I present to you five stocks from my list of 'best buy' ideas for 2012. I believe these stocks to be excellent investments considering current market conditions. I have selected these five stocks because their respective financial standings are excellent, their future prospects are great, and they all look attractive at current price trading levels. Here is my list:
First, I will focus on Enterprise Products Partners (EPD), an integrated energy company that provides natural gas and a wide range of services that include processing, transportation, fractionation, and terminalling.
Enterprise has a market capitalization of $44.4 billion and an average trading volume of 1.7 million. The stock is currently trading around $51 and has huge upside potential. It is expected that the EPS will grow by 30% over the next 3-5 years because of the expected growth in the natural gas liquids and crude oil pipelines segment. Furthermore, the increasing price of crude oil will further improve the expectation targets of the company.
The target price is $59 but the stock can reach as high as $75 because of the growing NGL demand and increasing crude oil price.
The stock has an impressive dividend yield of 4.78% and this means that the stock is an excellent investment at its current price. I recommend buying this stock now as it is on its way up.
Next, I will hone in on International Paper (IP), a global manufacturer of paper, wood, and packaging products. The company has four major business segments: Printing Papers, Consumer Packaging, Industrial Packaging, and Distribution.
The market capitalization of the company is almost $14.5. The stock is currently trading around $33, which is more than its 3 years high. The stock is spiraling upward, especially after it delivered better than expected earnings of 66 cent per share. The future prospects of the company are strong as it has a stable, well diversified business model and strong financial indicators suggest that the company will grow in the future. This can be evident from the fact that the Net Income grew by more than 100% in the fiscal year 2011.
The P/E ratio of around 11 suggests that the share is being traded at an excellent value at the current stock price. Furthermore, the dividend yield of 3.15% is also very impressive and so I recommend buying this stock.
Next on my list is Kimberly-Clark Corporation (KMB). Kimberly-Clark is a world-wide, paper-based products manufacturer and cleaning solutions provider. It operates through four major segments: Consumer Tissue, Personal Care, Health Care, and K-C Professional & Other.
Market capitalization of this stock at its current price is above $28 billion and the 52-week trading range is between $61 and $74. This stock is currently trading in the market at a price of $71 per share approximately.
The earnings per share (EPS) is a very impressive $4 per share figure and the dividend yield is also close to 4%. The price-to-earnings (P/E) ratio is nearly 18. The beta for this stock is 0.32, suggesting a risk level that is very low. The net profit margin of the company is above 7% and the stock has been given a rating of 7 out of 10 by the experts and analysts.
Overall, Kimberly-Clark's low beta, dividend payout of 70%, and annual dividend yield of 4% is an excellent dividend yield stock to buy.
Next I will discuss Mercer International (MERC), a large-scale manufacturer and seller of pulp that is produced from pulp logs and wood chips.
The market capitalization of Mercer is almost $441 million and the average trading volume is around 234 thousand shares. Mercer's share is currently trading around $7 and the 52 week high is $15, which suggests that the stock is potentially undervalued.
The price to earning growth ratio is an impressive figure of 0.8 and supports the possibility that the stock is undervalued. However, it should be noted that the beta of the stock is 3.12 and this makes it very risky. Mercer is on the list of highly undervalued stocks and is definitely worth buying, in my opinion, especially if you are willing to undertake the risk. The beta suggests that it has the capability of outperforming the market by 3 times, but it can be the other way round as well.
Last on my list is Union Pacific (UNP), the large scale provider of freight and railroad transportation services. The company operates through its subsidiary, Union Pacific Railroad, and serves various fastest-growing population centers of the U.S. It links the Pacific Coast to the Gulf Coast and provides several linkages to U.S. and Mexico gateways. The company has a well-diversified business mix that ranges from agricultural products to industrial products.
The distinguishing factor about the stock of Union Pacific is the company's excellent track record of increasing dividends over a period of 5 years. The current dividend yield is 2.4% and the stock is considered an excellent dividend growth investment.
The average dividend growth rate over the recent 5 year period is almost 15%. EPS comes in at an impressive figure of $6.72 and EPS growth is projected to increase by over 19% for the current year and 15.5% for the next 5 years. Hence, it can be safely assumed that the dividend rate is going to further increase over the next few years.
The company has a market capitalization of above $54 billion and average trading volume of nearly 3 million. The stock is currently trading around $111 and the 52 week low-high range is $77 to $117. I believe the stock is fairly valued and would recommend buying it, especially if you are looking for a stock with long-term dividend growth.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.