These 7 diverse technology and mining companies provide a moderate risk portfolio with significant upside for 2012. This select group of small and large cap stocks appear poised to beat the market this year.
Microsoft Corporation (MSFT)
Microsoft’s core business should remain strong in 2012 with the release of Windows 8, and a positive reception to the new OS would likely have a significant impact on revenues. Microsoft's other areas of operation should continue to improve. According to comScore, in November Bing reached 15% market share of U.S. searches, almost a 30% increase since November 2010. Expect the momentum to continue. Xbox sales remain strong, and Microsoft is well positioned to take advantage of the adoption of cloud computing. Finally, any adoption of Microsoft's significantly improved smart phone operating system would be a major boon and seems more likely than ever.
Activision Blizzard, Inc. (ATVI)
Activision Blizzard finished 2011 in roughly the same place it started. This stock, however, remains a buy for its long term growth potential. ATVI's Call of Duty series remains the top in its class and smashes records every year. This year's installment, Modern Warfare 3, recorded $1 billion in sales in just 16 days. I expect the upcoming Blizzard title Diablo III also to be a massive hit. The only worry is declining World of Warcraft subscriber numbers as the game ages and new MMO (Massively Multiplayer Online) competitors are released, such as Electronic Arts Inc.'s (EA) Star Wars: The Old Republic. The company has a proven ability to release popular titles and I expect continued growth, especially if the economic outlook improves this year.
Rogers Communications Inc. (RCI)
Rogers shares are up more than 12% from the beginning of 2011 and show no signs of slowing down. The company should be able to maintain its momentum with the continued market penetration of smart phones. Rogers is also well positioned in its other businesses, which include the Toronto Blue Jays and a recently announced purchase of a 37.5% stake in Maple Leafs Sports & Entertainment in a partnership with rival BCE Inc. (BCE) that saw the two companies team up to buy the Ontario Teachers' Pension Plan's majority stake in MLSE. Rogers also pays a respectable dividend yielding 3.7% in 2011. The biggest question surrounding the company remains the governments pending decision on whether or not to allow foreign ownership of telecom companies with under a 10% market share. Most analysts expect a consolidation of the small competitors that have struggled to compete and this could be a catalyst for Rogers stock.
Hochschild Mining PLC (HCHDF.PK)
The fundamentals of silver look strong and this is a silver play that I like for 2012. With several of the world's top producing silver mines and others well on their way to coming online the future certainly looks bright for Hochschild. With a market cap of just US$2.18 billion at its closing price of $6.26 on Wednesday the company is trading at just 3.5 times operating income and is generating enough cash that it increased its dividend by 50% this year to yield about 1% as well as an equal 50% increase in exploration spending.
Lynas Corporation Limited (LYSCF.PK)
With a couple of recent setbacks and a correction in rare earth prices, Lynas stock has taken a beating recently. The Lynas Advanced Materials Plant (LAMP) is awaiting the necessary permits from the Malaysian government but should receive the go ahead in the coming weeks despite loud, and largely irrational, protests by some of the local population. Although the outlook for rare earths may not be as bright as it appeared a few months ago, China plans to maintain current export quotas this year even as global demand will continue to rise. Lynas will likely be the first major rare earths project outside China to come online and will be well positioned to take advantage of increased demand and tight Chinese export quotas. Closing the year at $1.04 I will be looking for buying opportunities under a dollar in the next couple of weeks.
La Mancha Resources Inc. (LACHF.PK)
La Mancha is a Montreal, Canada based international gold producer. The company has producing mines in Sudan, Côte d’Ivoire and western Australia, as well as a gold-silver project in Argentina. With more than US$91.4 million in cash and no debt it has solid fundamentals. All 3 analysts covering the stock rate it a buy with an average price target of $4.25. The sparsely traded shares closed out the year at $2.74 up from $2.25, making it one of the few junior gold plays with positive movement in 2011. More attention and higher volume could mean significant gains in 2012.
Nokia Corporation (NOK)
After getting pummeled the past couple of years Nokia shares appear to be near their floor. With Nokia’s Windows Phone devices finally being released the company will be the main benefactor of any adoption of this new OS. I believe that there is a massive opportunity for the Microsoft-Nokia alliance to succeed in the smart phone market. Research in Motion’s (RIMM) corporate customers will be looking for alternatives and Google’s (GOOG) fragmented Android ecosystem leaves much to be desired. Customers will also want an alternative to Apple’s (AAPL) iPhone which is more of a media consumption device and isn't geared towards business users. For a more detailed analysis of why I think this stock is a buy at current prices see my previous article "Nokia Poised for Both Short- and Long-Term Gains." Nokia shares, however, still are not suitable for the risk averse.
Disclosure: I am long NOK.