With just a few hours remaining in 2011 trading, exasperated investors are probably looking forward to a change on the calendar. The year that was won't go down as the worst for stocks, but broadly speaking, it wasn't a great one either.
That's broadly speaking, though. With the benefit of hindsight, had you known where to look, 2011 would have been a great year. Yeah, it's kind of like that "Back To The Future" movie where Biff takes the sports almanac with him into the future to become a sports gambling legend.
Obviously, we don't have the benefit of a DeLorean that will take us into the future to see what stocks will perform well next year, but there are clues we can examine to see which of 2011's studly stocks might be in for sequels in 2012.
Here are five to consider.
Abbott Labs ABT
Admittedly, we've been bullish on Abbott recently, but with good reason. The stock had a stellar 2011, gaining about 17% as of this writing. We're not saying that performance will be repeated in 2012, but we feel pretty safe in saying that given its track record, Abbott will raise its dividend. Plus, the spinoff of the prescription-medicine business could prove very rewarding for shareholders.
General Mills GIS
Big G notched a solid 2011 performance with a gain of roughly 15% and will close the year just pennies off its 52-week high. The recent earnings report wasn't great as the company missed estimates, but at least it reaffirmed full-year profit guidance. The average price target of $42 implies limited upside from current levels, but there are a couple of things to consider with General Mills in 2012.
First, this is another stock where a dividend increase is basically a foregone conclusion. Second, if investors remain skittish throughout the year and turn the risk on trade off, General Mills will be one of the stocks they head to.
Ecopetrol EC
When we were screening for stocks that are currently trading close to their 52-week highs, it surprised us that Ecopetrol, Colombia's state-run oil producer, popped up. It also surprised us that the stock is up 3.4% this year. We already mentioned the Colombian oil giant as a preferred LatAm oil play next year. However, it should be noted that Ecopetrol now has a yield of almost 5%.
Said differently, if you want exposure to a South American state-run oil producer with rising oil production, forget Petrobras PBR and its pathetic dividend. Head to Ecopetrol. Oh yeah, Ecopetrol's current yield is also better than what you'll get with ANY major U.S. oil company.
U.S. Bancorp USB
Yeah, we know what you're thinking. "A bank stock???" In terms of big bank stocks, USB, a Warren Buffett favorite, might be the only one worth owning right now. To its credit, the stock will finish the year in the green and if odds were being given on the big bank most likely to raise its dividend next year, USB would easily be toward the top end of the list. For as bad as Bank of America BAC is, U.S. Bancorp might just be that good.
Others to consider: Major utilities, McDonald's MCD, Yum Brands YUM and major consumer staples names.
Market News and Data brought to you by Benzinga APIsACTION ITEMS:
Bullish:
Traders who believe that some of 2011's stars will shine again next year might want to consider the following trades:
Traders who believe that these performances will not be repeated in 2012, may consider alternative positions:
Bullish:
Traders who believe that some of 2011's stars will shine again next year might want to consider the following trades:
- Long the Utilities Select Sector SPDR XLU. Most major utilities are trading near 52-week highs right now.
- The same goes for the Consumer Staples Select Sector SPDR XLP.
- Long the Vanguard Dividend Appreciation ETF VIG.
Traders who believe that these performances will not be repeated in 2012, may consider alternative positions:
- Short McDonald's as the stock is arguably overbought here.
- Short any staples stock vulnerable to rising commodities prices that also has a hard time passing cost increases along to consumers.
- Long oil equities in the event risk on is restored and low beta stocks suffer.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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