GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

5 Lucrative Investment Ventures for 2012

March 02, 2012 | About:
Investing in stocks, like any other investment venture, has its fair share of pros and cons. While some investments prove to be lucrative and give healthy returns, other investors make a gamble that end up costing them dearly. A sound knowledge of the stock market along with a considerable amount of experience is therefore an essential prerequisite for investors seeking to make big investments in the market. However, a simpler option would be to consider the financial assessments of veterans. Here are five stocks that, according to my analysis of past trends and most recent performance, will fare well in the coming years:

Apple (AAPL)

Apple is recognized as the leading brand in computer software technology seconded only by Windows. The multinational corporation continues to introduce new innovations and breakthroughs in technology with a diverse range of smart and competitive products that have been market leaders.

Apple has traditionally enjoyed good investor sentiment with an impressive number of investors that have stayed loyal to the company through testing times. Ever since the sudden and unexpected demise of Apple’s owner Steve Jobs and the subsequent plummeting of Apple stock, the giant has made a quick recovery, recording impressive performance stats in the last quarter of 2011. Apple has continued its good run with good financial statistics for the opening month of 2012.

Apple shares are trading at a market price of about $493 per share with a 52-week range of $477 to $310. Apple has a market capitalization of nearly $460 billion with an average trading volume exceeding $12 million. With growth of earnings almost double the rate of share-price appreciation, Apple’s price to earnings ratio has grown to 14 from 10 after some initial hiccups. Analyzing past trends and current market performance leads me to speculate that earnings per share of $35 are set to grow by 30%. Achieving set goals for the current financial fiscal year will most likely help Apple widen its competitive moat. Apple has also traditionally enjoyed a good dividend history. The company will be a lucrative investment venture for investors.

Enbridge Energy Partners (EEP)

Enbridge Energy Partners is the U.S. affiliate of the Canadian pipeline company Enbridge Inc. Although the Canadian stock is likable with a dividend yield of nearly 3%, it comes nowhere close to the 7% dividend yield of Enbridge Energy or the consistent payout ratio. Historical data and market statistics suggest that the company has managed to grow at a steady average rate of 5% per annum since 1992.

In 2010, the energy giant was forced to make deductions after a huge oil spill. This resulted in a $48 million loss for tax purposes, even though Enbridge Energy paid out $505 million in distributions. However, Enbridge Energy saw steady growth in 2011 where most stocks were seen plummeting unexpectedly. The company has fared well in the first month of 2012 amidst favorable investor sentiment. Enbridge Energy has a total market capitalization of nearly $9 billion with an average daily trading volume of almost $1 million. The current trading price is nearly $32 with a 52-week range of $66 to $25. A price to earnings ratio of around 32 and healthy earnings per share has helped the company earn the trust of investors. Enbridge Energy has traditionally had a good dividend history with a payout ratio of around 70 and a yield exceeding 2%. In my view, amidst favorable investor sentiment and good performance, Enbridge Energy counts as a safe investment for the year of 2012.

Halliburton (HAL)

Halliburton is America’s leading oilfield services company helping oil companies in exploration and drilling of wells. Halliburton is the pioneer of the new horizontal drilling technique which has allowed it to boost production to nearly 4.5 trillion cubic feet from 500 billion barrels about five years ago. Halliburton has an equally strong appeal in international markets where investors have shown a lot of interest in the financial performance of this powerhouse. With overseas revenue rising by nearly 17% since the third quarter of 2011, I speculate the company to expand its field of operations significantly in the coming years. This conclusion can also be derived seeing how energy power-houses China and Argentina[/url] have sought assistance from Halliburton for the development of their national shale plays. Unless the global economy experiences another massive jolt, financial reports and current performance suggest that Halliburton will achieve its projected growth target of 22%.

The company currently has a massive market capitalization of $30 billion with total recorded revenues of $25 billion in 2011. At a current trading price of around $36, Halliburton has a price to earnings ratio of around 11 and earnings per share of almost $3. A positive dividend yield of nearly 1% has helped the company earn the trust of loyal investors. In my view, the company will continue to grow at a steady pace, opening new frontiers for investment such as the massive market of China. Therefore, I rank Halliburton among the safer stock investments for 2012.

Intel (INTC)

With a massive market capitalization of nearly $124 billion and total recorded revenues for 2011 exceeding $55 billion, Intel can comfortably claim to be one of the biggest market players. The company has had a good run in recent years making smart investing and cutting down on underdog projects. Statistics as well as exceptional performance in recent years has helped the leading chip manufacturer earn the trust of investors. This has helped Intel sustain its reputation as a good paymaster of dividends.

The company has projected its revenues for the current year to exceed the $11 billion which it managed to generate last year amidst a horde of favorable financial triggers. Sale of PCs has actually risen exponentially with China and Brazil hot in pursuit of a technological upgrade for major development sectors to counter growing competition. This has helped Intel boost sales by as much as 25% in 2011. The company has continued to perform well in the opening month of 2012, a positive sign that has not been missed by keen investors. While Intel failed to outshine arch rivals ARM in smartphone/tablet-chip manufacturing, it has strengthened its hold on mobile computing devices. Intel is currently trading at around $27 per share with a 52-week range of $19 to $27. The company has an average daily trading volume of nearly $50 million.

Price to earnings ratio and earnings per share are favorable at around 11 and $3 respectively with an earnings yield of nearly 9%. Intel has an average revenue growth of almost 22% with a profit margin of 24%. Over the years, the competitive moat of Intel has slid due to growing competition and emerging new technologies around the world. However, investors can rest assured that the world’s leading smart-chip manufacturer is a safe investment for 2012. Intel will continue to meet the expectations of investors in the current year.

Johnson Controls (JCI)

Johnson Controls is actually an assimilation of three businesses into one parent business. The first business that deals in auto parts unit has seen remarkable growth in the last quarter of 2011 with nearly 36% growth in operating earnings. The second is an HVAC manufacturing and servicing unit that has also seen a dramatic increase in demand for energy efficiency in constructions boosting earnings by nearly 12%. The third business is a high-tech growth play that produces a new breed of battery for "micro-hybrid" cars.

In my opinion, current market statistics on the company performance are favorable with a projected growth of nearly 16% for the next five years. Johnson's total market capitalization is worth nearly $20 billion with sales revenues of $42 million for the year 2011 easily exceeding projected goals. Looking at current stock market performance, I can see the company’s revenues grow by around 10% this year. Johnson’s has a good price to earnings ratio of around 12 with earnings per share of almost $3. Shares are currently trading at around $33.

Johnson’s is expected to launch new energy-efficient smart-hybrid cars in European and the local American markets this year which, analysts believe, will help the company widen its competitive moat considerably. The company has also enjoyed favorable investor sentiment which may be explained by Johnson’s good dividend history with a dividend yield of nearly 3%. In my opinion, Johnson is expected to come close to achieving its targeted revenue growth for the current fiscal. It has already proved much with an impressive run in the first month of 2012.

About the author:

Dividend King
I am primarily an investor interested in creating passive income streams through dividends. I focus on finding and analyzing dividend paying stocks, MLPs and REITs that are a good fit for income investors.

I practice Judaism and my faith is very important to me. I visit family in Israel once a year, but I am educated and work in the United States where I hold an MBA and a bachelor’s in English. I am a patient man, enjoy wine but am not a connoisseur, and I listen more than I speak.

Visit Dividend King's Website


Rating: 4.0/5 (6 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK