by Richard Young | October 25, 2013 7:00 am
Each month we here at Richard Young’s Intelligence Report put together our list of out Top Ten Stocks countdown. This month it contains a broad range of companies across oil and gas, industrial and rail interests that I believe you’ll find informative and more importantly, worth a look for investment purposes.
Without any further ado, let’s have a look at our Top Ten Common stocks:
The latest slogan from 3M (MMM) is “Transforming new ideas into thousands of ingenious products.” Being an innovation leader requires that you recognize problems and find solutions for them. That’s exactly what 3M excels at.
In June, 3M CEO Inge Thulin told CNBC, “I believe that what is driving this company in terms of return for us is the investment in research and development, and every time we do it we know that we have a competitive advantage.” He’s increasing the company’s R&D budget from 5% of revenue to 6%. That’s a major increase, and one that will put 3M ahead of the curve, and competitors.
To measure R&D success, 3M uses its New Product Vitality Index (NPVI). That’s the percentage of revenue generated from products developed in the last five years. The index is at 34% right now and Thulin expects it to reach 40% by 2017. Shares of 3M are trading near all-time highs. Don’t let inertia stop you from buying shares today: it’s our #1 stock.
You can see on my price chart that UPS (UPS) keeps hitting new highs. Shares yield 2.75% today. The company’s focus is increasingly on China, the world’s largest exporter. UPS has expanded its operations in China to 130 distribution facilities in 87 cities. UPS has operations in 220 countries and territories and serves every address in North America and Europe. Buy shares of UPS today.
Cyber security is the new frontier for government defense contractors. As spending on the machines of war becomes unjustifiable in budgets after the end of the Iraq War and the coming end of the American involvement in the war in Afghanistan, focus of government defense spending is changing to cyber security. General Dynamics (GD) has just won a contract with the Navy to protect its networks from cyber-attacks. You can see on my relative strength chart that GD has been making up lost ground on the S&P 500 since May this year. Buy.
The Bakken Shale has transformed American oil production. Companies like ConocoPhillips (COP) are producing so much oil and natural gas with horizontal drilling and hydraulic fracturing operations that, according to EIA data analyzed by The Wall Street Journal, America will be the world’s largest hydrocarbon producer by the end of this year. ConocoPhillips has 11 drilling rigs and 240 operating wells in North Dakota, and 59 operating wells in nearby eastern Montana. You can see on my long-term chart that shares of ConcoPhillips are headed towards their all-time highs. Buy now.
The railroads of Canadian National Railway (CNI) run through the resource rich western provinces of Canada. Oil sands, coal, logs, and croplands are all abundant in Canada’s vast western region. This year will see near record harvests from Canada’s plains provinces, and those crops will be shipped on CN’s rails. Management has been planning for this increased level of harvest all year with partners and subsidiaries gearing up to efficiently process the massive crop. Shares of CN are poised to break out over a range they’ve been bound in through 2013. Buy.
As power producers have more faith in the sustainability of the natural gas revolution brought on by horizontal drilling in shale plays, they are building more generation fired with natural gas. In Florida, NextEra Energy (NEE) needed more natural gas to fire its generators, and Spectra Energy (SE) is bringing it to them via a new interstate pipeline. The 465-mile pipeline will tap into the main stream in Alabama, and feed natural gas down into Florida. Prices for Spectra Energy shares have crossed above their 50-day moving average, a bullish sign. Buy.
Since its inception, General Electric (GE) has been an innovation leader. A new focus of the infrastructure giant is the industrial internet. The term refers to the embedding of sensors in machines and then linking those sensors together to form a data collection unit that will enable operators to generate more efficient production from the machine. The benefits of this research could be enormous. GE estimates a 1% reduction in commercial aviation fuel consumption could lead to a $30 billion saving over 15 years. I never thought I’d call GE a contrarian pick, but as you can see on my relative strength chart, shares have been flat on their back since the Great Recession. Buy today.
While coal has been a drag on some railroads, those that have metallurgical coal shipping business, like Norfolk Southern (NSC) have been less affected. The demand for exported metallurgical coal has been high, and Norfolk Southern recently loaded a record sized amount of it onto a ship at its Pier 6 transloading facility. Around 166,000 net tons of coal headed out on the China Pioneer to Liuzhou Iron and Steel in China. This is another contrarian pick. Buy now.
Over the last couple decades, cars have become more reliable. With that model in mind, Schlumberger (SLB) CEO Paal Kibsgaard wants to make the equipment of the world’s largest oilfield services company just as reliable. Those types of efficiency gains could transform the industry. A surge in relative strength since late summer is a bullish sign in SLB shares. Buy.
When I’ve recommended Illinois Tool Works (ITW) to you in the past, I have often brought up the company’s 80/20 rule. ITW management focuses on the portion of the business that brings in 80% of the revenue and looks for ways to either improve or discard the rest. Recently the company announced that its packaging unit will be sold. This is a good move by management to cut the fat and keep the business lean and profitable. ITW share performance is reverting to trend fast. Buy before it does.
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