Stock picks for 2013(Photo: Thinkstock)
Each of the six investment managers and strategists in USA TODAY’s 2013 Investment Roundtable chose 5 stock picks or investment plays.
INVESTMENT ROUNDTABLE: Read what the strategists think about the market outlook for 2013[1]
Here are each of their top picks for the best ways to make money in 2013:
Thomas Lee, chief U.S. eqity strategist at JPMorgan Chase
• Las Vegas Sands (LVS)[2], Friday closing price: $46.37. Resort/casino operator with properties in Las Vegas, Singapore and Macau, China, sports 3% dividend yield and is play on China economic rebound.
• eBay (EBAY)[3], $50.36. Ongoing shift to online and mobile commerce, plus confidence in U.S. recovery, make this midteens profit-grower and reasonably priced tech stock attractive.
• KB Home(KBH)[4], $15.65. Home builder that targets entry-level buyers to benefit from three- to five-year up cycle in housing and fact it is less pricey than many of its peers.
• Buy metals and mining stocks. Investors looking for “sleeper hits” in 2013 should bet on the “global recovery theme,” which will boost demand for commodities.
• Buy energy names. If global economies heal, it should increase need for energy sources that power factories, transportation and economic growth.
Liz Ann Sonders, chief investment strategist at Charles Schwab
Most-highly rated industries from Schwab’s quantitative industry analysis and sector analyst:
• Information technology services (IT services): Tech play is less exposed to hardware issues plaguing other stocks, and profit growth ranks in top 5% of industries rated by Schwab.
• Media: Despite a challenging advertising environment for many media outlets, especially print, that makes group a bit risky, decent valuations offer upside.
• Telecom: Robust growth of wireless coupled with history of plump dividend yield payouts add up to a solid fundamental case and low-risk grade.
• Pharmaceuticals: Despite risks due to Obama’s Affordable Care Act, generic competition and new drug pipeline concerns, resilient drugmakers have a nice mix of growth prospects and defensive charms.
• Food and staples retailing: Margins remain tight, so cost control is essential. But if consumer is squeezed due to new taxes and less government spending, this group could outperform.
Dan Chung, president, CEO and investment manager at Alger
• Denbury Resources (DNR)[5], Friday closing price: $15.88. Unique U.S.-based energy concern not in regulatory cross hairs, has below-market P-E and uses special tech to extract hard-to-tap oil from bottom of older oil fields.
• Cadence Design Systems (CDNS)[6], $13.18. Maker of electronic design automation software for semiconductor chips to benefit from rapid tech innovation and new wave of smartphones and tablets.
• ASML (ASML)[7], $63.64). Leader in photo lithography equipment used in chip development to benefit from recent Intel deal and shift to next generation of capital equipment needed for more-complex chip designs.
• LinkedIn (LNKD)[8], $112.99. Pricey Internet head-hunting site is modern-day job-recruiting tool that’s likely to do well despite weak economy. Emergence as business-to-business social-networking site also a plus.
• PVH (PVH)[9], $108.36. Kudos to management of multibrand apparel retailer, including Calvin Klein and Tommy Hilfiger. Recent acquisition of Warnaco, maker of swimwear and underwear, provides synergies that should boost 2013 profits.
Adam Parker, chief U.S. equity strategist at Morgan Stanley
• Eastman Chemical (EMN)[10], Friday closing price: $64.68. Chemical maker, which recently boosted its dividend for the third time in two years, to benefit from U.S. manufacturing renaissance and free cash flow generation.
• Kinder Morgan (KMI)[11], $33.72. The energy storage and transportation company sports a 4%-plus annual dividend yield in a low-interest-rate world and possesses a nice stable of pipelines and terminal facilities.
• Chubb (CB)[12], $76.12. High-quality property and casualty insurer carries a below-market P-E ratio of around 11 and a dividend yield of 2.1%. Analysts say there will be little long-term financial fallout from Superstorm Sandy.
• Cardinal Health (CAH)[13], $42.32. The drug and medical device distributor should benefit from increased demand from Obama’s health care law, making it a good growth-at-a-reasonable-price stock play.
• EMC (EMC)[14], $24.72. Maker of data storage devices and information security solutions has $24.5 billion in sales and has one of the tech industry’s more unassailable technology leads to prevent start-up competition.
Ann Miletti, senior portfolio manager at Wells Fargo Advantage Funds
• BB&T (BBT)[15], Friday closing price: $28.29. Large regional bank banks on strong management, attractive P-E, pick-up in loan growth as housing recovery continues and growth via organic means or M&A.
• Interpublic Group (IPG[16]), $10.90. Holding company for advertising and marketing agencies poised for growth in digital and traditional ad revenue in 2013. Stock sells at a below-market P-E and has 40% upside potential.
• Global Payments (GPN)[17], $44.24. Electronic payment transaction processor is focusing on global expansion in China via alliance with HSBC and could see its shares rise as high as $60 in 2013.
• Agilent Technologies (A)[18], $39.85. Electronic measurement company trades at just 12 times earnings to benefit from rebound in demand for end-market industries, such as semiconductors, and renewed growth in China.
• Nuance Communications(NUAN)[19], $22.01. Provides speech imaging solutions for consumers and health care industry that translate spoken words into text. Health care business, which transcribes medical records into digital format, has grown from zero to $1 billion in three years.
Bob Doll, chief equity strategist at Nuveen Asset Management
• CF Industries (CF)[20], Friday closing price: $05.99. Maker and distributor of fertilizer products to benefit from better crop quality and yields, as well as strong demand for ag products like corn. Use of free cash to buy back stock an added bonus.
• Comcast (CMCSA)[21], $36.54. Cable TV stock to flourish thanks to price momentum, ratings gains at NBCUniversal, traction for Xfinity brand, double-digit cash flow and profit growth, as well as dividend hikes and stock buybacks.
• Accenture (ACN)[22], $70.21. Blue-chip mangement and technology consulting firm to prosper from more spending after fiscal cliff deal, a bookings backlog and $3 billion a year in free cash flow to pay out in dividends and buy back stock.
• Eli Lilly (LLY)[23], $47.79. Despite chunk of revenue at risk due to coming patent expirations, potential upside from roughly a dozen new drugs in Stage 3 approval process and 4% dividend yield make it worth the risk.
• Verizon (VZ)[24], $44.21. Telecom firm is good defensive play. It pays a dividend of nearly 5%, gets revenue from land lines and smartphones and enjoys healthy subscriber growth and double-digit earnings growth thanks to sale of Apple’s iPhone and other phones using their 4G network.
Investment disclosures: BOB DOLL: Doll, family members do not own any stocks cited. All stocks held in Nuveen funds. ANN MILETTI: Miletti, family members own stocks cited via Wells Fargo funds. DAN CHUNG: Chung, family members own stocks cited via Alger funds. THOMAS LEE: Lee owns shares of Las Vegas Sands, KB Home, and both companies are clients of JPMorgan Chase. Firm also provides market making, public offering, investment banking services to eBay. ADAM PARKER: Parker, family members do not own any stocks cited. MS has investment banking/client relationship with all five companies.
References
- ^ http://www.usatoday.com/story/money/markets/2012/12/17/usa-today-2013-investment-roundtable-outlook/1767695/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/LVS/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/EBAY/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/KBH/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/DNR/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/CDNS/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/ASMLF/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/LNKD/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/PVH/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/EMN/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/KMI/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/CB/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/CAH/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/EMC/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/BBT/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/IPG/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/GPN/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/A/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/NUAN/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/CF/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/CMCSA/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/ACN/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/LLY/ (www.usatoday.com)
- ^ http://www.usatoday.com/money/lookup/stocks/VZ/ (www.usatoday.com)
