End the Year Strong With These Picks
The market has held up amazingly well in the face of some very scary headlines: European debt contagion growing, heightening tensions in Korea, concerns over inflation in China, new investigations into insider trading, and a Congress that is struggling to come up with a budget and avoid a government shutdown.
However, against the backdrop of unfavorable daily headlines are a recovering U.S. and world economy, and a Fed that continues to pump new money into the equity markets. If the market continues to hold above support, the likelihood of a solid breakout early in the new year is high.
Here are the top stocks to buy for December:
Top Stock to Buy: Caterpillar (CAT)
Caterpillar Inc. (NYSE: CAT)? manufactures construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. This blue chip has been in a bull market since the stock market bottomed in March 2009. The advance from its bear market low at $22 has been very orderly — defined by the stock’s ability to stay above its 200-day moving average and bullish support line.
In September, CAT broke from a triple-top and began a new march north. Any further weakness could be used as a buying opportunity. S&P has a “four-star buy” rating on CAT with a 12-month price target of $95, which matches our technical target.
Top Stock to Buy: Cenovus Energy (CVE)
Canadian integrated oil company Cenovus Energy Inc. (NYSE: CVE) is focused on the development of bitumen deposits (oil sands). The company markets itself as the technological leader in enhanced oil recovery with lower costs of recovery and a smaller environmental footprint than its competition.
A recent statement from the U.S. Joint Chief’s Joint Operating Environment report warned, “By 2012, surplus oil production capacity could entirely disappear.” This North American energy company is in a good position to benefit from domestic shortages.
CVE’s earnings are expected to rise 55% in 2010 and 16% in 2011, according to S&P, which has a “four-star buy” rating on the stock with a target of $35. The technical target is in the high $30s.
Top Stock to Buy: FedEx (FDX)
This global leader in domestic and international air express and domestic ground package delivery should benefit from any improvement in the world economies.
S&P estimates that FedEx Corporation (NYSE: FDX) could earn $5.35 in FY 2011, up from $3.76, and it projects $6.86 in FY 2012. S&P has a “five-star strong buy” rating on the stock with 12-month price target of $113.
Technically, FDX appears to be completing a “V” bottom formation, which would be confirmed by a break to new highs, and could produce a target of $120.
Top Stock to Buy: Tiffany & Co. (TIF)
In the jewelry world, Tiffany & Co. (NYSE: TIF) is associated with the very best. Despite difficulties in the retail sector, this stock has maintained a solid uptrend and recently broke to new highs.
S&P said it expects an 11% sales increase in FY 2011 (January) and 2012, and it has a 12-month target of $65 for the stock.
Technically, TIF broke from a massive reverse head-and-shoulders bottom on the weekly chart with a long-term target of $75-plus.
Top Stock to Buy: Coca-Cola Co. (KO)
The Coca-Cola Company (NYSE: KO) had a powerful breakout in September, coupled with extremely heavy accumulation, which has led to a 45-degree-angle advance. The buying in KO is so powerful that it recently broke above its bull channel.
KO appears to be overbought, so a retreat back below $62 would be an excellent buying opportunity.
S&P has a “five-star strong buy” rating on KO with a target of $73, which matches our technical target.
Top Stock to Buy: Triangle Capital Corp. (TCAP)
Triangle Capital Corporation (NASDAQ: TCAP) is private equity and venture capital firm specializing in buyouts, change of control transactions, acquisitions, growth financing, and recapitalizations with lower- to middle-market companies.
BB&T Capital Management has a “No. 1 buy” on TCAP, and The Street.com also rates the stock a “buy” with a target of $24. TCAP is supported by a dividend yield of 8.8%. The break from an ascending triangle in October renders a technical target of $22 to $25.