Surly, everyone who is anyone will publish a list of his or her “Top Stocks of 2012.” This is a moot exercise. The future is unpredictable, thus making any of these calls is mere speculation, and anyone who says otherwise is not to be trusted. Making these calls at the beginning of the year is unwise, most moves will happen for a short time, holding a stock long will strip you of the meager gains.
Even more than fundamentals or technical indicators, the news cycles dictates the major market moves. No one knows what the market moving stories of 2012 will be – Will Iran attempt a blockade? Unlikely. Will the economy keep showing signs of improvements? Maybe. Will another earthshaking disaster take place à la Japan? Certainly.
Despite understanding the sheer impossibility of predicting good stock stories a whole year into the future, the Whale will make such an attempt.
Apple is the darling of the average investor and the darling of the average consumer. Apple was the Whale’s favorite pick of 2011, netting a cool profit and a bonus to boot. Not only is the Whale fond of the stock, the products that the company sells are of an extreme desirability for the Whale. My house is dotted with these bundles of joy; an iPhone for each member of the household, a MacBook Pro 15, a MacBook Pro 13, an iMac, 2 iPads, 2 iPod Touches, and an Apple TV, and several other itty bitty products that I can’t recall.
Fortunately, this is becoming the norm is most American households. Families are hoarding these consumer electronic products. The desirability factor of an Apple product is undeniable, the average consumer puts the product line only a different level. When purchasing a cell phone or laptop, there is the utility factor and fun factor, Apple is only a handful of companies that can lay claims to both of these factors.
Now that Apple has established itself as a dominant brand and established pricing power that parallels no other, the company is going to continue to grow. First, the Whale is hearing increasing rumors of an “Apple TV,” supposedly a dream project of Steve Jobs. The Apple fan blogs that write about these things tend to be more right than wrong, hopefully they get it right on this one, and so does Apple. Second, the Internet is again a buzz with rumors of a lower end iPhone, supposedly this product is going to help dominate the emerging market and compete with the $100 Android phones. Where there is smoke, there is bound to be fire – and the sources are rather reliable.
Even if none of these rumors pan out, Apple is still great story that is going to keep growing. The Whale predicted a $465 price target at the end of the year for the stock,however we fell below that range. Had the year not been so volatile, we would have easily hit our price target. The price target might have been rather bullish but $500 is attainable by the end of this year.
Ford Motor Company
Ford is down 35% year to date. Not a good sign. The Whale took some good hits from this one, losing more than 12% and finally ditching it for good.
Ford is a growth story, and one that the Whale believes in. The stock is backed mostly by intuitional owners, about 53%. These people are not worried about the little hiccups that happen along the road, they are in it for the long haul. The company keeps improving and working on their product line, it has been a long time coming but the company is finally posting profits and cutting out more fat.
The most significant improvement that Ford has been able to make is branding itself. For the first time in a long time, people are happy to own a Ford; in fact people want to own a Ford. This is a very hard feat to accomplish, as anyone in the auto industry knows; American vehicles were the least desirable. The pecking order was always; German, Japanese / Korean, and then American. The tide might be turning and the line is starting to blur between American and the Asian imports.
The most notable factor is that Ford is a cheap stock. Trading at 6.5 P/E compared to 40 of Toyota.
Better times are ahead from this company.
No matter how much we hate to admit it, The world will always need oil. Any company who can get oil out of the ground will most likely be rewarded. Heckmann Corp is the next in a line of companies that make the earth go round and round. Although the company has been operating at a loss for a long period of time now, they finally started to post profits in 2011. With almost a 40% jump in operating margins, the company is poised to deliver some fine earning in the next couple of quarters.
Another reason to watch this stock is for a buy out play. This is a relatively small company that has established a name for itself in Shale oil, a lot of bigger players want to get in the business and might want to look at buying out Heckmann Corp, killing 2 birds with one stone – eliminating a rival and buying an already furnished infrastructure.
On an interesting note, the management of the company has previously declined buy out offers. This is usually a positive sign (not everyone can be as stupid as Yahoo’s management). The Whale trusts that the management knows the true value of the company is far from being reached, thus they want to play this out, drilling out some profits on the way.
Endeavour Silver Corp.
This is a gold play. The Whale is counting on the Euro Zone to have some turmoil times. Down goes the Euro, up go Gold and the Dollar. It is wrong to say gold is over valued; gold is rather at a fair value and plenty to room to grow. Silver on the other hand is under valued.
Further, there are too many fools in the Gold, and I fear that we are at the peak of some sort of bubble, thus I’m hedging my bets in Silver. It’s true that even with a Gold decline, silver will follow. But I fear that we will see more volatility in Gold thus sharp incline and decline, leaving no room to dump your assets before approaching the cliff. I rather have a soft ride up and a soft ride down.
Sprint Nextel Corporation
Sprint has been assaulted from all angels for a long time. Not only does Sprint play a second fiddle to the likes of Verizon and AT&T, the brand had no appeal to customers. AT&T was busy fashioning itself the most desirable product line, Verizon was busy fashioning itself as the most reliable, and T-Mobil the cheapest. Sprint was nowhere to be found, the only thing Sprint had going for it was a dedicated CEO who couldn’t do anything right.
However, things have changed. Steve Jobs was kind enough the leave Sprint a parting gift. The iPhone might help save this company from bankruptcy and maybe even let it compete with the AT&T. Currently, the only gimmick that Sprint has is the unlimited data plan, although this is not going to be enough to steal customers from the others, it will at least stop customers from fleeing to other carriers. Sprint might have an edge in attaining new customers; their price point is the lowest in the industry. Surly, people will take notice when their 2-year contract runs out.
The price point and unlimited data plan might be a double edge sword, where they might retrain and attract new customers; they will likely have paper thin margins.
The stock seems to be testing a double bottom at the current levels, this might be a good time to get in before 4the Q results are posted.