by Alyssa Oursler | December 30, 2013 2:00 pm
With the year coming quickly to a close, it’s time for the usual traditions: the cleaning up of Christmas and holiday decorations, the making of New Year’s resolutions that will be forgotten in mere weeks and, of course, a fresh start to InvestorPlace’s annual stock-picking contest with the 10 Best Stocks for 2014 showdown.
The 10 Best Stocks for 2013 contest sure hasn’t disappointed, with our top two picks blowing away the broader market with one trading day to go in the year. But 2014 is a clean slate, and lots of laggards in this year’s contest are back with a vengeance.
Add in some fresh faces, and the 10 Best Stocks for 2014 contest is sure to be another exciting race to the finish.
One thing to note: This year, the title “Best Stocks for 2014” is a bit misleading thanks to three experts who picked exchange-traded funds — a contest first. But, considering the sole ETF on our list last year posted a solid top-five performance, that fund focus might just make the 10 Best Stocks for 2014 contest even more competitive.
Let’s take a closer look at each pick for InvestorPlace’s 10 Best Stocks for 2014 contest:
Investor: Anthony Mirhaydari
The first pick in our 10 Best Stocks for 2014 contest isn’t just an ETF … but an inverse ETF. Anthony Mirhaydari thinks the coming year could be a bumpy one, especially for emerging markets.
That’s why he chose the ProShares Short MSCI Emerging Markets ETF (EUM) for his 10 Best Stocks for 2014 entry.
Mirhaydari has several reasons for his skepticism surrounding emerging markets. Trouble is brewing in China, for one, where demographics, a credit bubble and infrastructure overbuilding are a recipe for bad news. Plus, tapering could kill currencies in emerging markets … which would only weigh even more on the iShares MSCI Emerging Markets ETF (EEM).
As the name implies, the ProShares Short MSCI Emerging Markets ETF aims to return two times the inverse performance of the EEM. So if the emerging markets ETF indeed takes a tumble, Mirhaydari’s bet on the EUM could easily fly to the top of the 10 Best Stocks for 2014 heap.
Investor: Charles Sizemore
While Anthony Mirhaydari is betting against emerging markets in 2014, Charles Sizemore is ignoring them and instead banking on frontier markets — namely, Africa — for his 10 Best Stocks for 2014 group.
Sizemore’s entry is MTN Group (MTNOY), a South African telecom boasting more than 200 million customers across 22 countries in Africa and the Middle East. As Sizemore recently wrote, MTN Group could easily win the 10 Best Stocks for 2014 contest because the African market has “virtually unlimited growth potential,” while MTNOY stock is reasonably priced and pays a dividend.
And you best believe that Sizemore knows what he’s talking about. His pick of Daimler (DDAIF) is currently the leader in our 10 Best Stocks of 2013 contest, his pick of Turkcell (TKC) got nudged out of the top spot by a mere nose last year, and his pick of Visa (V) won the prize in 2011.
Don’t be surprised if Sizemore keeps up his stellar performance with MTN Group in the 10 Best Stocks for 2014 contest.
Investor: Jon Markman
Jon Markman is a contest veteran, but he had a bit of a down year in 2013. Markman’s emerging markets bet of Femsa (FMX) fell flat, with FMX stock sitting in the red year-to-date.
But the optimist would say that means there’s more chance for things to go better for Markman in the 10 Best Stocks for 2014 contest.
Now, he just has to hope his thesis on Emerge Energy Services LP (EMES) — a $930 million oil and gas services company headquartered in Fort Worth, Texas — holds true.
Markman chose EMES stock for his 10 Best Stocks for 2014 entry because the company processes both fuel and sand. The sand segment could provide big-time growth for EMES stock, as sand is a key material for fracking — a process that has led to our nation’s recent natural gas boom. Meanwhile, the larger fuel segment provides a strong foundation.
The cherry on top? Emerge Energy Services is a master limited partnership … one that currently yields over 8%. That delicious yield for EMES stock will be included in the total returns for the 10 Best Stocks for 2014 contest, and could just be the boost needed to send Emerge Energy to the top spot by the end of the year.
Investor: Louis Navellier
Louis Navellier’s 2013 pick of Sherwin-Williams (SHW) started off strong, but now is lagging the market after a big-time acquisition fell through. Luckily, Navellier gets a fresh start in the 10 Best Stocks for 2014 contest.
This year, he’s putting his eggs in FleetCor Technologies’ (FLT) basket.
You probably haven’t heard of FLT … but there’s a good chance that you’ve used its products. That’s because FleetCor provides private-label fuel credit cards to gas station operators and owners of vehicle fleets, covering millions of cardholders across North America, Europe, Africa and Asia.
But that’s not the only reason FLT stock looks appealing. The company boasts a strong earning history and also has been on a buying spree. Combined, Navellier thinks those qualities could help FleetCor be a leader — if not the winner — for the 10 Best Stocks for 2014 contest.
Investor: Bryan Perry
Our next entry for the 10 Best Stocks for 2014 contest is another high-yield play, as Banco Santander (SAN) currently pays out more than 9% in dividends. But the big-time yield is jump the tip of the iceberg for SAN stock, if you ask Bryan Perry.
Perry believes in the financial sector, but prefers SAN stock to domestic banks because of the recent passage of the Volcker Rule. Banco Santander isn’t just the largest bank in the eurozone, but could easily race out to the front of the 10 Best Stocks for 2014 pack thanks to its sensible risk management, the monetization of write-offs and heavy intervention from the European Central Bank … to name a few.
An interesting tidbit: SAN stock isn’t new to our Best Stocks contest. In 2012, Jim Jubak picked Banco Santander for the contest … and rode the market-beating gains of SAN stock straight to a third-place finish.
Considering Perry expects a solid 40% return for his 10 Best Stocks for 2014 entry over the next 12 months, though, another market-beating, medal-earning year just might be in the cards.
Investor: Greg Harmon
Financials are a pretty popular theme for the 10 Best Stocks for 2014 contest. Just take a look at our next pick, courtesy of two-year entrant Greg Harmon. Harmon has chosen Citigroup (C) for the one-two punch of fundamental tailwinds for financials, and a strong chart for C stock.
As he explained, tapering from the Fed will mean rising interest rates, which means a boost for all banks that collect deposits and lend money. But Citigroup stock in particular is also showing relative strength and has the potential to breakout in 2014.
Right now, Citigroup stock is trading for just under $52. According to Harmon, “If Citigroup stock climbs over $54, it could do multiples of its price and win the Best Stocks for 2014 contest.”
That would quite an improvement from Harmon’s performance in this year’s contest. Right now, his pick of Great Lakes Dredge & Dock (GLDD) is sitting on meager 3% returns and a seventh-place position. Still, that didn’t stop Harmon from coming back for another try at the top spot for the 10 Best Stocks for 2014 contest.
Investors: John Jagerson and Wade Hansen
While the last two 10 Best Stocks for 2014 entrants were individual stocks from the financial sector, John Jagerson and Wade Hansen decided to make a broader bet on financials via the Financial SPDR (XLF), a financial ETF from State Street Global Advisors.
As Greg Harmon and Bryan Perry also noted, Jagerson and Hansen believe quantitative easing from the Fed could result in a strong year for financials thanks to improvements in net interest margins. Toss in general economic growth and increased dividends after 2014 stress tests, and you have a blueprint for success.
Of course, there are lots of options when it comes to a financial ETF, but these two chose the XLF for their 10 Best Stocks of 2014 entry for one simple reason: It’s the cheapest. The iShares U.S. Financials ETF (IYF) has an expense ratio of 0.45%, while the RevenueShares Financials Sector Fund (RWW) has an expense ratio of 0.49%. The Financial SPDR, meanwhile, charges a mere 0.18%.
That’s good enough for a spot in our 10 Best Stocks for 2014 contest … and hopefully good enough for a strong performance.
Investor: Kyle Woodley
I know what you’re thinking: Tesla Motors (TSLA) gained over 300% in 2013 … yet Kyle Woodley picked it for his 10 Best Stocks for 2014 entry?
The answer is yes.
And Woodley isn’t just trying to make a splash with a ballsy pick; he put his money where his mouth is, and is currently long TSLA stock.
Why is Woodley so convinced that Tesla stock will make him a nice buck and win the 10 Best Stocks for 2014 contest? Well, he laid out three simple reasons recently: Tesla CEO Elon Musk is a freakin’ genius, the Tesla Model S is freakin’ sweet, and the company still has room to post more eye-popping growth.
Of course, Woodley also noted that any sign of a formidable headwind could send TSLA stock falling fast … and subsequently send him free-falling down the 10 Best Stocks for 2014 leaderboard. But a “go big or go home” attitude is often necessary to make it to the No. 1 spot … and a flyer on TSLA just might pay off in the new year.
Investor: Brendan Conway
The next entry in our 10 Best Stocks for 2014 contest is the complete opposite of a pick like Tesla. Brendan Conway went with the Vanguard Dividend Appreciation ETF (VIG), figuring that the non-aggressive play will protect him from steep losses, and definitely come out ahead of any busted momentum stocks.
But the non-aggressive dividend ETF isn’t just betting on stodgy old companies, he explains. Instead, the fund is full of “growing firms which choose dividends as a means of rewarding shareholders, such as Abbott Laboratories (ABT) or Lowe’s (LOW).”
Of course, Conway is honest about the risks of this dividend ETF when it comes to a contest like the 1o Best Stocks for 2014. Settling for a middling result and stacking the odds against a steep loss are solid investing strategies … but might not cut it in a high-flying stock showdown.
Only time will tell if the old mantra of “offense wins games, defense wins championships” applies to the 10 Best Stocks for 2014 contest.
Investor: Hilary Kramer
Fortegra Financial (FRF) is the next pick for our 10 Best Stocks for 2014, courtesy of Hilary Kramer.
FRF stock is coming off a down year, with losses of nearly 8% so far in 2013. But Kramer is bullish on Fortegra Financial going forward, for two main reasons.
To start, Kramer likes the fact that the company’s management has solid growth plans and is cutting costs. Plus, FRF stock is trading for just 8 times expected 2014 earnings after its recent slide.
But that’s not the main reason Kramer chose Fortegra Financial for the 10 Best Stocks for 2014 race. As she put it, “I’m watching closely for a buyout at what I expect would be a nice premium to the current FRF stock price.”
If that buyout indeed takes place, expect Kramer and FRF stock to shoot to the top of our 10 Best Stocks for 2014 contest.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.
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