A recent article from The Street made a case for finding stocks that could be "slam dunks" for 2012 and the next 10 years. It makes sense to find trends that are likely to continue for the next decade and then invest in stocks that can ride this trend higher, and literally become slam dunks. Regardless of the ups and downs in the market or short-term market concerns over the European debt crisis, there are a few sectors that can go higher over time as demand from an ever growing global population rises. The article says technology, healthcare and energy are solid areas to invest in for the long run and it details the reasons why by stating:
Investors of all stripes have been spooked by the stock markets' gyrations and the Standard & Poor's 500's struggle to break even this year. But there are clear buying opportunities for those with a long-term time horizon and the presence of mind to tune out the day-to-day market noise. Investors should be richly rewarded if they pick and stick with companies that have a proven record of rock-steady, double-digit returns, stand as leaders in their industry and can claim an unassailable competitive edge.
It's true that after seeing a lost decade of basically no gains for stock investors, many have given up hope. However, this could be creating opportunities for those who are willing to ignore the daily short-term distractions and invest based on long-term trends. Let's take a closer look at some of the stocks that could be slam dunks over the next 10 years:
Schlumberger Limited (SLB) provides support, project management and other services to the oil and gas industry. This company has nearly $40 billion in annual revenue and it gets many of the best oil project contracts from all over the world. With a solid balance sheet and top-notch management, this stock is likely to do extremely well over the next decade. The stock is trading at only about 12 times 2012 earnings, and looks like a core holding for energy investors.
Here are some key points for SLB:
Current share price: $68.60
The 52-week range is $54.79 to $95.64
Earnings estimates for 2011: $3.65 per share
Earnings estimates for 2012: $4.90 per share
Annual dividend: $1 per share, which yields 1.4%
Qualcomm Inc., (QCOM) is a leading maker of integrated circuits for mobile phones. Qualcomm chips are seeing strong demand from many of the leading mobile phone makers and that trend should remain strong for the next several years. Many emerging market countries are just getting started with higher demand for smartphones and this trend will fuel future growth. Considering that Qualcomm has growth prospects and a dividend, the shares look very reasonable, especially on any dips to about $51.
Here are some key points for QCOM:
Current share price: $54.87
The 52-week range is $45.98 to $59.84
Earnings estimates for 2011: $3.57 per share
Earnings estimates for 2012: $3.99 per share
Annual dividend: 86 cents per share, which yields 1.6%
CVS Caremark Corporation (CVS) operates a leading chain of drug stores and offers pharmacy services. This company is poised to benefit from the fact that the population is growing in the United States. People are living longer and consuming more pharmaceuticals and the many other health care related products that CVS sells. It's easy to see why some consider this stock to be a slam dunk for the next 10 years. However, the stock was just recently trading around $37 and it has gapped up to about $41. Because of that, I would wait for pullbacks before buying for the long term.
Here are some key points for CVS:
Current share price: $41.01
The 52-week range is $31.30 to $41.30
Earnings estimates for 2011: $2.80 per share
Earnings estimates for 2012: $3.23 per share
Annual dividend: 65 cents per share, which yields 1.6%
UnitedHealth Group, Inc. (UNH) is one of the largest managed healthcare companies with about $100 billion in annual revenue. Just as with CVS, this company is poised to reap benefits from the growth in population as well as ever increasing lifespans. UnitedHealth has a very strong balance sheet and the stock trades at a very reasonable valuation, at just about 10 times earnings. Chances are, this stock will be much higher in the next several years.
Here are some key points for UNH:
Current share price: $51.35
The 52-week range is $35.67 to $53.50
Earnings estimates for 2011: $4.57 per share
Earnings estimates for 2012: $4.77 per share
Annual dividend: 65 cents per share, which yields 1.3%
Visa Inc. (V) is a leading global provider of payment processing services and is based in San Francisco. Visa benefits from the rising trend of payments over the Internet as E-commerce grows worldwide. Furthermore, the company does not have the risks associated with traditional credit card companies. This stock has performed very well in 2011, and trades at a price to earnings ratio of about 15. I would wait for dips well below $100 per share before buying Visa for the long term.
Here are some key points for V:
Current share price: $101.91
The 52-week range is $67.51 to $102.50
Earnings estimates for 2011: $5.85 per share
Earnings estimates for 2012: $6.78 per share
Annual dividend: 88 cents per share, which yields .9%
Data sourced from Yahoo Finance. No guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.