The Avengers: 6 Super Stocks that will Fight Back
Keith is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
There’s just something about seeing comic book heroes on the big screen. Sure, the plot is typically the same - ordinary person becomes superhero, superhero rises to glory, superhero gets knocked down, superhero fights back. These movies never get old to me, though. Like millions of moviegoers across the world, I’m looking forward to the upcoming Avengers movie. The impending release of what will be a sure-fire blockbuster made me wonder about potential Avenger stocks – super stocks that have been knocked down but will soon fight their way back to the top. Following are my picks for the cast of characters.
Let’s start with a company that all Americans recognize as a captain of the insurance industry - Aflac (NYSE: AFL). How is Aflac a super stock? First, it doubled its income last quarter as compared to the previous year‘s quarter. Projected earnings growth for Aflac significantly exceeds its peers. The company’s debt-to-equity ratio is very low (0.24), which also bests other insurers.
Aflac trades currently over 20% lower than its 52-week high of $57.13 per share. It has a forward P/E of 6.57, definitely on the low end of its P/E range over the past four years. Aflac’s PEG is 0.65. This stock has lots of room to move upward. All in all, it looks like the Aflac duck is ready to soar like an eagle.
Iron is good, but gold is better. One gold stock ready to make a comeback is Randgold (NASDAQ: GOLD). Randgold has a strong profit margin of 33%. Net income per share was up more than 250% in 2011. The company is expected to grow earnings by 40-50% in 2012.
Randgold is trading 25% below its high of $120.73 in November 2011. The decline stems in large part from a decrease in gold prices. Some analysts think Randgold shares can go as high as $140. A return to the $120 range in 2012 seems very possible. That would make for some very powerful returns and a stark contrast with many other stocks.
The company really bringing the hammer down in the oilfield services sector is Schlumberger (NYSE: SLB). Year-on-year revenue growth for last quarter was 21.7%. Quarterly earnings grew even faster – 37.8% over the same quarter last year.
With its strong international presence, a ramping up of exploration across the globe would drive Schlumberger’s stock higher. Its forward P/E is 13.96 but in four out of the five previous years the stock has traded at a multiple of at least 34% higher. Schlumberger peaked near $95 per share in July 2011. Clawing back even half of the way to that level would result in thunderous gains.
A stock that truly hits the bulls-eye is Silver Wheaton (NYSE: SLW). My recent analysis of stocks that were contenders for belonging in the same league as Apple included this silver mining and streaming company. The numbers speak for themselves- 265% EPS growth, 75% profit margin, 22% ROE and I could go on.
Silver Wheaton has retreated around 35% from its February 2012 levels and over 40% from its 52-week high. Its decline correlates with a similar drop in silver prices. The stock seems well positioned to shoot up with strong fundamentals and a PEG ratio of 0.66.
Celgene doesn’t make drugs to treat poisonous spider bites, but it is a major force in the cancer and immune-inflammatory disease pharmaceutical market. Celgene boasts a healthy profit margin of 27% and continued revenue and earnings growth.
The middle-of-the-road target by analysts is for Celgene to trade upward of $85 per share over the next 12 months. Although its most recent earnings were a slight disappointment for some on the street, Celgene reaffirmed its outlook for 2012. My prediction is that this stock will crawl up to the $90 per share mark by year end.
When I think of green, two things come to mind: the Incredible Hulk and John Deere tractors. Deere (NYSE: DE) is as solid as its tractors. The company should benefit from several factors in 2012, including strong demand for farm equipment and developing markets updating aging fleets of construction equipment.
Deere’s valuation is also appealing. The stock trades at nearly a 20% discount off its 52-week high. Its forward P/E is a low 9.68. Deere shares will likely hit $95 or higher later in 2012. That’s enough profit to tame even the most volatile among us.
All six of these stocks are worthy of investors watching and possibly taking action. As with the upcoming movie, I expect the performance of these Avengers to be marvelous.
Keith Speights (www.keithspeights.com) has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Aflac, and Schlumberger. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.