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Author of Investcraft.com. Investcraft is a Financial Blog that focuses on helping individual investors navigate through the complexities of the stock market. Both individuals hope to provide keen insights on the trends of the market as well as individual stock analysis. If you’re looking for... More
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  • Top 8 Stock Predictions for 2011 0 comments
    Dec 29, 2010 6:58 AM | about stocks: BZH, LVS, MGM, PHM, WYNN, YHOO
     Ok, it’s that time of the year again. It’s time to make some predictions for 2011. I wouldn’t necessarily trade based on these predictions but it’s fun to make them nonetheless.

    Here goes…

    1. Homebuilders make a comeback. It’s safe to say that many homebuilders are getting pummeled and rightfully so. Home prices have declined drastically, housing starts continue to disappoint, unemployment still high, foreclosure mess still unresolved, etc. However, the market looks ahead and once we turn the corner on the economic recovery, housing should be one of the first segments of the market to rebound. My favorites in this sector are BZH and PHM.

    2. S&P gains 10% in 2011. I know many experts have predicted as much as 15-20% gains in the S&P and NASDAQ in 2011 but I think the gains are going to be pretty moderate. However, I do think that money is going to be re-allocated to different areas. Banking and retail are going to be strong in 2011 whereas healthcare, insurance and basic materials are going to be weaker.

    3. Interest rates will rise. There’s no doubt the interest rates are going to rise over the long term. But I think towards Q3 and Q4, I see mortgage and interest rates make a comeback. The Fed probably won’t raise rates but the market is going to start pricing in rate increases and we may see mortgage rates up near 6-7% by the end of 2011.

    4. Sarah Palin runs for President. This isn’t necessarily good for stocks but her running for president increases Obama’s chances of getting re-elected. I think Obama has been GREAT for the stock market and his re-election in 2012 (I believe this to be likely) should only help sustain a bull market into the middle of this decade (think Bill Clinton’s 2nd term).

    5. Huge Consolidation in the Regional Banking – Many smaller regional banks are getting bought out as we speak. They’re typically getting bought out at a slight premium at their currently depressed stock prices. In 2011, I think there’ll be several more small-to-medium sized struggling regional banks that will get bought at slight-to-moderate premiums. Most of the banks that are being targeted are probably ones that still owe TARP money — the ones who paid back their TARP are probably going to resist any urges to merge with a larger bank at such low valuations.

    6. Google buys Groupon. Yes, you heard it here first. Even after the media reports Groupon shunning Google’s offer of $6 Billion, I still believe Google will buy Groupon sometime in 2011. Sorry to break it to you all, but there’s no way Groupon is worth $6 Billion and Google may very well get Groupon for even less than the $6 Billion they offered. The scenario I see is — Groupon goes IPO, market gives them a valuation around $3B and Google buys them out for around $5B to $6B. Total speculation but who knows, stranger things have happened!

    7. Online Poker becomes legal in the U.S. Senator Reid has been pushing a bill to legalize online poker and I think it’ll happen in 2011. Republicans and conservatives don’t like it but it’s extra tax money for the government — who desperate need it because of our piles of debt and excess government spending. It also means the big winners are going to be companies like MGM, LVS, WYNN — some of my favorite casino stocks.

    8. My boldest prediction — probably least likely to happen out of the 8.

    FACEBOOK WILL BUY YAHOO!

    That’s right! I called it here first in Dec 2010. Zuckerberg is going to work out a deal with private equity groups and split up Yahoo! into multiple parts. Facebook gets Yahoo! Content properties (Yahoo! Finance, Sports, Flickr, Movies, etc), Jack Ma and his Alibaba gets their 40% stake back and Yahoo!’s international properties (Yahoo! Japan, etc), AOL gets Yahoo! e-Commerce properties (Yahoo! Autos, HotJobs, Travel, Mail), Microsoft gets Yahoo!’s Search. Keep in mind that Facebook currently has a valuation of $56 BILLION as a private company. Yahoo’s market cap is about $21 Billion — quite affordable for Facebook if it can buy Yahoo! out by issuing stock as payment.

    Ok, there you have it — my 8 predictions for 2011. Good luck everyone and happy new year!

     
     


    Disclosure: I am long OTC:ALBCF, LVS, PHM, YHOO.
    Stocks: BZH, LVS, MGM, PHM, WYNN, YHOO
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