by Sam Collins | August 27, 2012 6:25 pm
With Europe in trouble and China’s rate of growth slowing, the United States may eventually be the fortress of the world’s economy. That is why I’m bullish long term, but shorter term, the market is telling us that the trend is down and that defensive measures should be taken.
Some hope for the bulls was provided from a statement by Fed Chairman Ben Bernanke that “there is room for more action on the part of the Fed to shore up growth.” Bernanke is expected to speak on Aug. 31 at the Fed-sponsored Jackson Hole meeting. And there is continued optimism that the European Central Bank (ECB) will act to suppress the euro-zone debt crisis.
In such an uncertain environment, it is best to stick with high-quality stocks with proven performance and solid dividend yields. This month’s picks should provide for a higher-than-average degree of stability and return despite the national and international risks.
Here are your top stocks to buy for September:
Agnico-Eagle Mines Ltd. (NYSE:AEM) is a Canada-based international gold producer with operations in most gold-producing countries. The company reported Q2 earnings of 40 cents versus estimates of 33 cents. Production guidance for the year has been raised, and costs have fallen to the lower range of management’s estimates.
Technically the stock popped higher in July on a breakaway gap and a golden cross and ran for a quick 8 points to its current level. Note: Breakaway gaps usually remain open whereas continuation gaps are most often quickly closed by pressure from profit-taking.
This is one of analysts’ favorite gold mining stocks, but it is slightly overpriced. Buy AEM on a pullback to its 50-day moving average at $42 with a trading objective of $50. Longer-term buyers can expect AEM to climb to $70 within 12 months.
Cubist Pharmaceuticals (NASDAQ:CBST) focuses on research and development in the acute-care environment. Drugs to combat hospital-acquired infections are its priority. This year’s earnings may be flat at $1.84, but the approval of several potential blockbuster drugs could contribute to an earnings increase.
In early August, Goldman Sachs (NYSE:GS) initiated coverage of CBST with a “buy” rating and a $54 price target.
Technically the breakout from a triple-top on high volume and a stochastic buy signal are noteworthy. The target for the breakout is $52.
Express Scripts Holding Company (NASDAQ:ESRX) provides health care management and administration services for HMOs, health insurers, and various compensation plans and systems.
In July, the company ended an extended dispute with Walgreen Co. (NYSE:WAG) over rates and returns. Most analysts now project that both companies will benefit, and several analysts reaffirmed their earnings target of $4.49 for 2013 versus $3.69 this year with a median price target of $70.
ESRX broke from a double-top at just above $58 in July with an impressive breakaway gap. The trading target from the breakout is $68. Investors should buy ESRX as a quality long-term hold in the health care management industry.
Highwoods Properties (NYSE:HIW) is an integrated real estate investment trust (REIT) that operates and develops office, industrial and retail properties throughout the Midwest and southwestern United States. Leasing activity is improving in many of Highwoods’ markets. Funds from operations (FFO) are expected to increase to $2.82 in 2013, up from $2.72 in 2012.
The stock is at the lower range of an uptrend, trading within a right triangle. Recently it flashed a buy signal from our internal indicator, the Collins-Bollinger Reversal (CBR), and its stochastic is undervalued and arching up.
The trading target for HIW is $36, and its long-term target is $40-plus. The stock has a current dividend yield of over 5%.
Formerly FPL Group, NextEra Energy (NYSE:NEE) is the holding company for Florida Power & Light and NextEra Energy Resources. NextEra should grow and reflect a recovery in Florida’s economy and housing market. The company’s ambitious investment plans include wind and solar development.
Earnings are estimated at $4.54 for 2012 and $4.95 for 2013. The stock has a dividend yield of 3.5%, and analysts’ targets average $76.
Technically the stock has fallen through its 50-day moving average but should find support at around $65 — a Fibonacci 61.8% decline from the breakout in March. NEE appears to be a solid investment with above-average growth potential and a solid plan for expansion. Our 12-month target is $75.
Pfizer (NYSE:PFE) is the world’s largest pharmaceutical company, producing a wide range of drugs. In October 2009 it acquired competitor Wyeth.
The stock has had a long history of earnings improvements that have resulted in increasing dividends. The current dividend yield is 3.7%. Analysts have raised their price target to $26-$28.
Technically PFE is in a powerful bull channel with a recent buy signal from our in-house Collins-Bollinger Reversal (CBR) indicator and the stochastic. This should be a cornerstone pharmaceutical stock in long-term portfolios. Buy at the market for a trading target of $30.
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