5 Of My Favorite Stocks To Buy In 2012

By Michael French - January 19, 2012 | Tickers: F, FCX, SD, SLW, SIRI | 0 Comments

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Investors often turn to metals and energy in lean economic times for safety and steady growth. However, investors should also consider companies that may be poised for growth when the economy makes a comeback. Consider these 5 issues in your portfolio this year.

SiriusXM (NASDAQ: SIRI)

The satellite radio provider sells for at almost 3 times earnings, which seems small until you consider that competitor Cumulus (NASDAQ: CMLS) sells even cheaper at 1.6 times earnings. Despite the absorption of XM radio, SIRI only sports a quarterly revenue growth of 6.3%, relative to CMLS’s 96%. CMLS also tops SIRI as a good value in the sales department, offering a 1.6 price-to-sales ratio compared to SIRI’s 2.7. Lacking a dividend, income investors should look elsewhere.

SIRI’s other direct competitor Dial Golobal (DIAL) recently merged with Westwood One in a stock-for-stock deal. The recency of the arrangement makes most financial statistics unavailable, however, a .12 price-to-sales ratio is an encouraging start, and may be a worthy speculative consideration going forward.

Ford Motor Company (NYSE: F)

The bailout dodger Ford attracts with a 10.6% year-over-year quarterly revenue growth, coupled with a price-to-earnings growth ratio of .66. However, cross-town competitor General Motors (GM) has even more encouraging value metrics with a .25 price-to-sales ratio as compared to F’s .34, and a PEG of .43. While F offers a 1.7% dividend (beginning in March) where GM refrains, the latter is relatively cheaper selling at 5 times earnings as compared to F selling at 7 times earnings.

Japanese competitor Toyota (NYSE: TM) continues to struggle with negative quarterly revenue growth, and is well over-valued selling at 40 times earnings. The earthquake in Japan last year continues to plague the company’s bottom line, which should be taken into account moving forward. While GM has its own problems with the revolutionary Volt, the company continues to be a value relative to its competitors

Freeport-McMoRan Copper and Gold (NYSE: FCX)

While mining giant FCX disappoints at a projected .8% quarterly revenue growth, at a P/S of 1.78, it is a relative value compared to competitors Newmont Mining Corporation (NEM) at 3.09 and Southern Copper Corporation (SCCO) at 4.2. FCX’s 2.4% dividend yield is comparable to NEM’s 2.2%, but both are overshadowed by SCCO’s massive 8.4% divided. However, one has to pay over 12.5 times earnings to purchase SCCO, compared to a relatively cheap FCX with a P/E of 7.53. NEM is even more expensive selling a nearly 14 times earnings.

Investors are anxiously awaiting a next quarters' earnings estimates, which should affect short-term price movement. Still, FCX compares favorably on almost all value metrics relative to its competitors NEM and SCCO. While SCCO’s whopping 8.4% dividend yield is tempting, this is well off of the 5-year dividend average of 6.4%

Sandridge Energy (NYSE: SD)

Provided that SD can continue its healthy 48.3% revenue growth, coupled with a negative PEG, this screams value to most investors. While it is a safe assumption that oil and gas are not going to be replaced on a large scale any time soon as the world’s main fuel source, fluctuation in world oil prices will continue to be a source of price volatility in this stock, as evidenced by SD’s beta coefficient of over 2. 

SD’s P/S ratio of 2.41 is comparable to competitor Apache Corporation’s (APA) 2.25. However, it sells cheaper at 9 times earnings compared to SD P/E of 14, and unlike SD, offers a small dividend of .6%. Considering APA also features a quarterly revenue growth in the 40s, APA offers an alternative to SD that is worth a look.

Silver Wheaton Co (NYSE: SLW)

While SLW offers an exciting 99% quarterly revenue growth, its P/S ratio of nearly 16 indicates that it is too expensive. SLW’s P/E of 18 indicates it trades at a premium to competitor Barrick Gold (ABX) which sells at nearly 11.5 times earnings. However, ABX’s more subdued 43.7% year-over-year quarterly revenue growth, coupled with an expensive price-to-earnings growth ratio of 4.17 makes SLW more attractive with a PEG of .89.

SLW offers a 1.2% dividend yield, which should be no inducement to buy since it has only been paid regularly starting last year. By contrast, ABX has been paying dividends since at least 1987, and is currently paying a 1.3% dividend. This is in line with its 5-year average dividend yield of .9%. While precious metal streamers lock-in prices for the long term, pressure on metal prices due to large gold sales may significantly impact earnings going forward.

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