Trend Remains Up
March 1 marked the first time in seven months that the first day of the month closed lower. And not just a little bit lower. The Dow tumbled almost 170 points, while the S&P 500 gave up 21, and the Nasdaq fell 45 points. It’s beginning to feel like last fall when investors were glued to the news since every nuance seemed to have an impact on stock prices.
But even with all of the unsettling news from the Middle East and oil selling at over $100 per barrel, the major indices did not make a clean break to the downside. So, we begin March with the near-term sideways, intermediate-term trend up, and the long-term trend up.
For this month’s stock picks, I’ve selected six that should do well in a renewed round of buying. Here are your top stocks to buy for March:
Top Stock to Buy #1 – National-Oilwell Varco (NOV)
Designer and maker of oil rig equipment, National-Oilwell Varco Inc. (NYSE: NOV), should benefit from the rising price of oil due to the crisis in the Middle East. With increased pressure to find new oil fields, the most stable investments in the energy sector appear to be in the oil well services and equipment stocks. NOV supplies equipment to deepwater drilling, shale operations and natural gas exploration.
S&P notes that, in the near future, there may be changes in regulatory measures pertaining to the Gulf of Mexico that could benefit NOV. S&P has a “four-star buy” on NOV with a target of $85.
But technically, the stock is picking up volume, and if it can break through the triple-top at $89, it could have a major move up as it accelerated away from its bullish support line. Buy NOV now for a one-month trade to $89. Longer-term investors should hold this stock for long-term capital gains.
Top Stock to Buy #2 – Norfolk Southern Corp. (NSC)
Norfolk Southern Corporation (NYSE: NSC) is a rail transportation company that moves raw materials, intermediate products and finished goods that represent a broad cross-section of the economy with an emphasis on energy (coal). We’ve been following NSC for a long time, and it has provided many profitable trades.
During periods of high energy costs, railroads tend to do much better than other transportation companies because of their fuel usage advantage — they are able to carry large amounts of cargo at a fraction of the cost of trucks and air freight. NSC is one of the most efficient railroads in the country, operating over 21,000 miles in 22 Eastern states.
S&P has a “four-star buy” rating on NSC with a target of $75. Technically, note the cup-and-handle breakout that supports a trading target of $75.
Top Stock to Buy #3 – Potash Corp. (POT)
Canadian integrated fertilizer and feed products company, Potash Corporation of Saskatchewan (NYSE: POT), has been in a bull market since late 2008. Since then, it has risen from $18 to over $63.
It is the world’s largest diversified fertilizer company and, thus, in a unique position to supply the needed nutrients to grow crops for Third World countries that are in need of grain products. Several research analysts have recently raised their opinion on POT from “hold” to “buy,” including Canaccord Genuity and Gleacher & Company. POT has also been the subject of takeover rumors, but thus far, nothing has developed.
Technically, the stock is in a long-term bull market. In December, POT broke out from a five-month consolidation, and last week, our in-house Collins-Bollinger Reversal (CBR) indicator issued a buy signal along with a buy from the slow stochastic. The two-month target for POT is $72, but it can be bought as a long-term position, as well.
Top Stock to Buy #4 – Skyworks Solutions (SWKS)
Semiconductor maker Skyworks Solutions Inc. (NASDAQ: SWKS) is an innovator of high reliability analog and mixed signal semiconductors for dual- and triple-mode smartphones, tablets and data cards.
Although its P/E ratio appears high at over 39 times 2011 earnings, its five-year earnings growth of over 35% appears to justify it. Analysts at Stifel Nicolaus recently raised SWKS from a “hold” to a “buy.”
Technically, SWKS is in a powerful uptrend and recently flashed a new buy signal from the slow stochastic. This is a speculative stock and buyers should place a 10% trailing stop loss in order to protect against a reversal. But if the trend continues, a target of $45 in one month is possible.
Top Stock to Buy #5 – Stryker Corp. (SYK)
Global specialty surgical and medical products company, Stryker Corporation (NYSE: SYK), is expected to have a 12% rise in sales this year, led by the acquisition of Boston Scientific Corporation’s (NYSE: BSX) neurovascular unit.
S&P looks for earnings of $3.72 this year, up from $3.33, and they project earnings of $4.15 in 2012. On Feb. 23, UBS raised SYK to a “buy” from a “hold.”
Technically, the break from the double-top could give a trading target of $74.
Top Stock to Buy #6 – Waste Management (WM)
Houston-based Waste Management Inc. (NYSE: WM) is the largest trash hauling/disposal company in the United States. This company is a model for steady growth with earnings increasing steadily over many years.
S&P has a “four-star buy” on WM with a 12-month target of $42. WM pays an annual dividend of $1.36 for a yield of 3.7%.
Technically, the stock is in a powerful bull channel with support at $36 and resistance at $39. Buy WM as a long-term growth opportunity.