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'Hit The Refresh Button' - Ken Fisher's Forbes Column
Posted by: Ken Fisher (IP Logged)
Date: February 14, 2012 06:38PM
Ken Fisher expects a great year for stocks. This is his latest Forbes column:
You may remember that in my February column last year I predicted that 2011 would “frustrate bulls and bears alike—without a big directional trend” and “end up or down just by a hair.” I was right, but my stock picking could have been better.
In 2011 my 63 investment recommendations lagged the S&P 500 for the fourth time in the 16 years FORBES has done a formal accounting of columnists’ picks. Equal amounts invested in each of my 2011 stocks would have caused you a 6% loss. The same money put into the S&P 500 would have broken even. Many of my recommendations were of foreign stocks, and they had a lousy year. My worst pick was Aixtron, a German semiconductor company I recommended in July. That stock nose-dived 63%. My best stock was Bristol-Myers Squibb (BMY), up 44% since late February 2011. I recommend you hold on to all of my 2011 picks for 2012.
Last year I warned of a middling market, but this year will be different. I expect it to be a great year for stocks, including last year’s picks.
Volatility spooked investors in 2011, and as a result there are few superbulls or superbears out there. Most pros are noncommittal, mildly bullish or bearish. No one is expecting a huge trend. This is the perfect environment for an up-a-lot year.
Capital markets tend to anticipate events, and so far all I see are strengthening markets. Italy should muddle through. When the rest of the market finally realizes there will be no crisis, stocks will have already rebounded sharply. My advice is to buy now to beat the rush.
Houston’s CAMERON INTERNATIONAL (CAM) is a global leader in process equipment like valves, pressure control and compression systems for fossil fuel extractors and refiners. The companies’ customers are in more than 100 countries. In a mildly growing economy oil prices should stay firm, and demand for Cameron’s products will grow. It sells at 13 times my 2012 earnings estimate.
Health care provider BAXTER INTERNATIONAL (BAX) hasn’t done well in a long time. It isn’t regarded highly, so it’s cheap. A new internationally focused president, Jean-Luc Butel, recently joined the company from Medtronic. He is the right guy at the right time, and I believe they have the right product mix. Baxter has a heavy emphasis on kidney and immune deficiencies. Nearly 60% of its revenues come from overseas, including a healthy proportion from faster-growing emerging markets. Last year it upped its dividend, and it now yields 2.4%. Baxter has a forward price/earnings multiple of 12.
Glenview’s ILLINOIS TOOL WORKS (ITW) has more than 20,000 unexpired patents spanning a vast array of industrial fasteners, components and consumables used in almost every field. It’s an innovative and profitable product creator in a very boring field. It’s well diversified, but its biggest operating segment is transportation, with brands like Permatex’s Dr. Bond, a superglue used mostly by auto mechanics. With a 2.6% dividend yield, it sells at 11 times my 2012 EPS estimate.
Guru Discussed: Ken Fisher: Current Portfolio, Stock Picks
Stocks Discussed: BMY, CAM, BAX, ITW,