In this article, I analyze stocks with a positive catalyst and bullish fundamental trend going into 2012. Earnings will be key in quarter one, and these stocks have the most potential for fundamental upside. These stocks should be considered for further research by sophisticated investors.
Cedar Fair, L.P. (NYSE:FUN): A month ago Cedar Fair shot up from around $19.00 per share to a 52-week high of $23.14 and has since leveled off around $21.00 per share. Cedar Fair owns and operates family-oriented theme parks under various names in 11 different areas of the United States. The company is also affiliated with 1 indoor water park, 6 outdoor water parks and 5 hotels. Although Cedar Fair is not as big as Walt Disney Company (NYSE:DIS), it does have a market cap of $1.232 billion and gives both of its closest competitors, Great Wolf Resorts (NASDAQ:WOLF) and Six Flags (NYSE:SIX), a run for their money.
Even though Cedar Fair may seem a little pricy with its current move and a PEG ratio of 2.99, let's compare it with its competitors and see if it's worth the premium. Cedar Fair has a quite astounding 79.17% earnings growth forecast in the coming year. Great Wolf Resorts also has a respectable 42.80% forecast earnings growth in 2012 and is dirt cheap with a PEG ratio of -0.18 by comparison, but there may be other reasons for the lack of interest in the stock. Six Flags not only has a very expensive PEG ratio of 7.62, but virtually no growth prospects at all with a forecast earnings growth of -35.71% in 2012. See this article for analyst upgrades, company holdings and some technical analysis.
SPDR Gold Trust (NYSEARCA:GLD): A month ago, Gold Trust units were sitting above $166.00, and since then they have fallen to under $153.00 per share. Go to this article for more information on the gold market and SPDR Gold Trust ETF. I recommend that you always keep a portion of your portfolio in gold for diversification purposes, but mainly as a hedge against the rest of the market. Gold tends to hold its value even in a volatile market and has an inverse relationship with the economy in general.
SPDR Gold Trust is an exchange traded fund, and as such, the shares move up or down according to the most recent London PM Fix on the price of the commodity. The only real difference between any gold exchange traded fund is the amount of fees charged to run the fund and the expenses involved. SPDR Gold Trust may very well be one of the most attractive exchange traded funds in this respect, but the idea is to increase your percentage in the fund when its down and to decrease it when its high, according to your risk tolerance. Of course if the economy worsens and gold rises again, sophisticated investors should get the last laugh.
Home Depot (NYSE:HD): Home Depot has been on a short term trend that began in August when the stock was at $28.00 per share. Home Depot is setting up nicely to continue making new 52 week highs over $40.00 per share. A lot of the company’s prosperity is attributed to being in the right place at the right time and moving forward with technological advances and strategic plans while the competition was being lulled by the housing downturn (see this article).
As a national and international company, Home Depot has stores that are located in regions were housing markets are improving, and through the use of more centralized distribution centers as well as better merchandising tools, the company is diverting resources to these regions more efficiently. Home Depot recently raised its guidance for the third time in six months at the same time it reported earnings that beat analysts estimates' by $.02. The company also raised its dividend by 16% to $.29 per share. All this served as a wakeup call to competitor Lowe's (NYSE:LOW) who also beat estimates and groggily released its blueprint to win back customers it has lost to Home Depot over the period.
Kinder Morgan Energy Partners, L.P. (NYSE:KMP): Kinder Morgan's price is up from around $65.00 per share one month ago and the stock is currently making 52 week highs at the $80.00 per share level. The news that got this train rolling was Kinder Morgan's announcement that it intended to acquire El Paso (EP) for $21 billion. El Paso is currently the owner of the largest natural gas pipeline system in the United States and transports 1/4 of the nation's total consumption requirements of the commodity on a daily basis. This kind of news usually brings the short sellers out in droves, but this time it has had quite the opposite effect.
Kinder Morgan said it plans to sell off El Paso's exploration and production assets to cover any debt resulting from the purchase. The combined network of pipelines will amount to about 80,000 miles-- by far the largest in the nation --and may spark monopolistic regulatory concerns. Two of the remaining competitors Kinder Morgan has to go up against are Spectra Energy (NYSE:SE) and Questar (NYSE:STR) and we will compare their earnings growth for next year to bring this into perspective. Spectra Energy has forecast earnings growth of 5.98%, Questar has forecast earnings growth of 4.60% and Kinder Morgan has forecast earnings growth of 29.18%, so you can see what kind of competitive advantage the company will be enjoying.
Oneok (NYSE:OKE): In 2011's fourth quarter, Oneok stock has resumed a long-term uptrend that it has been following all year. It was $75.00 per share at the time and is approaching its 52 week high of $80.48 per share. Classified as a diversified energy company it operates natural gas utilities in Kansas, Oklahoma, and Texas as well as having a 46% stake in a Master Limited Partnership involved in midstream natural gas operations. On one hand this company's utilities segment is hem strung by government regulation and limited growth, but it is also guaranteed a profit. On the other hand, through its Master Limited Partnership, it has income and revenue growth prospects. These growth prospects could range to the tune of $100 to $200 million next year alone as this article illustrates.
So you get the safety and income of a utility company with the potential for growth. For a closer look at this growth we shall compare Oneok with two of its competitors Atmos Energy (NYSE:ATO) and Energen (NYSE:EGN). Atmos Energy has a PEG ratio of 3.13 and forecast earnings growth of 12.27% in 2012 and only 5.18% in 2013. Energen has a PEG ratio of 1.21 and forecast earnings growth of 0.31% in 2012 and 21.56% in 2013. Oneok has a PEG ratio of 1.96 and forecast earnings growth of 12.73% in 2012 and 14.13% in 2013. This shows that the company is intermediately priced in relation to its competitors, but its consistent future growth potential still make it very attractive.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.