Wall Street is off to one of its best starts in recent history, thanks, in part, to strong 4th quarter results from companies like Apple (NASDAQ:AAPL). This surge has included a number of solid companies, and the hope is that it will be sustained throughout the year, powering the stock market to bounce back, not only this year, but in 2013 as well. For investors looking for gains, five stocks to consider now for big profits in 2013 are Cisco Systems Inc (NASDAQ:CSCO), Rio Tinto Plc (NYSE:RIO), Terex Corporation (NYSE:TEX), Abbott Laboratories (NYSE:ABT) and Raytheon Company (NYSE:RTN).
Cisco Systems Inc
This San Jose, CA-based manufacturer of Internet networking systems and equipment has been one of the fast-rising technology stocks that are frequently misunderstood. Although long viewed as speculative stocks for their volatility, Cisco has become a great long-term investment, combining solid gains with nice dividends to create an excellent option. This $105 billion company had a rough 2010, but after a solid 2011 and the implementation of a dividend payout structure, analysts are optimistic about the next two years for Cisco.
Currently at $19.50 per share, Cisco stock is just above the midpoint of its $13.30 - $22.34 range, and it is looking to climb. Climbing past its 200-day moving average in October, the stock has been on an upward trend ever since. Its one-year target of $21.29 suggests double-digit growth in share price, and its $0.24 dividend (for a yield of 1.2%) has started to catch the attention of even the risk adverse. Combined with a 16.89 price to earnings ratio, a low beta of 1.17 and $8.38 billion in levered free cash flow, Cisco is expected to continue to grow.
Rio Tinto Plc
Operating in another business sector not typically viewed as a growth industry, London-based Rio Tinto Plc is a mining and exploration company that specializing in the production of a wide variety of natural resources. With mining operations in Australia, North America, South America, Asia, Europe, and Africa, the company has quietly combined growing dividends with big share price gains to attract the attention of investors. With a 52-week range of $40.50 to $76.67, the company's $60 share price is just above the midpoint; however, a one-year target of $92.81 has the company poised to shatter that range. Added to its dividend of $1.07, (for a yield of 1.8%) this kind of growth is very appealing.
Powered by a quarterly earnings growth of nearly 30%, the company is flush with cash (almost $20 billion in operating cash flow) and increasing demand for Iron ore in Asia has Rio Tinto poised to fuel the expected gains. With its nice dividend, soaring share price and future prospects, the company appears to be on the verge of a strong run.
Known in the heavy machinery industry for building big trucks, Terex Corp is also looking to become known on Wall Street for helping investors build big portfolios. This Connecticut-base manufacturer has been around for nearly 90 years, and it is hoping to capitalize on increasing expansion plans worldwide to push it higher. Much like its competitors Caterpillar (NYSE:CAT) and Deere, (NYSE:DE) Terex views the lack of paved roads in developing countries as a strong indicator of future growth.
Currently trading just above $20 per share, Terex is below the midpoint of its 52-week range, ($9.30 - $38.50) and has recently pushed above its 200-day moving average, suggesting possible continued growth. The stock has a one-year target of almost $22, and expanding business opportunities could push it even higher. The only negatives for Terex are a negative operating cash flow and the lack of a dividend payment, something that investors with both Caterpillar and Deere enjoy.
Abbott Laboratories is an Illinois-based manufacturer of pharmaceuticals and healthcare products. The company specializes in medicines that target ailments such as HIV infection; prostate cancer, endometriosis and others. With a market cap of nearly $86 billion, Abbott has a stock price of $55 and a very nice dividend of $1.92, returning a yield of 3.5%; this is an excellent dividend stock for people who want growth and dividend returns.
Although Abbott growth was down for 2011, the company is still positioned to make gains going forward. Offering a return on equity of nearly 20%, the company has a price to earnings ratio of 18.98 and a PEG of 1.28. What's more, the company has levered free cash flow of $9.06 billion and a manageable payout ratio of 62%. With a one-year target estimate of $59.68 and that attractive dividend, investors should consider adding this stock to their portfolios.
Working closely with the United States military, Raytheon is a manufacturer of electronic systems and technology. The Massachusetts-based company has long been an attractive stock to many, and it is looking like that will continue for the next couple of years as well. With a market capitalization of nearly $17 billion, this government contractor had a good year in 2011, with increased efficiency and cost-cutting pushing earnings to $1.77 per share, up from the $1.55 it earned in 2010. Raytheon's 2011 earnings exceeded analysts' predictions, allowing it to gain $2 per share during January.
With its share price climbing, many expect good things from the company in the days ahead. Currently trading around $48.50 per share, the one-year target is $50.81. This number, plus its price to earnings ratio of 9.95 and its PEG of 1.18 suggest continued growth. With a solid beta of 1.18 and $1.88 billion in levered free cash flow, Raytheon is another very good stock to hold.
Building a Portfolio for the Future
Combining dividend and growth stocks, it is possible to take advantage of the building stock market momentum to find profits for 2013 and beyond. With all the possibilities, Cisco Systems Inc, Rio Tinto Plc, Abbott Laboratories and Raytheon Company all look to be great acquisitions now, with Terex Corporation being one that investors might want to monitor further before taking a position.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.