By abounding measures, this accomplished decade was a downer. We accomplished the dot-com bust, agitation attacks, the Enron scandal, Bernie Madoff’s Ponzi scheme, at atomic two wars and the Jonas Brothers. Oh, and lest I forget, one of affliction banking crises in history.
For anyone account this, congratulations. You’ve survived, admitting it hasn’t been pleasant. But we accept abounding things to attending advanced to. Amid them are my 10 admired banal picks for 2010. Several trends are in the works over the abutting year that I accept accomplish the companies I’ve alleged acceptable bets.
First amid these trends, some banking companies were hit way too hard, forth with their brethren, and will now balance in a apple breadth they accept beneath competitors. Next, the developing apple is aback on track. Bodies are affective from rural to burghal areas throughout the planet. And they are very, actual hungry.
Back at home, bloom affliction reform, whether you like it or not, is happening. Also, the dollar is weakening. Meantime, claimed accretion is still accepting faster, smaller, cheaper. And I’m abashed the blackmail of agitation is actuality to break — and the action adjoin it will still amount billions of dollars.
In ablaze of these themes, actuality are my 10 favorites for 2010, with some ammo credibility for each. While the ammo credibility don’t present an absolute advance apriorism for anniversary stock, appearance them as starting credibility and feel chargeless to email me at james@formulacapital.com with questions.
1) Assured Guaranty (AGO): Assured insures borough bonds. Its competitors MBIA (MBI) and Ambac (ABK) accept been agape out of the bold due to over-speculation in mortgage-backed securities, abrogation the absolute breadth advanced accessible for Assured. The adorableness of borough bonds is that they accept tiny absence ante (0.14% this year). And best of the worries in borough accounts were apparent by a little affair alleged the $787 billion bang plan, abundant of which went anon to bounded governments to bung costs holes. JP Morgan said it sees the banal extensive $42 — it’s not trading in the $20s — based on $6 per allotment earning abeyant in 2010. The banal is currently trading for aloof three times abutting year’s balance and the aggregation aloof aloft added than $500 actor in financing, acceptable any apropos from the acclaim appraisement agencies. I own the stock.
2) Wellcare Bloom Plans (WCG): The managed affliction provider bound its problems with Medicare and is all set for a apple breadth its role as a advocate amid corporations and government-sponsored bloom affliction will be in abundant demand. The company, with a $1.4 billion bazaar cap, has over $1.2 billion banknote in the coffer and no debt. This could calmly be a bifold in 2010. I own the stock.
3) Potash (POT): Bodies charge to eat. Potash increases the crop of fertilizer. And in an crawling apple with bodies affective into burghal areas (less farmers agriculture added mouths), appeal will fasten for whatever can admission that yield. Potash’s banal is carefully activated to prices of the artefact Potash. It’s account acquainted that the banal represents billionaire financier George Soros’s third better position. Goldman Sachs aloof aloft its appraisement on the the stock, adage “Investors are acceptable underestimating the 2010 US appeal accretion that could see amazing yoy [year-over-year] percent increases in aggregate accustomed the abyss of the 2009 abridgement and the atypically anemic abatement burning levels.”
4) Banknote America (CSH): This alternation of pawnshops is a backdoor way to comedy an admission in gold prices. Pawnshops accept now replaced boilerplate banks as the lender to the sub-prime community. Not alone that, aback bodies borrow from a pawnshop, they generally duke over gold as collateral. As gold rises, so do the asset ethics sitting in the assurance shop. At nine times earnings, this one is bargain activity into 2010. I own it.
5) Becton Dickison (BDX): A almost new position for Warren Buffett, this aggregation makes all sorts of medical supplies. Buffett has been authoritative an all-embracing bet on medical companies. He owns Johnson & Johnson (JNJ), GlaxoSmithKline (GSK) Sanofi Aventis (SNY). And now the aboriginal aggregation amid the medical stocks he invests in is Becton Dickison. The aggregation aloof afresh added its dividend, authoritative it the 37th year in a row that it added its payout. At 14 times earnings, this one has allowance to grow, decidedly with an crumbling Baby Boomer citizenry acute added medical care.
6) Hillenbrand (HI): Hillenbrand is the better supplier of articles to the burial account industry. Caskets and urns are at its primary articles and it sells to 16,000 of the nation’s 22,000 burial homes. This is a demographic trend that is alone accepting beyond with an crumbling population. The banal yields 4% and trades for alone 10 times advanced earnings. I like stocks that are monopolies in their industry, pay huge assets (which they aloof increased) and barter for a bargain assorted on banknote flows.
7) Telecom Corp. of New Zealand (NZT): Trading for aloof seven times balance and acquiescent a 10% dividend, it’s additionally nice to apperceive that it’s a cartel in New Zealand. And, on top of that, with gold prices soaring, it’s account acquainted that the bill best carefully activated with gold is the New Zealand bill (affectionately accepted as the Kiwi dollar), authoritative the aggregation a nice backdoor comedy on gold.
STEC (STEC): The maker of solid-state drives has $130 actor banknote in the bank, no debt, a $650 actor bazaar cap, and trades for aloof six times advanced earnings. The banal burst in November aback it appear that EMC had an account excess of STEC’s SSD product. In added words, EMC ordered too much. Since EMC is the company’s better customer, it threw into agnosticism its balance expectations. JP Morgan’s analyst came out and said he still sees the aggregation earning $2 per allotment in 2010 and put a $42 amount ambition on the stock. Not bad for a $12 stock.
9) Alvarion (ALVR): This is a backdoor comedy on the advance in the developing world. The aggregation food the WiMax networks that acquiesce bodies in the developing apple to get Internet access. This will be a aerial advance breadth but additionally at $3.80 a share, Alvarion is clay cheap. It has $2.50 a allotment in banknote in the bank, no debt, and is accepted to acquire 14 cents a allotment abutting year. Trading at beneath than 10 times balance (when you aback out the cash) and with the safe beanbag of the cash, this banal is actual attractive.
10) GlaxoSmithKline (GSK): Warren Buffett holds this biologic stock. It trades for 12 times advanced balance and offers a 4.7% dividend. Appeal for its bloom affliction articles will alone go up with an crumbling Baby Boomer population.
