Hot Stock Picks for 2012 and Beyond

After years of crisis investors are looking for companies that are likely to prosper even under uncertain economic conditions.
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Stock market volatility indicates that the future is still uncertain. When choosing stocks, several factors need to be taken into consideration. We have to examine growth, financial solvency, stock price performance and volatility.

We have selected companies with a promising future stock performance, that are well worth consideration. Our hot picks are as follows:

Apple (AAPL)

Apple has shown a massive growth and has good prospects for the future. The company designs consumer electronic devices, including the famous Macs, iPads, iPhones, and iPods. Its iTunes online store is the largest music distributor in the world.

Its finances have been convincing throughout the past years:                 

  2011-09  2010-09 2009-09 
 Revenue  108,249    65,225   42,905
 Free Cash Flow    30,077    16,474      8,94

Millions USD.

It has returned 40.84 % over the past year, 71.78 % over the past three years, and 55.07 % over the past decade. The stock is remarkably cheap for a company with such rapid growth.

Investors worry that the death of Apple's leader, Steve Jobs, could slow the company’s growth. Their other concern is the growing competition in the market of tablet computers. Most probably there is no need to worry, as the tablet market is expanding rapidly, iPad sales are expected to grow in the future as well, even if Apple would lose some of its market share.

Bridgepoint Education (BPI)

Bridgepoint Education is a regionally accredited provider of post-secondary education services,  offering associate to doctoral degrees. It provides programs in the areas of business, education, psychology, social sciences and health sciences. Most of its students are exclusively online, but it  has two traditional campuses: Ashford University in Iowa, and the University of the Rockies in Colorado.

Financials of Bridgepoint Education reflect a rapid growth:

   2010-12  2009-12  2008-12
Revenue        713        454       218
Free Cash Flow        163        107         55

Millions USD.

The stock has returned 38.77 % over the past year.

Imax (IMAX)

Imax is an entertainment-technology company, specializing in motion-picture technologies for play  on large screens in 2D and 3D. The secret of its success is that IMAX has emerged as a standard for large screen, enhanced viewing of films.

The financials of the company are getting stable:                                        

  2010-12   2009-12 2008-12 
Revenue       249        171       106
Free Cash Flow         52          12        -11

Millions USD.

It has returned -19.95 % over the past year, 68.05 % over the past three years, and 21.42 % over the past decade.

IMAX has growth opportunities both domestically and internationally. Especially its expansion overseas can drive further growth.

Lockheed Martin (LMT)

Lockheed Martin is the largest defense contractor in the world. Its product portfolio includes  aeronautics, electronics systems, information systems, and space systems. Lockheed is the lead contractor on a multiyear contract for F-35 fighter jets.

The financials of the corporation are stable:

  2010-12   2009-12  2008-12
Revenue   45,803    45,189    42,731
Free Cash Flow     2,727      2,321      3,495

Millions USD.

It has returned 13.32 % over the past year, 7.20 % over the past three years, and 15.93 % over the past decade.

Lockheed regularly pays dividends and buys back billions of dollars’ worth of its stock.  Worries about reduction in military spending pressure stocks of defense contractors, but Lockheed has a lucrative satellite business that can help sustain growth.

Navistar International (NAV)

Navistar International produces commercial and military trucks, diesel engines, school and commercial buses. Its well-known brands include MaxxForce engines, Monaco RV recreational vehicles, and Workhorse chassis. The firm company provides service parts for trucks and trailers as well as financing services for its dealerships.
Machinery represents an extremely cyclical industry. This is reflected in a 34% drop in Navistar's share price during 2011. Now the stocks is considered cheap, it can be a hot pick for investors.

Revenue of the firm grows even under difficult conditions:

  2011-10   2010-10  2009-10
Revenue    13,958    12,145    11,569
Free Cash Flow         354         813      1,021

Millions USD.

It has returned -32.23 % over the past year, 13.86 % over the past three years, and 1.16 % over the past decade.

Most probably the low stock price does not reflect the quality of the company. An improved trucking industry should enhance the company's performance.

Target (TGT)

Target is one of the largest retailers in North America, it offers a wide range of quality products at reasonable prices. Its 1,800 units traditionally sell general merchandise, but recently food products have been added to the assortment as well. Beside entering the grocery business, Target launched its RedCard that offers customers a 5% discount.

Financial show a solid growth:

   2011-01 2010-01   2009-01
Revenue    67,390    65,357    64,948
Free Cash Flow      3,142      4,152         883

Millions USD.

It has returned -0.39 % over the past year, 22.41 % over the past three years, and 2.55 % over the past decade.

While food business usually brings lower returns, grocery aisles and RedCard discounts can generate more repeat business and can fuel sales growth.



Source of data: Morningstar.com. Returns are annualized.

 



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