Pimco CEO Mohamed A. El-Erian, the world’s largest bond manager, made some incisive comments during a recent CNBC interview. With the European crisis now “settled” and Italy saved, he said, “Greece has been sacrificed in order to build a firewall.”
And, according to Riverfront Investment Group, “The good news is that in contrast [to Europe], the U.S. economy is turning slowly. For the first time in 35 years, manufacturing employment is increasing faster than non-manufacturing employment.”
The U.S. unemployment rate is falling and even existing home sales are increasing –the best sign that the housing market is showing signs of improvement.
From a technician’s viewpoint, the major indices have had difficulty breaking several psychological barriers, chiefly the Dow’s 13,000 line and the S&P 500’s May 2011 high at 1,371. But a lagging sector, the banks, has turned positive, and that could provide the push needed to break the logjam for the indices. In February, bank stocks led the other sectors, and on Feb. 27, advanced 1%.
On the defensive side, there is massive support under all of the markets, and so corrections are probably limited to no more than 3% to 5%. And on the positive side, breakouts could easily move the major indices 10% or more.
Here are your top stocks to buy for March:
Top Stock to Buy #1 – CSX Corp. (CSX)
CSX Corp. (NYSE:CSX) is the operator of the largest rail network in the easternUnited States. The stock is expected to be driven higher by an increase in foreign coal shipments and auto and international container shipments.
Profit margins are expected to rise in 2012 due to an increase in volume and productivity. And earnings are expected to increase from $1.35 in 2010 and $1.67 in 2011 to $1.85 in 2012. Credit Suisse sees steady growth ahead and has a target of $29 on the stock.
Technically the stock has been consolidating just under its 50-day moving average at $22. A break over $22 on high volume could catapult CSX to $27.
Top Stock to Buy #2 – Deere & Co. (DE)
Deere & Co. (NYSE:DE), the world’s biggest producer of farm equipment and maker of construction machinery and lawn and garden equipment, is in an ideal spot to benefit from an economic turnaround.
S&P analysts forecast that a strong gain in farm income and a likely improvement in global construction markets will boost equipment demand for Deere’s products. S&P recently increased its 12-month target from $99 to $111.
Technically DE has retreated to its 50-day moving average following a run from $79 in early January to $89 on Feb. 14. The pullback appears to have been the result of a 30-cent miss in its last quarterly earnings estimate, but it gives long-term quality stock buyers another opportunity to buy this blue-chip growth stock.
Prior to the correction there was high accumulation, a golden cross, and in November, a dramatic change in trend from a bear to a bull market. The short-term technical objective for DE is $95.
Top Stock to Buy #3 – IBM (IBM)
“Big Blue” is the bluest of the blue-chip technology giants. Its global capabilities in information technology, software, computer hardware, and related financing make it a household name.
IBM (NYSE:IBM) is a company that is in full maturity, and so future growth is expected to result from strong trends in emerging markets and improved profitability in its more developed markets. Earnings for 2012 are estimated to increase to $14.93, up from $13.49 in 2011. And IBM is expected to earn $16.41 in 2013.
Technically the stock has been advancing in a bull channel, but upside breaks have been followed by sharp corrections. It could advance to the top of the current channel at $205, but is not one to chase at this price.
IBM shareholders should consider writing options on the stock, and those thinking of investing should wait for a pullback below $188. The fundamental target for the stock is $205, but technically the very organized bull channel could exceed $210.
Top Stock to Buy #4 – JPMorgan Chase & Co. (JPM)
JPMorgan Chase & Co. (NYSE:JPM) has assets of over $2.3 trillion and has increased earnings every year since 2008. It reported earnings of $4.48 in 2011 compared to $3.96 in 2010, and estimates are for an increase to $5.13 in 2012.
JPM is considered the most solid of all major banks by a broad range of analysts. And the stock pays a dividend of $1 per share (yield 2.61%).
In our Top Stocks for January, we recommended JPM conditional upon a breakthrough at $34. The break occurred shortly afterward on Jan. 3, confirming a double-bottom and a major change in trend from bear to bull market for the stock.
On Feb. 27, the stock broke from a shallow step-up above $38 that, along with a new buy from the stochastic, signals the stock is headed higher. The price target for JPM is $48.
Top Stock to Buy #5 – McKesson Corp. (MCK)
McKesson Corp. (NYSE:MCK) provides pharmaceutical supply management and information technologies. The company acquired US Oncology in December.
S&P estimates that MCK will earn $6.35 in 2011 versus $4.29 in 2010. The company is in a strong financial position with over $3.9 billion in cash and good cash flow. Of the 20 analysts covering MCK, 18 have either a “strong buy” or “buy” on the stock. And S&P targets the stock at $100.
Technically MCK has been consolidating around its 200-day moving average. A break above its May high of $88 should quickly propel it to our technical target of $105.
Top Stock to Buy #6 – Micron Technology (MU)
Micron Technology (NASDAQ:MU) is a maker of semiconductor devices, primarily DRAM, Nandi Flash memory, and other products for mobile computing products. Credit Suisse analysts have an “outperform” on the stock, emphasizing MU’s continued execution of its strategy to diversify and upgrade its product line. Their 12-month target is $12.
On Feb. 27, the stock jumped nearly 8% following the bankruptcy of a key rival. Technically MU has had high accumulation since the beginning of the year, executed a golden cross (long-term buy signal), and recently flashed a stochastic buy signal. The breakaway gap on Feb. 27 confirmed a technical target of $12.