3 Top Game-Changing Buys for February

by Hilary Kramer | February 3, 2012 8:00 am

Here are three stocks currently on my buy list that are good buys right now. If you’re new to investing or have money to put to work, I recommend you give these stocks strong consideration:

Johnson Controls’ (NYSE:JCI[1]) recent earnings report disappointed the market, and the company is coming under some criticism for inconsistent profit margin and cash flow performance. However, those should be short-term concerns for a couple of reasons. First, some of the problems in the quarter were beyond JCI’s control, such as weak battery sales due to the abnormally warm winter weather. And more important, management is taking direct action to boost margins, including cost cuts in its HVAC division and hiring experts to make production processes more efficient.

Despite its challenges, JCI still expects record earnings in its fiscal year (ending September 2012) of $2.70 to $2.85 a share. I like the changes the company is making and, in the bigger picture, it remains well-positioned to benefit from global growth in automobiles and the demand for more efficient building controls. The stock has stabilized after pulling back after earnings, and this is a good opportunity.

Cerner (NASDAQ:CERN[2]), which I added last month, slid back a bit in the middle part of January. It has regained momentum as well in recent days, and I continue to like the stock ahead of the company’s Feb.7 earnings report. The health care information technology company is already benefiting from the strong trend toward electronic records, and its Cerner Millennium software is an exciting game changer that allows doctors to access patient information in real time.

Revenue growth has accelerated in response to the HITECH Act, which mandates digital medical record-keeping, with sales growing 24% last quarter. I expect a good showing in the next report as well, and I still like the stock a lot long term.

Zeltiq Aesthetics (NASDAQ:ZLTQ[3]) has bounced back nicely after its mid-January management change that sent shares down to $10 from $12. Its core story remains intact, and the company should continue to see rapid revenue growth for its CoolSculpting system, a noninvasive procedure that removes fat from stubborn areas. The procedure is relatively low-cost ($700), which makes it an appealing alternative to other more involved and more expensive surgeries such as tummy tucks.

ZLTQ’s revenues have grown from just $1.5 million in 2009 to $25.4 million in 2010 — including a doubling of revenues through just the first nine months of 2011. I like the razor and blades business model, which will generate a lot of high-margin recurring supply sales as the procedure grows in popularity.

  1. JCI: http://studio-5.financialcontent.com/investplace/quote?Symbol=JCI
  2. CERN: http://studio-5.financialcontent.com/investplace/quote?Symbol=CERN
  3. ZLTQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=ZLTQ

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