Get in the Game With These Stocks
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Even with the political strife erupting around the globe, stocks logged their third straight month of gains this February. I expect this strong performance to continue and for our top stock picks to do even better in March as a fresh wave of buying pressure enters the market following Friday’s job numbers. This report should show growth in February, which will encourage sidelined investors to get back into the game.
Whether you’re one of those investors that has been riding the bench or you’ve been in the game all along, you want to have quality blue chips in your portfolio. So I have put together a list of the top blue-chip stocks to buy to take advantage of this coming strength.
Blue Chip to Buy #1 – AutoZone Inc. (AZO)
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AutoZone Inc. (NYSE: AZO) remains my favorite blue chip. Today, the auto parts company announced that its 2011 fiscal second-quarter profit rose 20% thanks to improvements in its Duralast product line and overall revenue. The company’s overall sales were up 10% to $1.66 billion, compared with $1.51 billion the year before. Earnings were also boosted, climbing 10% to $3.34 per share. Analysts only expected AutoZone to earn $3.05 per share for the quarter, so the company posted a 9% earnings surprise.
AutoZone also continued expansion measures in the latest quarter. The nationwide chain opened 21 new stores in the United States, raising its total number of U.S. locations to 4,425. It also opened eight new stores in Mexico, bringing its Mexican locations up to 249 stores.
AZO is up 2% in trading today. I expect its positive earnings to push it even higher in the coming days. Buy AZO under $274.
Blue Chip to Buy #2 – Novo Nordisk (NVO)
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Novo Nordisk A/S (NYSE: NVO) is up over 9% in the past month. In the latest quarter, the company announced that sales increased 23% and profits surged 70% thanks to strong sales, reaching $724 million. In addition to a fantastic earnings report, the company announced that it would be implementing a share repurchase program, which began on Feb. 2, and will be in effect until April 26.
Novo is a leader in diabetes management and recent regulatory failures of competitors have given it the green light to increase market share. The company just expanded its leading pharmaceutical services to include mobile technology. Novo Nordisk has developed the first mobile application to help doctors diagnose bleeding disorders. The application, Coags Uncomplicated, allows doctors to input test results and provides a list of possible diagnoses and descriptions that helps speed up the diagnosis process. Continue purchasing shares of NVO under $135.
Blue Chip to Buy #3 – Ilumina Inc. (ILMN)
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Ilumina Inc. (NASDAQ: ILMN) announced absolutely fantastic fourth-quarter earnings, which is part of the reason the stock has made our list this month. I don’t often recommend biotech companies to blue-chip investors as their earnings are erratic, but we have a rare exception in this case. The biotech company, which specializes in DNA-studying products, said its revenue increased 45% to $261 million in the quarter. Earnings also received a big boost, more than tripling to 29 cents per share.
The company continues to showcase strong growth, and its newest product, the MiSeq sequencer, will surely help boost sales further. For 2011, Ilumina is expecting its earnings to grow more than 30% and revenue to climb an additional 20%. Buy ILMN below $77.
Blue Chip to Buy #4 – Baidu (BIDU)
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The Chinese Internet search engine company Baidu Inc. (NASDAQ: BIDU) received a big boost after reporting yet another glowing quarterly earnings report, which beat analysts’ earnings estimates by 9%. Revenue also increased by more than 100% in the quarter.
There is something about the Chinese Internet market that only Chinese companies get. Baidu is the clear leader and Google (NASDAQ: GOOG) is a distant second, and from the recent quarterly performance, I don’t see this changing any time soon.
This year, I expect to see Baidu chase increasing advertising demand in China. And now that the country has overtaken Japan as the second largest economy in the world, the company is sure to see even more demand and room for expansion.
The stock reached a new 52-week high on Valentine’s Day of $131.63 per share and is positioned to go even higher. Buy BIDU below $143.
Blue Chip to Buy #5 – Chipotle Mexican Grill (CMG)
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Chipotle Mexican Grill Inc.’s (NYSE: CMG) recent expansion of same-store sales and operating margins suggest to me that earnings are about to surprise to the upside in 2011. An excellent fourth-quarter earnings report pushed the stock 5% higher on the day after its earnings were released. The stock hit a new 52-week high on Feb. 14 of $275, but has since pulled back to $245.
With Chipotle opening over 100 new locations in 2011, and opening a new Asian-cuisine branch, we’re sure to hear a lot more from the company in the coming months. Given that the stock has been on an impressive run in the last 12 months, I have very high hopes for the stock. Buy CMG below $289.
