For anyone seeking a huge winner on the stock market in 2012, (and who isn't?) there are a number of big name, big profit companies available for consideration. These companies typically offer impressive gains in share price, nice dividends and a stability that is very appealing to most investors. Among the stocks to buy now for big profits during 2012 are McDonald's Corp (MCD), Johnson & Johnson (JNJ), Costco Wholesale Corp (COST), Citigroup Inc (C) and American Express Co. (AXP)
In the past, McDonald's used the advertising slogan, "You deserve a break today." These days, the company is providing the same type of offer to people purchasing its stock. This large-cap king of the fast-food industry continues to offer rising stock prices, dividends and stability to investors.
A specialist in advertising directly to children, its share price has been on a steady climb for the past year, only once crossing below the 200-day moving average. The stock is currently sitting at 100.35, just below its 52-week high of 101.59, and within reach of its one-year target estimate of 103.81. The company paid out a dividend of 2.80, representing a yield of the same. With a steady quarterly revenue growth rate of 13.70%, 3.60 billion in levered free cash flow and a forward PEG of 1.92, McDonald's is doing its best to be the "golden arches" for investors holding shares.
Johnson & Johnson
One of the largest manufacturers and distributors of personal healthcare products worldwide, Johnson & Johnson continues to be a very solid investment for many people. The company has been a dividend champ, (2.28 for the year with a yield of 3.5%) and analysts expect 2012 to be another year where investors win big, both in dividends and rising share prices.
After a December sell off pushed its share price down, JNJ has been on a bullish run. Currently trading at 65.23, the stock has a one-year target of 72.30, an increase of more than 10%. A five-year PEG ratio of 2.19 and a healthy levered free cash flow of 10.74 billion are two of the reasons that many analysts are high on Johnson & Johnson.
Costco Wholesale Corp
One of the heavy weights in the membership warehouse business, Costco has made its name by being able to give the customer more products for less money. This will likely be true on Wall Street in 2012 as the company looks forward to enjoying a solid year on the stock market.
With a trailing P/E of 24.27 and a forward P/E of 18.45, the future looks almost as bright as the past for Costco. Foreign and domestic expansion has helped to spur the company's year-to-year quarterly revenue growth to 12.40%, and the company issued a dividend of 0.96 for a yield of 1.20%. Although its shares are trading at 80.61, well above competitors like Wal-Mart Stores Inc (WMT) at 59.54 and Target Corp (TGT) at 49.82, Costco stock is reasonably priced and offers a very positive option for buyers.
The financial services sector has rebounded nicely from the global economic crisis, and there are a number of very promising investments in the market. One of these is Citigroup. One of the giant international companies that has been climbing out of the doldrums after a double-bottom drop in October and November, the share price has started to rise in advance of the Q4 earnings announcement in mid-January. While many analysts are expecting an EPS of 0.48, Wells Fargo warned of softer Citigroup earnings due to a number of one-time charges the company would be taking.
In spite of this shaky news, Citigroup still looks like a profit-maker for 2012. With year-to-year quarterly earnings growth of 73.90%, a big gain is anticipated for this year as evidenced by its one-year target estimate of 41.93, a gain of nearly 33% of the current price of 31.60. Investors who are ready to purchase should be prepared to act on news of the company's earnings, since less-than-stellar news could suppress the share price even more before it starts to climb.
American Express Co
American Express is another financial services company that is showing great promise for 2012. AMEX has long been a favorite of Warren Buffett, with AXP stock making up a hefty 11% of the famed portfolio of Berkshire Hathaway. (BRK-A) After the share price made a bullish move above the 200-day moving average this week, it is likely that a number of other investors will look to take positions.
In general, analysts rate American Express from hold to strong buy. The company had a dividend of 0.72 and a ratio of 1.50% while enjoying a trailing P/E of 12.47 and a forward P/E of 11.90. A very good 28.04% return on equity makes it look quite attractive, and the one-year target estimate of 56.63 offers a potential increase of over 14% on the current price of 49.65. Although it is more expensive than Citigroup, American Express, with its solid numbers and backing from Buffett, looks to be a very intriguing stock to add this year.
Finding Big Profits in 2012
Each offering the chance to pick up dividends and increases in share price, McDonald's Corp, Johnson & Johnson, Costco Wholesale Corp, Citigroup Inc and American Express Co are all poised to be big gainers in 2012. That said, Johnson & Johnson and Citigroup appear to be the best opportunities of the group, given their strong performance and the expected surge in their share prices. Investors who are looking for big profits this year should take an especially close look at these two companies.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.