stocks to buy in 2012
Tracking insider buying and selling activity has been proven to be a very effective method of finding good stocks to buy.
Insiders usually buy when the stock price is down, since they are usually long-term investors by nature and are fond of bargain prices.
When they are buying into shares on the rise - especially when they're hitting 52-week highs - it demonstrates a high amount of confidence in the direction of the company they oversee and operate.
All insider activity is filed with the U.S. Securities and Exchange Commission, so interested investors can easily find out which stocks insiders love - and which ones they're dumping.
Tracking activity can be done using a stock screener like finviz.com, that lists the stock, the buyer's name, relationship to the company, date of sale, number of shares and total value.
This week we have a couple more stocks hitting our radar with high insider buying, making good stocks to buy now if you like to invest where the key officers put their money. Take a look.
Why Insiders Love these Stocks to Buy Now
One of the most powerful positive indicators of stocks to buy is insider buying by officers and directors of a publicly traded corporation.
There is often a good reason why an insider buys stock in the company he works for and it is the same reason you and I buy a stock: He or she thinks it is going to go higher in the months and years ahead.
The big difference is that insiders know more about the direction and finances of the company and are in a better position to make an informed decision. Both research and practice shows that following the insiders often leads to excess profits.
Following insiders when deciding on stocks to buy has been a reliable approach to selecting investments over the years.
Stocks to Buy: Why Warren Buffett Is Hunting in Europe
Investment guru Warren Buffett is looking for stocks to buy now in struggling Europe- a region many investors refuse to touch thanks to the destructive Eurozone debt crisis.
"We've bought some European stocks," Buffett said. "And the fact that there are troubles in Europe, and there are plenty of troubles, and they're not going away fast, does not mean you don't buy stocks. We bought stocks when the United States was in trouble, in 2008 and it was in huge trouble, and we spent $15.5 billion in three weeks in between September 15 and October 10."
One reason for Buffett's interest in Europe: plenty of cheap buys.
How to Find Defensive Stocks to Buy for Portfolio Protection
In recent weeks many pundits and gurus have advised investors on which defensive stocks to buy for portfolio protection - but before following their lead, you should do some research as well.
The definition of defensive stocks seems to be a little unclear, but generally the same names keep appearing: large drug stocks, consumer-related issues and utility companies. While those suggestions sound like smart moves, many of these advisors seem to be using a rearview mirror to select which stocks and sectors fir the definition of "defensive."
In fact, during the past year the dividend-paying large cap stocks have had a huge rally as yield-seeking investors have pushed them to new highs. They are exactly the type of stocks that a defensive investor would want to avoid in the current market.
Fortunately for investors there is a method for identifying and selecting truly defensive stocks that has worked for more than 40 years.
Stocks to Buy: We Found Two of the Next Big Growth Stories
When investors discuss growth stocks to buy they are usually talking about the most popular issues of the day. These tend to be the companies that dominate the headlines and have the newest, most exciting products and services.
While stocks like Google Inc. (Nasdaq: GOOG), Apple Inc. (Nasdaq: AAPL) and other market darlings have rewarded investors, when they become too popular there is a risk that the valuations become unsustainable and the shares find a new lower level.
Often it can take many years for a broken growth stock to get back on track and allow investors to recover lost gains.
There is another way to approach growth stocks that's more successful than targeting the most talked about companies. The stocks aren't always as well-known - but the returns can be even higher.
It's fairly simple to put together a list of stocks that have been able to grow sales, earnings and dividends at a double-digit rate for at least the last ten years.
As a further qualifier you should limit your list to those that have been able to successfully grow the book, or net asset value, of the company at a high rate. This is an indication that management has been able to generate free-cash flow and reinvest in the business successfully. All too often companies that initially boast strong revenue and profit growth fall victim to high capital expenditures or startup costs that squeeze profits and make the growth unsustainable.
The following companies may not be the most exciting, but they have products and services that are in high demand and have been so for an extended period of time.
Stocks to Buy Now: How to Make Money from Banks
In the past, you used to be able to safely invest at the bank. But now, it might be wiser to invest in the bank, as the following institutions are looking more like attractive stocks to buy now.
Thanks to the U.S. Federal Reserve, interest rates will continue to be low for an extended period of time, meaning savers would be lucky to get 1%.
Meanwhile, bank stocks have gone from unloved and out of favor to being an industry on the verge of recovery - and able to pay dividends to shareholders.
Income investors have a new opportunity with certain bank stocks. Banks that eliminated or reduced dividend payouts to preserve capital during the crisis are now loosening the purse strings a bit.
For example, many regional banks are starting to reinstate and raise dividends. As residential and commercial real estate markets continue to stabilize, banks should start to grow once again and higher earnings will lead to very high rates of dividend growth.
These bank stocks should be part of every income investor's portfolio right now as the long-term prospects for capital gains in addition to income are excellent.
Here are a few that rank among the regional bank stocks to buy as they raise payouts.
Stocks to Buy: Huge Growth for a Bargain Price
Some of the most exciting stocks to buy are those with impressive growth potential.
Companies that are able to grow earnings for a long period of time can often see their stock prices soar for years, creating tremendous wealth for shareholders. Stocks to Buy: Huge Growth for a Bargain Price
Unfortunately, much of what passes for growth stock investing today is really momentum investing in disguise. Today's growth stock investors all tend to own and trade the same really popular companies that have already experienced significant price appreciation.
While it may be exciting to share cocktail party chatter with friends about the shares of Apple Inc. (Nasdaq: AAPL) or Green Mountain Coffee Roasters Inc. (Nasdaq: GMCR), odds are that the real growth and profit opportunity has passed.
It makes more sense for growth investors to look for stocks of companies that have been growing sales and earnings at a consistently high rate, but are off Wall Street's radar. Companies that have very high rates of institutional ownership and lots of analyst coverage from the major firms are more than likely fully priced. All the growth potential is well defined and everyone already owns the stock.
The big rally moves in growth stocks come when the institutional money discovers the company and intense buying pressure develops as they all pile into the stock, pushing prices dramatically higher.
One such company that fits the bill now is CPI Aerostructures Inc. (NYSEAMEX: CVU).
4 Stocks to Buy in the Exploding Cybersecurity Market
There's a story out of England I heard recently that's one of the most ironic tales of how developments in technology - cybersecurity, in particular - need to be taken more seriously.
The story started in 2009, when 18-year-old Nicholas Webber was arrested for using fraudulent credit card details to pay for a penthouse suite at the Hilton Hotel in Park Lane, Central London.
When police examined Webber's laptop, they found details of 100,000 stolen credit cards linked to losses totaling 16.2 million pounds ($24.6 million)
Turns out Webber ran the Internet crime forum GhostMarket. The site allowed hackers to meet up virtually, create computer viruses and share stolen IDs and private credit card data.
In 2011 Webber was sentenced to five years in prison. Once in prison Webber was allowed to participate in a computer class.
And earlier this year, he hacked the prison computer system.
"Safe" Stocks You Need to Dump Right Now
Many investors have one or two "safe" stocks they own that, for whatever reason, have become sentimental favorites they never consider selling.
These companies typically are household names, large, and considered by almost everyone - even fund managers - to be safe investments.
That means even if you're not holding such stocks in your personal portfolio, you may own mutual funds that own them, or they could lurk somewhere in your 401(k).
Many "safe" stocks are really hidden time bombs, ready to blow a big hole in your portfolio at any moment.
And as Money Morning Chief Investment Strategist Keith Fitz-Gerald points out, even the most stable, veteran companies can morph into portfolio-destroying dogs.
"Just because you think a stock is safe doesn't mean that the markets will treat it that way," Fitz-Gerald said.
What's more, he said, is that "the very definition of safe has changed," noting how the massive leverage common on Wall Street can unravel a company almost overnight, as happened with Lehman Brothers at the height of the 2008 financial crisis.