5 Stocks To Buy Now For Big Profits In 2012
Everyone wants to begin the new year 2012 with a handsome return from their investments, and as many think about reshuffling their portfolios, I bring you my analysis of stocks ranging from oil to radio manucturers and financial managements companies, which are going to lead the way to higher returns in 2012. Specifically, these companies are trading at a significant discount to their ir values on an earnings per share basis.
Baker Hughes Incorporated (BHI) is a worldwide supplier of oilfield products, technology and services for the drilling, production, refining and processing of oil and natural gas, with operations in more than 80 countries. BHI operates under five reporting segments in terms of geography– North America, Latin America, South America, Middle East/Asia Pacific and Europe/Africa/Russia. The revenues have shown a consistent increase over the last 10 quarters with an EPS growth rate of 175% in the last 4 quarters alone on a TTM basis.
A $27 billion enterprise, BHI trades at a price earnings multiple of 19.30, well below the industry average of 25.78 times. BHI has delivered a quarterly revenue growth of 40% as compared to 25%, for its closest competitor, Weather Ford International (WFT). BHI is currently trading at $57.99, around the middle of its 52-week range of $81- $41.91, and with a 5-year average return on equity of 19.35%, it beats the industry average of 15.92%.
BlackRock Inc (BLK) is an investment and risk management company providing services to a variety of clients, including but not limited to institutions, retail investors and even HNI individuals with a focus on customized solutions. BLK is a global player with investments in nearly every major capital market, not to mention fixed-income securities, mutual funds, ETFs and money market instruments from around the world. With a market capitalization of $28.26 billion and an enterprise value of $31.78 billion, an increase in quarterly revenues at 6% and a net profit margin of 25.73% (above the industry average of 15.37%), BLK should be in your New Year portfolio!
BLK is currently trading at $157.79, near the 52 week low in a range of $209.77-$137, with a price earnings multiple of 12.41 times, it somewhat more expensive than the industry average would indicate, at around 9.5 times, although the more than healthy dividend yield of 3.49% meets the industry par. The 5-year EPS growth rate of BLK hits peers such as T Row Price Group (TROW) and Affiliated Managers Group (AMG) out of the park, at 24.71%, beating 9.87% and negative EPS growth, respectively.
Charles River Laboratories International Inc (CRL) is a clinical research solutions provider, offering research models, preclinical and other related services, which help in accelerating the process of drug discovery and development. It reports revenues under two operating segments, research model and services, and preclinical services, contributing 58% and 42% to the revenues, respectively. The stock is currently trading at $32.28, near its low in the 52-week range of $42.84- $26.85, which makes it an attractive buy at the current pricing levels.
The price earnings multiple of less than 50 times, where competitors trade at an average of over 120 times, makes the stock a relative bargain. Apart from pricing, however, the stock does offer some reason for caution — a less than average current ratio of 1.98, versus 3.66 for the industry, and excessive debt at over 100% of equity. The stock is going through a bad phase; however, the silver lining may be the operating margin of 16.67%, which beats major peers such as Pharmaceutical Product Development, Inc (PPDI) at 14.84% and Covance (CVD) at 9.27%. Furthermore, after the dismal December 2010 performance in earnings, the stock has seen recovery for the first two quarters in 2011.
ConocoPhillips (COP) is a start-to-finish, a.k.a. integrated energy company with operations in crude oil, natural gas, coal (worldwide), as well as processing and marketing petroleum products. The company also transports its own oil across the USA as well as some other markets in Europe and Asia. The stock last traded at $69.65, well below the 52-week high of $81.8.
A $115 billion enterprise value company, COP reported a quarterly revenue growth of 28% on a year-on-year basis, beating competitors such as Chevron Corporation (CVX) and Exxon Mobile (XOM) with 30% and 36% revenue growth, respectively. COP provides a dividend yield of 3.79, nearly twice the industry average of 1.54, and a price earnings multiple of 8.92 times, where the industry average is nearly double at 18.47 times. Furthermore, the price earnings is near the 5-year low, the stock a bargain bin purchase.
Sirius XM Radio Inc. (SIRI) is a premier music, sports, news, weather, entertainment broadcaster in the United States, based on paid subscriptions, transmitting via 135 satellite radio channels and the internet. The company provides services using devices from Apple (AAPL) and RIMs (RIMM) BlackBerry. The company has over 20 million subscribers, not including institutional deals with automakers and retailers to ctory-install company-manuctured radios in their vehicles.
A $9.20 billion enterprise value company, SIRI is expensive, with a price earnings multiple value versus growth stocksof 61 times, while the industry average is just about 19 times. However, with a return on equity of 70.41% and a return on assets of just about industry par, the company is worth a second and even third look. SIRI reported an earnings jump from last year in the 2nd quarter of 2011, with a nearly 10-fold increase, almost doubling net income to 173 million compared to just 78 million in Q1 2011.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I am an American trader and a Vanderbilt University alumnus currently living in San Francisco. Im mostly interested in income investing using dividends, preferred stocks and other debt instruments, and pair trading. I fundamentally analyze every business from the top down. In my personal life,…More