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In this end-of-the-year wrap-up, I can make two definitive statements about the Private Briefing special report "The Five Stocks You Have to Own in 2012."
Investors who acted upon the initial stock recommendations we outlined in this Dec. 23, 2011 research report reaped some very big profits during the course of the year.
And investors who used the risk-management techniques that we urge everyone to employ got to keep them.
During a year in which volatility and whipsaw trading was the norm, several of these stocks experienced torrid hot streaks after our experts recommended them to you. And several did some hefty back-tracking.
One of the provisions of Private Briefing – a condition I agreed to in order to be able to access recommendations from the high-dollar trading services run by our experts – was that we wouldn't issue real-time "Sell" alerts. As it's turned out, that's largely become a moot point. Because we publish daily – something none of our other paid services do – and because we do so many regular updates on our recommendations, we've discovered that our readers end up buying in at so many different prices that "Sell" orders tied to a specific price have become too unwieldy to execute.
Instead, we counsel subscribers to use "trailing stops." They protect on the downside and, because they slide higher as a stock advances, they can also lock in profits on big-gainer stocks.
On stock recommendations that double, we urge investors to use the "free-trade" strategy devised by Chief Investment Strategist Keith Fitz-Gerald. In situations where you have those gains of 100% or more, the strategy that Keith created calls for investors to sell half their position – meaning they put their original outlay back in their pocket and then let the rest ride. When you do that, you're essentially playing with the house's money – hence the "free trade" moniker – and can no longer incur a loss.
Many investors told us they used those strategies this year, and said they were well-served by doing so.
Let's take a look at the recommendations.
NQ Mobile Inc. (NYSE ADR: NQ): Chief Investment Strategist Keith Fitz-Gerald recommended this mobile-security stock at $5.02 a share, and at its apex it was the biggest winner of the five stocks in the report. Its intraday peak of $12.36 a share was reached on May 7 – a peak gain of 146%. It sold off later that month but surged again in early July, and was up roughly 90% from where Keith first made his "Buy" call. Concerns about its connections with Beijing and questions about the numbers the company has been reporting have hit the stock hard. It's still up about 30% from where we recommended it, but investors who employed trailing stops could've exited with a gain of 80% to 85%. (Peak Gain: 146% / Current Gain: 30%). Current Rating: Hold.
Sandstorm Gold Ltd. (CVE: SSL): This gold-streaming play was recommended by Real Asset Returns Editor Peter Krauth. The Vancouver-based company's shares rose as much as 138%, and are still up more than 92% as I write this. Peter still views it as a "Buy," especially since he has a $2,200-an-ounce price target on gold – 34% above current prices in the $1,640 range. (Peak Gain: 138% / Current Gain: 92%). Current Rating: Buy.
Brasil Foods SA (NYSE ADR: BRFS): Capital Wave Forecast Editor Shah Gilani recommended this Brazil-based food-processing heavyweight at $19.93. The stock traded as high as $21.70 – an 8.9% return by mid-May. It subsequently sold off – and was down more than 30% this summer. But then the stock came screaming back in a 50% rebound that now has the stock 2% above where Shah recommended it. Brasil Foods is the world's biggest poultry exporter. Formed from the May 2009 merger of Brazil's two largest meatpackers – Sadia and Perdigão – Brasil Foods was expected to take advantage of the country's reputation as an exporter of the best-quality poultry, and boost profits by slashing redundant overhead. Management now believes the company is finally ready to capitalize on the factors that prompted the merger to start with. It expects the redundancy reductions to generate about $530 million in cost savings this year and continues to say that its 2011 promise to double sales over the subsequent four years is realistic (though highly ambitious). In the near-term, challenges remain. A double-digit increase in Brazil's minimum wage will boost labor costs, and demand problems in Japan, China and Russia could hurt near-term results. But you have to like this company's prospects over the long haul, especially given the global food shortages that are all but certain. (Peak Gain: 8.9% / Current Gain: 2%). Current Rating: Buy.
Martin Midstream Partners LP (NYSE: MMLP): Recommended by resident energy expert Dr. Kent Moors, the Kilgore, TX-based Martin is a master-limited partnership (MLP) that focuses on the "midstream" part of the energy market. Kent viewed it as an income play (with a 9% dividend yield) that would also generated capital gains. At its peak in mid-January, it was 9.8% above where Kent recommended it. But the big spike in energy prices that he expected failed to materialize this summer. The stock is currently down about 9% from where we recommended it. But Wall Street likes it, and has slapped a consensus target price of $35.75 on the stock. That's 13% higher than it is right now, and that return would be aided greatly by the current yield of 9.71%. (Peak Gain: 9.8% / Current Loss: 9%). Current Rating: Buy (even if only for the dividend yield).
Freeport McMoRan Copper & Gold Inc. (NYSE: FCX): Less than two months after Permanent Wealth Investor Editor Martin Hutchinson recommended this copper-and-gold producer, the stock was up as much as 23% and seemed to be developing quite a "bandwagon" effect among the Wall Street set. But slowing growth in China and a big summer drop-off in copper prices contributed to a summer swoon in Freeport's shares. Copper prices rebounded in the fall, and so did Freeport shares – they were up by more than 11% in October. Then came the early December "merger massacre." The stock dropped 16% in a single day after the world's largest publicly traded copper producer agreed to buy two natural-resource companies in transactions worth an aggregate $20 billion. The Phoenix, AZ-based Freeport said the deals will return it to its energy-based roots. Investors were skeptical, however, and dumped the shares in a defensive pique. Martin says that Freeport "now looks like a screaming buy to me." And the institutional players seem to agree, with a consensus target of $42 – which is 25% higher than the stock's current price. The 3.7% dividend yield adds further allure. (Peak Gain: 23% / Current Loss: 12%). Current Rating: Buy.
One final note: We're putting the finishing touches on our "Stocks for 2013" special report. You'll get it free as part of your Private Briefing subscription.
[Editor's Note: We recommend a "trailing stop" on 25% on all holdings.]