by Sam Collins | December 4, 2012 11:05 am
Despite political and economic uncertainties, the bull market is intact. The S&P 500 plunged in early November, when prices broke the support line at 1,403. But in mid-November, the index reversed, and within eight trading sessions, broke above that former breakdown line.
Now the current range of trading is very narrow — just 19 points between the 50-day and the breakdown line, and 37 points between the 50-day and 200-day moving averages. A break in either direction would be significant.
But regardless of the overall uncertainties, there are some stocks that have special characteristics that could enable them to appreciate. Each stock on this month’s list of stocks to buy was chosen with that thought in mind. Here are your top stocks to buy for December:
Crown Castle International Corp. (NYSE:CCI) owns, operates and leases wireless infrastructure, including towers and antenna systems. Earnings have been on a tear, increasing from $0.37 in 2010 to $0.60 in 2011, and estimates for 2012 are $0.75.
Technically, the stock is consolidating with support at its bullish support line and resistance at a triple-top at $69 (close). CCI is under heavy accumulation, so although buying “at the market” may entail greater risk than when it was first recommended in our Top Stocks to Buy in July, the company’s performance fully justifies new positions now.
A break through the triple-top gives a trading target of $75. Longer term investors are likely to achieve a much greater return on their investment.
Online auctioneer eBay Inc. (NASDAQ:EBAY) is really a global commercial platform, and the largest of its kind. It owns PayPal, Bill Me Later, Gmarket, GSI Commerce, Shopping.com and StubHub.
In late November, EBAY broke from a triple-top at $51, and to a new eight-year high following a positive recommendation from Caris & Company and a buy signal from our internal proprietary indicator, the Collins-Bollinger Reversal (CBR). Accumulation is high and MACD is flashing a buy signal.
Buy EBAY for a quick trade to $58. Longer term the stock appears capable of trading in the mid-$60s.
The objective of iShares Gold Trust (NYSE:IAU) is to track the price performance of spot gold, minus administrative costs. The bullion is held in vaults in Toronto, London, and New York under the custody of JPMorgan Chase (NYSE:JPM). Expenses are just 0.25% per year. This trust offers one of the few ways to directly invest in gold bullion and, according to Morningstar, which ranks it a “five-star buy,” IAU “is the least expensive way to gain gold through exposure to ETFs.”
Technically, gold’s impressive run could continue despite its recent advance. It is on a MACD buy signal, has confirmed a break above its 200-day moving average, executed a golden cross (long-term buy signal) in September, and is now in an intermediate uptrend after breaking its downtrend line.
Buy IAU as a hedge against inflation and currency debasement, and as a diversification tool.
Kinder Morgan Energy Partners LP (NYSE:KMP) is a master-limited partnership (MLP) and one of the largest pipeline operators in the United States. It transports refined petroleum products and natural gas through over 28,000 miles of pipeline.
It is expected to earn $2.23 this year and $2.59 in 2013, and pays an annual dividend of $5.04 for a 6.2% yield. It is a “five-star strong buy” S&P stock that is expected to have a cash distribution of $5.36 per unit in 2013.
Over the past decade, both the payout and the share price have more than doubled. Since its high at over $90 in February, the stock has been consolidating within a rectangle with support at $74.50 and resistance at $86.50. An upside break from the rectangle renders a target of $100.
As a publically traded limited partnership (PTP), KMP is expected to continue to receive favorable tax treatment. See the NAPTP website for information on PTPs, current thinking on their tax treatment, and answers to just about every question you might have about them.
Patterson-UTI Energy (NASDAQ:PTEN) is among the most recommended companies by Thompson Reuters’ First Call. This drilling services company is estimated to earn less this year than last ($2.14 in 2011 versus an estimate of $1.79 for 2012); however, after upgrading its rigs and modernizing, its long-term contracts have a backlog sufficient to positively impact future earnings.
Technically, PTEN is trading in a bull channel with a bottom in June at under $14. In November, the 50-day moving average crossed above the 200-day moving average — a long-term buy signal called a golden cross. The stock is under heavy accumulation and flashed a MACD buy signal in November. Buy PTEN as a long-term investment in the energy industry.
Westport Innovations (NASDAQ:WPRT), a global leader in the manufacturing of natural gas engines, uses innovative alternative energy technology that allows diesel trucks to run on natural gas. Management recently cut 2012 revenue outlook from $400 million to $340 million, and the company has string of losses. But bottom fishers who believe, as I do, that a major change is about to occur in the use of natural gas vehicles (NGVs) should consider this stock.
On Nov. 15, Deutsche Bank (NYSE:DB) initiated coverage of WPRT with a “buy” rating saying, “We see an inflection point for NGVs from 2013 as engine technology [advances]… we believe risk-reward is attractive at current levels.”
On Nov. 26, the company announced a newly developed, unique on-board storage solution, which is expected to give the ability to fuel even the largest spark-ignited engines on a single tank of liquid natural gas and reduce the overall fuel costs and weight “dramatically with a single-tank option.”
Technically, this very volatile stock appears to have made a bottom along an extended base at $23. The MACD is flashing a buy signal. The near-term target could be as high as the mid-$30s. Long-term buyers could see substantially higher returns.
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