T. Rowe Price
Click to EnlargeT. Rowe Price (NASDAQ:TROW), which was founded 75 years ago, enters 2012 on a strong note, notching record annual average assets under management, annual net revenue, net income and earnings per share for 2011. Assets under management rose to $489.5 billion. The company’s popular target-date retirement funds accounted for $66.9 billion of T. Rowe’s assets under management at year-end.
Running up short-term records is something any company can achieve by taking on enough risk and debt. But at T. Rowe Price, management focuses on the quality of earnings. The company carries no debt. It also holds $1.7 billion in cash and mutual fund investments — that’s over a tenth of its market capitalization.
But not only is the fundamental case for investing in T. Rowe Price strong, the technical case is as well. You can see on my chart for TROW shares that the stock’s 50-day moving average has crossed over its 200-day moving average and is headed upward. That’s a bullish sign. T. Rowe Price has increased its dividend in each of the last 24 years. Over the last five years, the dividend has been increased at a compound annual growth rate of 16%. Buy T. Rowe Price today.
Click to EnlargeThis is 3M’s (NYSE:MMM) 100th year in business and 100th year of innovation. 3M uses its research and development teams to churn out new products for its customers. One of 3M’s newest innovations is an ingenious patch that injects immunizations using hundreds of micro-needles. The invention allows injections without intimidating syringes. To create the micro-needle patches, 3M repurposed micro-replication technology it had pioneered to enhance the visibility of reflective road signs. 3M’s breakout over its 50-day moving average is a strong signal. Buy.
Illinois Tool Works
Click to EnlargeThe simple 80/20 business model at Illinois Tool Works (NYSE:ITW) generates success. It’s called the ITW Toolbox. The system behind the Toolbox is to focus investment and resources on the 20% of subsidiaries that generate 80% of revenues. It then focuses on the 20% of customers that generate 80% of the revenues.
If a company can keep focused on these main drivers of success, it will prosper. This strategy is working because, over the past 25 years, ITW has provided shareholders with a compounded annual return of 15%. Look at the breakout on my price chart for ITW. The stock’s sharp jump above its 200-day moving average is a bullish sign. Buy.
Click to EnlargeAmerica’s largest foodservice company is Sysco (NYSE:SYY), which operates out of 180 locations nationwide. Sysco serves around 400,000 customers including hospitals, schools, restaurants and hotels. My relative strength chart for Sysco shows a positive trend developing. Buy.
Plum Creek Timber
Click to EnlargePrices for lumber are improving after a big drop in early 2011. Plum Creek Timber (NYSE:PCL) took advantage of the increased export demand from China last year by increasing its harvest by 40%. When lumber prices fall, timber companies can wait out the hard times with assets (the trees) that keep increasing in value. My price chart for Plum Creek shows a nice breakout around its 200-day moving average. Buy.
Click to EnlargeAt its top-secret labs and testing facilities, Boeing (NYSE:BA) is developing a “bunker buster” bomb known as the Massive Ordnance Penetrator (MOP) for the seemingly inevitable U.S. attack on Iran’s nuclear facilities. The MOP is a 30,000-pound guided bomb designed to destroy the world’s deepest bunkers by carving through earth, bedrock and concrete reinforcement to detonate inside. The bomb carries 5,300 pounds of explosive in a 20.5-foot long chassis. One estimate of the final development cost of each bomb is $20.6 million.
My long-term chart shows Boeing’s price reverting to its trend. Buy before it does.
Click to EnlargeYou can see on my relative strength chart what is likely a bottom in EnCana (NYSE:ECA) shares. With EnCana’s competitor Chesapeake Energy (NYSE:CHK) announcing natural gas production cuts, it’s only a matter of time before other production companies do the same. The slowdown in drilling activity should put a bottom on the price of gas. The effect has translated into a bottom on EnCana Corp shares. Buy EnCana Corp. today and lock in a yield near 4%.
Click to EnlargeUnion Pacific (NYSE:UNP) has paid a dividend on its shares every year for 112 years. On Nov. 17, Union Pacific’s board announced a dividend increase of 26%. That was the second dividend increase of 2011, raising the quarterly dividend to 60 cents a share, up from 38 cents at the beginning of the year. Union Pacific is aiming to pay out more.
Take a look at the long record of outperformance on my relative strength chart for UNP. Over the last five years, UNP has outperformed the S&P by over 150%.
Click to EnlargeShortly after Diageo‘s (NYSE:DEO) success in Africa, the company announced the acquisition of Meta Abo Brewery in Ethiopia. Meta Abo is the second-largest brewery in Ethiopia. Its purchase will give Diageo access to the country and a lead-in for its premium spirits brands.
You can see on my price chart that a strong trend in Diageo’s price has developed after the financial crisis. Buy Diageo shares today.
Canadian Pacific Railway
Click to EnlargeWith the Obama administration’s denial of pipeline transportation routes to the south, Canadian oil producers are looking to rail to transport their crude out of Alberta. Canadian Pacific Railway (NYSE:CP) has signed a deal with NuStar Energy (NYSE:NS) to bring oil from the refiner’s Saskatchewan terminal to the coastal cities of Canada for export to emerging markets. CP has a fleet of 1,700 cars for transporting oil.
My long-term chart shows CP shares reverting quickly to trend. Buy.