It might seem surprising, but time does fly! It seems like just yesterday, 2012 was beginning. Now, we are just days away from the end of the first quarter, one that has been very good for the markets. Even though markets have done exceptionally so far in the three months, there still could be room for growth. Here are five names I think you should be in at quarter's end.
Apple (AAPL): Yes, you can still buy Apple here, although if you get any opportunities to get it cheaper, those are much better (those $5 drops mid-day usually don't last very long). The new iPad is selling well, and from all accounts, the iPhone 5 is coming soon. The average price target on Apple is currently $650, with the median being $675 (taking out all of those analysts who have $275 and $350 price targets helps). Analysts are increasing their earnings estimates for the quarter almost daily, and as we saw last quarter, analysts couldn't even get those estimates high enough. We will get a true test of Apple's power in just a few weeks, and if the report is decent, $700 could be coming shortly. Oh, and don't forget. Apple just announced a new dividend, which will be paid to shareholders starting in the third quarter. They also announced a plan to limit the increase of outstanding shares (it's not really a buyback, see the article I linked to above).
On a recent article where I discussed Apple, a commenter asked how Apple will sell the iPhone 5 when everyone just bought the 4S. It's easy. Everyone who has a 2-year contract ending this year will get the iPhone 5, and then next year if they release an iPhone 5S or 6 (whatever it may be called), the 4S people will get that one. It's a cycle that will last for quite a while, and that is a good enough reason to own the stock currently.
SodaStream (SODA): The company is doing very well, earnings keep beating estimates, guidance for this year was well above expectations, and the stock is down roughly 25? That is your opportunity to buy. SodaStream is selling globally, and is heavily focused on expanding their retail distribution in the United States, including more locations to exchange CO2 canisters. The company is still forecasted to grow revenues by 27% this year and 19% next year. Earnings per share are expected to grow at even a faster rate. I've always said to buy this name in the low to mid $30s, so we are at a fairly decent entry point right now, although you might be able to get it a little cheaper. I don't think that this name can get back to the $70 or more level it was at last year during 2012, but I think we can easily get to $50.
Lululemon (LULU): Athletic apparel is always in demand, and Lululemon has a great presence in this market. Some may question the valuation, but the company is expected to have 35% revenue growth this year and 24% next year. Sometimes, you have to pay for growth, and LULU is a great example of that. Even with the stock up 60% so far this year, it is still $5 below the average analyst price target and $8 plus away from the median target. The high target is $100, and while it is possible to see that this year, I would think it could get there next year at least. It might be wise to wait for a pullback, if you can get one. Even the negatives can be positive, and this company proved that in the past few months. Everyone was concerned when their inventory levels got high, but then they sold a ton and sales exceeded expectations. Remember, you can't sell what you don't have. Right now, Lululemon has products that almost everyone wants.
McDonald's (MCD): The recent pullback has made this a very good opportunity for long-term investors. When I mentioned this name about two months ago, I said buy under $98. At least one person told me that I would be waiting forever for that price level. Well, we are there now, and we've been lower. This company is still growing revenues and earnings, and a 2.9% dividend yield is nothing to ignore. McDonald's should get back above $100 soon, so why not get it cheaper while you can? The average analyst price target says there is 10% of upside left in this name. This is a very good name to be in.
Philip Morris (PM): So if a company has a 3.5% yield, is expected to raise the dividend again this year, and told you it will buy back $6 billion of stock this year, would you buy it? It would seem like a good idea. Philip Morris is near 52-week highs, so if you get a pullback, buy more. When it initially rallied towards $80, it pulled back to $73. I called that a great buying opportunity, and it turns out I was right. Oh, I forgot to mention as well that their full year guidance was above expectations, and they've recently been able to raise prices in three markets. Yes, I said raise prices. That's good for business. I think this name is heading towards $100, the only question is when.
These are five great names to own at the end of this quarter, and I'll probably be entering one or two myself soon. I don't own any currently, and I probably won't be getting in at all this week (I'm busy this week during market hours so I'm not watching everything like I usually am). However, I might set a limit order or two, or will just wait till I'm around next week. A few of these names are at very interesting levels, but all five seem like must owns at this quarter's end.