As 2011 draws to a close, many investors will be looking for the market movers entering 2012. As with any other year, some stocks will be climbing and some falling, but you must know in what direction they are going in order to pick more winners in the coming year. Companies like Pozen Inc (POZN), Lucas Energy Inc (LEI), Samson Oil & Gas (SSN), Gyrodyne Co of America Inc (GYRO), Pacific Ethanol Inc (PEIX) and Kodiak Oil & Gas Corp (KOG) are all poised to move as the New Year arrives.
For many investors, the pharmaceutical sector has been a portfolio staple for a long time. Companies like Eli Lilly and Company (LLY) or Pfizer Inc (PFE) have been great holdings with steady increases in both dividends and stock price. Pozen Inc is one such company; located in the Research Triangle Park area of North Carolina, Pozen received FDA approval on two medicines it has developed. One of these formulas has the company poised to surge in 2012.
Anti-migraine medicine Treximet has been a strong source of income for Pozen. The income will continue as the company sold the royalty rights of Treximet to Pantheon Pharmaceuticals (PTI) for $75 million. Sold in November of 2011, this deal will create a strong revenue stream and boost the company in the coming year. Currently selling around $3.90, (about half of its 52-week high) the 1-year target is $5.50, representing an expected increase of nearly 30%. Although it is a relative newcomer in pharma, look for Pozen to be a strong mover in 2012, with many analysts considering it either a hold or a buy.
Lucas Energy Inc
Another potentially hot stock for 2012 is Lucas Energy Inc. Trading under the symbol LEI, this nimble oil & gas company has a 45 million market cap and is currently trading around $2.35 per share. The company is offering its stake in the Eagle Ford/Austin Chalk trend, a 6,000-acre property that is considered a lucrative location. This, coupled with the company’s low float of around $16 million, has many expecting great things from LEI in 2012.
Although the current price for Lucas Energy sits near its 52-week mid point, ($1.04 - $5.23) great things are expected as the company’s 1-year target is an amazing $5.50. This potential climb of over 100% has many investors listing it as a strong buy for the year ahead.
Samson Oil & Gas
Many oil & gas companies have been favored investments due to their potential as profit makers. This is true about Samson Oil & Gas (ASE), as this successful small cap competes against producers such as Abraxas Petroleum Corp (AXAS), Anadarko Petroleum Corp (APC) and Black Hills Corporation. (BKH) The company has focused on its efforts as an oil producer, hitting several big deposits, including North Stockyard Field and Roosevelt Project in Montana. Combined with shrewd sales of land such as part of its DJ Basin Niobrara acreage, the company is sitting on a hefty $173.27 million market cap.
The future looks very promising for SSN, and by extension, people who choose to invest in the company. Between the sales and prospective strikes on its current holdings, the company appears to have a solid future. Many analysts view Samson Oil & Gas as a strong buy, as its 1-year target of $6.00 per share offers a hefty 200% increase.
Gyrodyne Co of America Inc
Oil and gas companies won’t be the only movers in 2012 as Gyrodyne Co (GYRO) of America Inc, a real estate investment trust, looks to take the market by storm on the heels of its courtroom victory over the State of New York in an eminent domain case from 2006. The courts have ruled in favor of Gyrodyne twice in a just cause claim that will pay the company more than $125 million for 245.5 acres the state acquired in St. James and Stony Brook.
The outlook for the company is difficult to predict. Although Director Paul Lamb recently purchased more than 3,700 shares, valued at nearly $200,000, from the company, it has a -0.85 EPS and a 27.19 P/S. These metrics stand in contrast to competitors Mack-Cali Reality (CLI) at 0.71 and 3.18, and Prologis Inc (PLD) at -2.23 and 9.57. With the uncertain signals, it is probably best to hold steady and wait to see in which direction Gyrodyne goes.
Pacific Ethanol Inc
Switching back to the oil & gas companies, Pacific Ethanol Inc (PEIX) is expected to be a mover in 2012, but not necessarily in a good way. Long considered a “sinkhole” by some investors, the company developed a reputation for introducing more stock, not just for exploration, but to keep the company afloat. Although this is somewhat common in the exploration sector, analysts are largely bearish on the company.
Competing against the likes of Archer Daniels Midland Company (ADM) and the privately-held Lake Area Corn Processors, PEIX shows huge numbers, but has consistently generated negative free cash flow; in fact, Pacific Ethanol has had such results for seven consecutive years.
With its recent decline following an $8 million private placement with institutional investors, the company has not been able to show the momentum needed to reverse its trend and start producing positive cash flow. Unless an investor is prepared to predict the ups and downs of this highly volatile stock, it is probably wise to avoid entering a position at this time.
Kodiak Oil & Gas Corp
KOG is another interesting investment opportunity. This oil & gas company boasts a hefty 2.05 billion market cap, and it has been on a steady run since dipping to $4.29 per share in early October. Focusing a great deal of effort on the Bakken and Three Forks oil plays in North Dakota, the company had a strong 2011 as it finished with an impressive quarterly revenue growth of more than 260% over 2010. This solid effort allowed it to outpace competitors like Double Eagle Petroleum Co (DBLE) at 46%, Gasco Energy Inc (GSX) at -2.6% and Marathon Oil (MRO) at 27.3%.
The future also looks extremely bright for Kodiak. The company has a 5-year PEG of 1.90, outpacing both MRO at 0.78 and the industry as a whole at 0.89. Analysts are supporting KOG as well, with the majority of their recent activity upgrading its position. In spite of a steady climb that has been ongoing since its October low, the 2012 forecasts are predicting target increases of between 15% and 50%.
Hopping on the Moving Market in 2012
While the uncertain economic conditions and financial unrest in Europe are likely to continue pressuring the markets in 2012, there are going to be some companies that break through and move higher throughout the year. Investors who are looking to add positions to their portfolios in the upcoming year would be wise to do their diligence on companies like Pozen Inc, Samson Oil & Gas, Lucas Energy Inc and Kodiak Oil & Gas Corp.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.