Predictions for 2012
Nikhil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Before the New Year begins, I figure I should make a few predictions for 2012, just for fun. This blog is copied from my CAPS blog post, but modified a little bit.
Here I go:
1. ATP Oil and Gas (NASDAQOTH: ATPAQ.PK) will FINALLY get its footing. There will be a gigantic short squeeze and the stock will fly. I'm actually in the process of synthesizing 30 articles of controversy on this, so I should be blogging about that in the near future. Speculation price target? $20.
2. Apple's (NASDAQ: AAPL) dividend policy has bugged investors and the general media for a while. With Tim Cook at the helm, we find a more open-minded CEO on the idea of an Apple dividend. On the other hand, there are two things about a normal dividend policy that would be out of wack:
a) It would be admitting defeat. Apple is the 'next bit thing', and it is also the 'current big thing.' A normal dividend policy would be saying..ok..our growth is declining, we are maturing, the law of big numbers has defeated us. Not the most upbeat statement to the world, and ultimately not a statement a company with Apple's growth really needs to make.
b) Steve Jobs hated the idea, probably for the reasons above. I've heard he laid out his plans for the future of Apple...I'm guessing he had ideas on the dividend policy as well, and I hope his ideas will mimic mine.
Actual Prediction: Apple will use a one-time special dividend to distribute cash to investors, and create real returns. This allows Apple to give investors satisfaction and stay a growth based company. Much like what Cabot Microelectronics is doing, but maybe not to the same extent.
3. Corning (NYSE: GLW) will start to rise as institutions recognize that which every Fool has already acknowledged...Undervaluation. Also Corning has about $1.2 in current asset value over total liabilities, giving Corning about 10% of its market cap in pure cash/receivables/inventory/etc. value. Prediction: I see Corning at $20-$25 next year.
4. Vale will see the $30s again. Ultimately, I see the world economy using 2012 as another recovery stage, pumping up for the real wonder year in 2013. Vale should thrive going forward due to its cheap valuation and a promising future.
5.A portfolio of DCIX, SDRL, and SBRA with equal weighting (dividend yielding portfolio of 10.4%) will beat the market. Soundly. Why? Look for Teacherman1's CAPS blog articles on DCIX, TMFRoyal's Rising Star articles on SBRA, and make your own judgment on SDRL. Essentially though, this is a concentrated dividend portfolio looking for dividend yields to buoy stock price increases.
6. AMR will go bankrupt...not much of a prediction, just some easy accuracy points for this blog.
7. Shanda Games (NASDAQ: GAME), which is sinking again after investors get out post-dividend, will turn out to be an excellent investment. But not because of a change in investor sentiment. The same management that turned Shanda Interactive private will decide its best to take Shanda Games private as well, yielding patient investors a nice return.
8. Neostem Inc (NYSEMKT: NBS), which burned me this year (down 60%) will rise again. Price target $2.20 - note that target was pure speculation and based on an expected change in market psychology rather than value. Ultimately I am finding it hard to value Neostem because it's a yet-to-be-profitable small-cap growth company. Its cash flows are a bit difficult to estimate going forward.
9. Medco Health Solutions (UNKNOWN: MHS.DL) will be a brilliant investment from here on out. Price Target $60+ Why? Excellent valuation on its own, and of course if the merger goes through it will be valued much higher. So I guess this is a merger arbitrage play, but a very very nice risk/reward profile.
10. Aflac Inc.'s (NYSE: AFL) stock price will thrive next year, especially as the eurozone crisis is worked out. I've already blogged about the profit potential of selling Aflac Puts, but I think that it realistic to see AFL in the price range of $60-80 next year. This is a bit out there, but conservative DCF valuations don't lie.
11. Finally, to end it. Obama will be reelected and the market will be up at least 10% from where it is now by the end of 2012.
Good Luck in the coming year!
Fool Blogger Nikhil Shamapant owns shares in DCIX, NBS, and AFL, and will not buy shares in any company mentioned above in the next two trading days.