallied to $37.99 a share only to correct in the big November swoon back down to $33.39. Monday it soared above $36.60, well below its 52-week high of over $45.
Keep in mind that Netgear is a leading player in home networking equipment. They provide the Wi-Fi signal that allows you to connect your desktop, laptop, cellphone, or iPad to the internet.
It virtually dominates its market. Their 30% national market share is the highest in the industry. But Netgear is ramping up for further expansion.
With tablet computers, consumers now insist on connectivity in places that never mattered before: basements, stairwells, bathrooms and back patios. So Netgear recently rolled out new Wi-Fi boosters to meet demand.
This is just the tip of its "expansion iceberg", and this is a healthy company too. In the most recent quarter, earnings almost doubled on a 49% increase in revenue.
The company enjoys double-digit operating margins, plus it carries zero debt and a relatively low forward PE of around 13.
Netgear has made a full-fledged commitment to cyber security, too. Netgear has started making routers with a “guest” feature that lets visitors access the internet while protecting the privacy of your stored files.
Shane Buckley, General Manager of Netgear’s commercial business, says the company will announce and deploy several other “smart IT” products in the year ahead.
If you can buy some NTGR shares at around $36 or below, you might catch a ride on the home-networking and internet security "tsunami" and be surprised how high you may see the shares rise.
Advanced Auto Parts (AAP) is a good way to invest in the Services Sector while catching the trend toward people keeping their cars longer in this tight economy.
AAP through its subsidiaries, operates as a retailer of automotive aftermarket parts, accessories, batteries, and maintenance items. It operates in two segments, Advance Auto Parts (AAP) and Autopart International (AI).
As of January 1, 2011, the company operated 3,369 AAP stores, including 3,343 stores located in the northeastern, southeastern, and Midwestern regions of the United States under the Advance Auto Parts and Advance Discount Auto Parts trade names.
It also has 26 stores situated in Puerto Rico and the Virgin Islands under the Advance Auto Parts and Western Auto trade names; and 194 stores under the Autopart International trade name in the United States.
It serves the do-it-yourself, do-it-for-me, and some commercial customers. The company was founded in 1929 and is based in Roanoke, Virginia.
AAP is a little too debt-heavy to be ideal, but they have over 10% operating margins and very impressive Operating Cash Flow (trailing-twelve-months) and over $351 million in Levered Free Cash Flow (ttm).
Their year-over-year quarterly earnings growth is above 20%, and they shine with a Return on Equity (ttm) of almost 40%.
D.A. Davidson's analyst A. Shah raised his rating on the stock last week to Buy from Neutral, writing that the stock’s valuation is “too cheap” to ignore, and that there are product catalysts on the horizon.
TQNT provides radio frequency (RF) solutions and technology for communications, defense, and aerospace companies worldwide.
It designs, develops, and manufactures RF solutions with gallium arsenide (GaAs), gallium nitride, surface acoustic wave (SAW), and bulk acoustic wave (BAW) technologies.
The company offers an array of filtering, switching, and amplification products for RF, microwave, and millimeter-wave applications.
It also sells electronic components for mobile phones, including transmit modules, RF filters, power amplifiers and power amplifier modules, duplexers, switches, other RF devices, and integrated products to mobile device manufacturers.
As of Friday, Nov. 25th close TQNT is selling for around 8 times current earnings and around 11 times forward earnings. On Nov.28th the stock rose almost 4%.
The company has no debt and is gearing up to benefit from the new generation of smart phone technology and expanding mobile phone industry growth.
It has had its problems, but it is making money and has a wide array of tech products to power its revenue and net earnings going forward.
There are many other names and stocks in all 4 sectors that will do well in the weeks ahead. These five just may be some of the biggest potential gainers to consider adding to our portfolios if appropriate.
Do your own due diligence and read all you can including their web sites before speculating or trading these stocks. I've done mine, and I'm expecting some very nice upside results soon.
Disclosure: I am long IAG.