by Alyssa Oursler | January 2, 2013 11:45 am
At the end of last year, InvestorPlace kicked off a contest called Ten Best Stocks for 2012. In it, 10 stock market experts each picked a buy-and-hold investment they thought would deliver market-beating returns over the course of 2012.
Now, after 12 long months of tough competition and countless shakeups, the results are in. The stock that was on top after Q1 finished the year at the bottom, making it one of two picks that lagged the group — and the broader market — significantly.
Overall, though, it was a relatively successful year. While the average of all the picks wasn’t anything stellar, seven stocks finished in the black, and four managed to best the S&P 500’s total return of 16%.
With that in mind, let’s take at which stock-picker and company came out on top. Here are the results of InvestorPlace‘s Ten Best Stocks for 2012:
Q4 Return: -27%
Total Return: -49%
Investor: David Gardner
It wasn’t a pretty year for little-known MAKO Surgical (NASDAQ:MAKO), David Gardner’s high-risk selection for the best stock of 2012.
The company actually sat atop this list after the first quarter, then dropped nearly 40% in Q2 to sixth place. In Q3, the stock crumbled all the way to last place and kept slipping in Q4 — the tune of 27% losses — to finish there.
Several disappointing quarters — featuring wide losses and lowered outlooks — were to blame for the stock’s ugly performance. At the end of the year, the shares had lost an eye-popping 49%
Of course, MAKO was a volatile play to begin with. This small-cap, niche medical company was betting on a narrow product line — MAKOplasty procedures for knee and hip replacement surgeries — and that bet sure didn’t pay off in 2012.
Q4 Return: -22%
Total Return: -42%
Investor: Josh Brown
The good news is that Arcos Dorados (NYSE:ARCO) — the largest McDonald’s (NYSE:MCD) franchisee in the world, operating primarily in Latin America — has enjoyed double-digit gains since mid-November.
The bad news is that the company’s shares still shed over 20% in the past three months, putting them more than 40% in the red since January.
The stock reached a high over $22 in early February then began the downward slide as growth slowed. Not-so-hot consumer spending in Brazil and an unfavorable currency exchange weighed on the bottom line in the first quarter, when Arcos suffered a brutal 28% year-over-year drop in net income.
Plus, when 2012 kicked off, Arcos expected at least double-digit earnings growth. That was then lowered to a range of 8% to 10% … and then lowered again to between 3% and 5% growth.
Hopefully, that trend will head in the opposite direction in 2013.
Q4 Return: 5%
Total Return: 2%
Investor: Dan Burrows
Caterpillar (NYSE:CAT) was the third-to-worst pick heading into the fourth quarter and remains there now that the final three months have come and gone. The construction equipment maker had a tough year in the wake of the global slowdown.
Dan Burrows remains as bullish as ever on the stock in the long term, but things aren’t looking much brighter for 2013, either. In late October, Caterpillar followed up a disappointing full-year 2012 forecast with news that it expects around the same in 2013.
Heck, the company even made headlines by lowering its 2015 forecast because it expects “fairly anemic and modest growth” until then.
In the end, despite several bright spots throughout the year, CAT is definitely not a Top Stock of 2012 … and is an underdog for the new year as well.
Q4 Return: -3%
Total Return: 2%
Investor: Jeff Reeves
In Q3, Alcoa (NYSE:AA) broke into the top five and look poised to make a run down the homestretch. Unfortunately, that run never did happen.
AA managed to end just slightly in the black — better than the back of the pack can say — but its 2% gains aren’t anything to write home about.
InvestorPlace Editor Jeff Reeves summed up the year’s problems nicely: He was betting on a global manufacturing recovery and an improvement in aluminum pricing, but didn’t get either, all while investors remained defensive.
Like Burrows, Reeves is sticking to his pick — even though it didn’t win him any honor in the contest. He believes many of the same bullish arguments for the stock hold true for the coming year. Plus, Alcoa has an attractive valuation and is a cyclical play. The global economy won’t be deadbeat forever.
Then again, that’s what he said last year.
Disclosure: Jeff Reeves owns Alcoa stock.
Q4 Return: -9%
Total Return: 6%
Investor: James Altucher
James Altucher is a strong believer in Microsoft (NASDAQ:MSFT) — he picked it for two straight years. And in the beginning of the contest, his faith was looking pretty smart. Microsoft kicked off 2012 right, climbing over 25% from January to mid-March.
Since then, though, it’s been basically downhill. In the fourth quarter alone, the stock lost nearly double digits on disappointing core Windows 8 sales and the departure of Steven Sinofsky, head of the Windows division, soon after the launch.
Plus, a general lack of innovation from the tech giant sure isn’t helping things. The company’s new Surface tablet, for example, created some buzz this year, but that’s far different from making it a viable alternative to competitors like Apple‘s (NASDAQ:AAPL) iPad or Amazon‘s (NASDAQ:AMZN) Kindle.
Q4 Return: 8%
Total Return: 11%
Investor: Paul R. La Monica
Just squeezing into the top five is shipping giant FedEx (NYSE:FDX), picked by Paul R. La Monica, who writes CNNMoney’s daily “The Buzz” column.
La Monica liked FedEx off the bat because it’s a fundamentally strong, low-risk stock. Unfortunately for FedEx and its advocate, that wasn’t nearly enough to offset the year’s tough reality: The global economy is weak.
The stock’s chart is ripe with ups and downs for the year, and even an 8% climb in the last three months wasn’t enough to offset the headwinds this global economic bellwether faced. The second-largest delivery company after UPS (NYSE:UPS) most recently blamed its weakness on Hurricane Sandy, but excuses don’t really matter in this contest.
Q4 Return: 1%
Total Return: 20%
Investor: Jon Markman
Sweet stock Hershey (NYSE:HSY) held onto its bronze-medal spot through Q3 largely because of a stellar climb just before the halfway mark. Unfortunately, the third-place honor slipped away after the stock barely was in the black for Q4.
Still, this fourth-place finisher is the first one of the group to best the total returns of the S&P 500, thanks in part to its solid 2.3% dividend. The company boasts over 300 straight payouts to investors and has raised its dividend over 180% since 2000.
That kind of consistency could still make it a great long-term buy. Of course, we were just looking for a one-year buy, and in 2012, the Kit-Kat and Kisses maker just wasn’t sweet enough.
Q4 Return: 10%
Total Return: 26%
Investor: Jim Jubak
Banking on Spain coming into 2012 seemed a bit risky, considering all the drama that’s been unfolding in the eurozone, but Jim Jubak’s Banco Santander (NYSE:SAN) has been hot down the homestretch.
SAN was the third-best performer for Q3 and the best for Q4, climbing double-digits in the last three months alone. And while the stock’s 6% year-to-date climb lagged behind the broader market, toss in the 10% dividend yield and its 26% total return is good enough for the third-place spot in this contest.
Not too shabby for a European bank. Looks like Jubak was right when he said Banco Santander had been a victim to overselling in the midst of the eurozone crisis.
Q4 Return: 6%
Total Return: 37%
Investor: Charles Sizemore
Charles Sizemore, editor of the Sizemore Investment Letter, was almost the winner of this contest two straight years. Almost.
His company managed to post impressive gains — despite its multiyear soap-opera-like boardroom drama — thanks to the emergence of Turkey’s up-and-coming middle class.
Unfortunately, Turkcell (NYSE:TKC) finished the year where it finished Q3 — just shy of the gold medal. It gained an impressive 21% in Q3, poising it for a sprint to the finish line. And while it did keep trying until the last second, its 6% Q4 climb just wasn’t enough to take the top spot.
Still, a silver medal is nothing to sneeze at, and the same holds true for 37% gains for the full year.
Q4 Return: Flat
Total Return: 38%
Investor: Philip van Doorn
It looks like TheStreet.com contributor Philip van Doorn was right on the money when he said not only that financials weren’t looking all that bad, but that smaller banks like Capital One (NYSE:COF) were ready to soar.
Heck, he probably isn’t even that excited by his victory, considering he’s held the top spot for the most of the year. Heading into Q4, Capital One was already ahead by double digits and managed to fend off a run by Turkcell to be named this year’s Top Stock of 2012.
The company was helped by its acquisitions over the past 12 months: It bought ING Group‘s (NYSE:ING) ING Direct for roughly $9 billion and HSBC‘s (NYSE:HBC) roughly $30 billion U.S. credit card portfolio. Both served to boost Capital One’s numbers, as it reported impressive earnings in Q3, easily beating estimates.
In the end, Capital One shares boasted total returns of 38% — more than double that of the S&P 500 and worthy of the gold medal for this contest.
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