Top 6 Stocks for September

by Sam Collins | August 30, 2011 12:17 pm

Secure Stocks for an Unsure Market

High unemployment, a shaky economy with talk of a “double-dip recession,” and more debt crises in Europe drove stocks lower throughout most of August. And fear of lower prices has kept the public out of stocks following the breakdown of the major indices early in the month. Technically a Dow Theory Bear Market signal resulted from a mid-month breakdown, and other technical characteristics followed including a “death cross” and a plunge in the S&P 500 to 1,101 and last summer’s trading range.

Late in the month, the indices formed symmetrical triangles, which are continuation patterns that indicate indecision — in this case a three-week period of indecision due to the withdrawal of the public from a market that is in the hands of “high-frequency trading.” Normally a pattern like this breaks in the direction of the major trend (down). But due to the currently unnatural source of trading (computer to computer), it could break on the upside and run the broad market back to the breakdown point at S&P 500 1,260. But lower prices in September could  provide opportunities to buy quality stocks at bargain prices, and this month’s list of stocks to buy has been examined for those opportunistic bargains.

Here are the top stocks to buy for September:

Top Stock to Buy #1 – Consolidated Edison (ED)

Consolidated Edison (NYSE:ED[1]) is a holding company for a number of energy businesses in electric and gas delivery that sell to wholesale and retail customers in the greater New York City area and Westchester County. With electric utility dividends compelling versus bonds, analysts have highlighted several companies, including ED, which they consider to be lower-risk investments. ED pays an annual dividend of $2.40 for a current yield of 4.3%, and has a history of regular increases.

Technically ED broke from a four-month consolidation following a dramatic reversal on Aug. 9, from under its 200-day moving average. Note the long-term bull market of ED, and buy it as a steady performer and income provider in an uncertain time. ED could pull back as a result of costs associated with recent storms, so its buy point is $53.

See chart key[2]

Top Stock to Buy #2 – EV Energy Partners LP (EVEP)

EV Energy Partners LP (NASDAQ:EVEP[3]) acquires and develops oil and natural gas properties in the Appalachian Basin, Central and East Texas, the Permian Basin, and other major oil and gas regions in the United States. And there is an emerging shale play in its Utica Shale holdings that could result in positive news before year end.

EVEP has consistently met or exceeded analysts’ estimates and had two upward earnings revisions in August. It earned $2.01 per share in 2010, and the consensus estimate for 2011 is $2.56. EVEP’s expected dividend is $3.04, for a current yield of 4.62% yield.

The stock has held above its 200-day moving average for over two years and broke from a three-month consolidation in July to a new high at over $72. It is on the verge of a break from a right triangle, which could pop it to the mid-$70s.

 

See chart key[2]

Top Stock to Buy #3 – IBM (IBM)

“Big Blue” is the bluest of the blue-chip technology giants. IBM’s (NYSE:IBM[4]) global capabilities in information technology, software, and computer hardware and related financing make it a household name. It is a company that is in full maturity, so future growth is expected to result from strong trends in emerging markets and improved profitability in its more developed markets. Earnings for 2011 are estimated to increase to $13.40 from $11.52, and analysts target the stock at $200 to $220 within 12 months.

Technically IBM had been advancing in a bull channel, but following an upside break, the stock became the victim of profit-taking followed by a general market sell-off. The sell-off overshot the support line of the channel and its 200-day moving average, but then quickly reversed, negating a breakdown. The reversal may have formed a double-bottom[5] and confirmation from its stochastic. This proven high-quality equity doesn’t often provide such an unusual buying opportunity. The technical objective is $200.

See chart key

Top Stock to Buy #4 – McDonald’s (MCD)

McDonald’s (NYSE:MCD[6]) is the most famous fast-food chain and operates in over 100 countries. Internationally people love the quality and quick service that McDonald’s provides, and shareholders have benefitted from its huge cash flow and its history of returning cash to stockholders through buybacks and dividend hikes.

Analysts’ consensus target price for MCD stock is $95 to $100. Technically MCD is breaking from a “deep V” with a target price of $105.

See chart key[2]

Top Stock to Buy #5 – New Gold (NGD)

New Gold (AMEX:NGD[7]) is a mid-cap mining company with assets in the United States, Mexico and Australia. It is expected to increase earnings in 2012 by 9% to 59 cents, a 29% growth projection, according to Zacks. NGD reported Q2 earnings of 12 cents per share, which met the consensus of nine analysts.

Technically, in early August, the stock broke from a four-month consolidation at just over $11 supported by very high volume. This volatile junior gold stock could experience some profit-taking, but has a strong base and is selling at a slight discount to the industry’s average price/earnings ratio. It could move into the mid to high teens.

 

See chart key[2]

Top Stock to Buy #6 – Tiffany & Co. (TIF)

When it comes to high-quality jewelry, Tiffany & Co. (NYSE:TIF[8]) is a name associated with the very best. Despite difficulties in the retail sector, this stock has maintained a solid uptrend until the recent market sell-off, which drove it back to its major support zone at $57 to $65.

S&P forecasts sales growth of 17% in FY 2012, and looks for earnings of $3.70 versus $2.87 in FY 2011 based on a global expansion program. The consensus target for TIF is $85 to $92.

Technically TIF’s broad base of support should hold, and continued excellent earnings will most likely drive the stock first to its 50-day moving average at $74, and finally to new highs.

 

See chart key[2]

Source URL: https://investorplace.com/2011/08/top-stocks-to-buy-ed-ever-ibm-mcd-ngd-tif/

---