Latest EIA numbers show that demand is as low as it's been in a decade or more. Although energy stocks are out of favor right now, over the next several years, these two could easily become growth darlings once again as energy demand inevitably rises. Details here.
Good Stocks to Buy
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Stocks to Buy Now: Cash in on Dividend Growth in this Energy Subsector
Income investors looking for stocks to buy in the energy space have had several prominent choices over the years.
Integrated names such as Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX), for example, have lengthy dividend increase streaks, though neither fit into the high-yield category.
Royalty trusts and master limited partnerships (MLPs), two asset classes abundant in the energy sector, have surged in popularity in recent years mostly due to their large payouts and high yields. MLPs have also proven popular with conservative investors due to the predictable, prosaic nature of the oil and gas transportation business that leads to a steady stream of rising dividends.
But broadly speaking, the oil services subsector has been left out of the energy dividend conversation.
Oil services investors have had only a couple options within the sector when looking for dividend stocks to buy.
Stocks to Buy Now: These Three Retailers Are Prime Takeover Targets
The wave of deal-making on Wall Street hasn't extended to retail yet. But that's about to change.
That's because retailers make for great M&A candidates - which also makes for some stocks to buy now ahead of this takeover trend.
Takeovers provide chances for companies to cross-sell products and negotiate better with landlords and suppliers. Plus, retailers face low regulatory barriers to deals.
That's why major retailers are among a list of 71 companies Morningstar says are some of the most likely takeover targets this year.
"We think 2013 will bring an uptick of deal activity," said R.J. Hottovy, director of global consumer equity research for Morningstar. "There's no shortage of companies with available capital on their balance sheets and high operating margins, fewer organic growth opportunities and candidates with attractive valuations."
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Stocks to Buy: Will Solar Shine This Year?
Since legendary investor Warren Buffett took a liking to solar this year, investors have been wondering if it's time to revisit this beleaguered industry when looking for stocks to buy in 2013.
The solar sector has endured a beatdown for about two years, with massive oversupply of solar panels and unfavorable publicity combining to keep solar stocks down.
But two recent purchases by MidAmerican Energy Holdings Co., a subsidiary of Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B), have brightened the solar stocks outlook.
MidAmerican announced a $2 billion to $2.5 billion deal to buy two California solar power projects from SunPower Corp. (Nasdaq: SPWR). MidAmerican also agreed in January to invest in what will be the world's largest solar photovoltaic operation, which is partly owned by First Solar Inc. (Nasdaq: FSLR).
Many solar stocks and solar ETFs, including Market Vectors Solar Energy (NYSE: KWT) and Claymore/MAC Global Solar Index (NYSE: TAN), have soared on the MidAmerican news. They're both up about 17% this year.
Does this mean investors should follow Buffett into solar stocks? Here's a look at the sector.
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Stocks to Buy: Three Small Cap Stocks for Safety & Dividend Growth
Here's how to get rich in stocks: Buy elite businesses at a good price and let the dividends compound over the years. That's the safe, steady road to building true wealth.
The key is in selecting the right stocks to buy.
However, most investors starved for solid dividend-payers often overlook one of the safest and most lucrative sectors - small cap dividend stocks.
Instead they focus on large cap businesses like Wal-Mart Stores Inc. (NYSE: WMT) or McDonald's Corp. (NYSE: MCD).
But therein lies the problem--everybody knows they are great companies. That alone can drive their share prices to dizzying heights.
So investors who limit their choices to the big blue chips can end up paying too much-while missing out on another category of stocks that could make them even more money.
In short, they miss the quality small-cap dividend-payers. Here's why that is a big mistake for most investors.
Small Cap Stocks to Buy
Small-cap stocks can be an individual investor's best friend.
In the period between 1927 and 2009, small-cap value stocks returned 14.9% per year.
Meanwhile, returns on large-cap value stocks averaged roughly 3% less per year.
So why do these small frys outperform their larger cousins?
First of all, their small size makes them fly under the radar of many institutional investors.
What's more, mutual funds and pension funds have billions to invest, making it nearly impossible to buy and sell small stocks without having a huge influence on the price. As a result, a fund manager may find himself chasing a stock higher as he tries to take a meaningful position simply because he's the only big buyer.
Second, because the big fish tend to attract the big bucks, small caps are often ignored by Wall Street analysts. Most analysts simply aren't about to spend precious hours researching a company that no one follows.
So "in-the-know investors" buying small cap dividend payers face a lot less competition and can pick up shares at a good price.
Plus, many of these small cap dividend machines actually have a lot in common with their big brethren.
Like many large-cap, dividend-paying stocks, these companies generate tons of cash flow, have great brand names and wide competitive moats in their respective industries.
More importantly, they also have a history of dividend growth. They just happen to be much smaller than giants like Coke (NYSE: KO)and Procter & Gamble (NYSE: PG).
The bottom line: Investors who are willing to accept a slightly higher degree of risk should consider investing in small-cap value stocks that pay dividends.
Three Small Cap Dividend Machines
With that in mind, here are three small caps that are members of the Russell Global Small Cap Dividend Achievers Index. To qualify they must have raised their dividends annually for more than 10 years and meet minimum cash volumes.
In short, these are companies that throw off plenty of cash and safe dividends.
They include:
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Stocks to Buy Now Ahead of Major Bank Industry Takeovers
There has been a lot of discussion among investors over the past few years about whether the banking industry offers any quality stocks to buy now.
The big banks brought the economy to its knees in 2008 and had to be bailed out by the federal government with taxpayer dollars. The disastrous decisions at large banks spilled over to the smaller banks and caused severe economic distress for many of them.
Many banks were forced to close with 140 banks failing in 2009 and another 157 in 2011.
Although the numbers have tapered off some we still saw more than 50 banks fail last year as a result of residual problems from the housing boom and ensuing credit crisis. This type of carnage is reflected in the price of many small banks, which are just now starting to see their balance sheets and stock price show signs of improvement.
We now face an environment much like the aftermath of the savings & loan debacle in the late 1980s and early 1990s.
You see, during the economic boom from 2001 to 2007 many new banks opened across the United Sates to take advantage of the cheap money from the Fed and the high demand for housing and home equity loans.
Now in the aftermath of the implosion of housing prices, we find ourselves with too many banks even after all the failures. We have seen some bank mergers in 2012 but this is just the start of what will be a massive wave of bank and thrift consolidation activity.
While we have seen some economic recovery, we continue to operate in a better but not good economy. Loan demand is still fairly tepid and is well below pre-crisis levels. It is difficult for many banks to gain market share and maintain profitability.
As we enter 2013 banks face new regulation and compliance costs that may further crimp operating profits. Smaller banks in particular are experiencing high levels of frustration at their inability to remain profitable and grow their franchise. Shareholders are unhappy after several years of poor share-price performance and want to see a return on their investment.
For many the best path is going to seek a suitor and sell out to a larger competitor.
For investors this creates an enormous opportunity for long-term profits, if you know the right stocks to buy now.
"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.
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Why Oil Refiners Are Among the Best Energy Stocks to Buy Now
Shale oil production continues its upward path, increasing overall U.S. oil production and making specific groups of energy stocks among the best to buy right now.
In fact, the U.S. Energy Information Agency (EIA) reported last month that domestic oil production surpassed the 7 million barrel a day level, the highest point in nearly 20 years. Production this year, the EIA says, will rise by another 14%.
This is obviously good news for the companies producing that oil, and it gets even better. Many industries outside the energy sector, including chemicals and railroads, have benefited from the shale boom.
But there is one subsector in the energy industry that has reaped the rewards of plentiful oil from the Bakken and other areas more than any other, and that's the refining industry.
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Five Energy Stocks to Buy That Offer Juicy Dividends with Low Risk
The only thing better than a sector with a lot of growth potential - like energy stocks - is finding a financially sound group of stocks to buy within that sector that pays a healthy dividend to boot.
And a recent screen by investment research firm Value Line turned up five such energy stocks, all electric and gas utilities.
Technically, Value Line cast a wider net that included all stocks. The screen actually yielded 17 stocks, many of them well-known companies like McDonald's Corp., Lockheed Martin and General Mills.
But the beauty of an exercise like this is finding the less-obvious gems, which in this case turned out to be mostly energy stocks.
Value Line used several proprietary filters - financial strength, safety and timeliness -
to narrow the list.
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Stocks to Buy Now Before the U.S. Infrastructure Spending Boom
In last week's State of the Union Address, U.S. President Barack Obama delivered some hints as to where he'll focus his spending over the next four years - signaling some stocks to buy in 2013.
In his speech, President Obama made reference to the critical need for infrastructure spending in the United States. He proposed a "fix-it-first" program to address some of the more pressing needs among our nation's roads, highways, bridges and other areas in need of repair.
We have heard this type of political commentary before as the need for infrastructure repair was a highlight of the 2008 campaign. Deteriorating infrastructure is a growing problem in the United States.
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Stocks to Buy: Will China's Bull Run Continue?
The past three years, from an investment viewpoint, have had many surprises for those trying to decide which stocks to buy.
Perhaps one of the biggest surprises is having one of the world's best performing economies - China - right alongside one of the poorest performing stock markets - Shanghai - over the past three years.
The darkest days were in late November 2012 when the Shanghai index dipped below the 2,000 level for the first time in nearly four years.
But the Shanghai index staged a remarkable turnaround, rallying 23% just since the start of December.
With the beginning of the Chinese New Year - the Year of the Snake - it's a good time to evaluate if this market rally will make Chinese stocks good ones to buy.
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Stocks to Buy: 5 Picks Buffett and Insiders Love Right Now
Investors often look to Warren Buffett's purchases when trying to pick the best stocks to buy.
And with good reason: Buffett's conglomerate, Berkshire Hathaway (NYSE: BRK.A, BRK.B),
has an impressive track record and got off to a stellar start this year. Berkshire Hathaway gained 8.7% in January, beating the Standard & Poor's 500 Index's 6% rise and the Dow Jones Industrial Average's 7% increase.
It's also a good sign when Buffett's picks include companies with heavy insider buying, given insiders buy because they expect shares to rise.
That's why MarketWatch and Insider Monkey just took a look at Buffett's 38 holdings and compared his purchases to stocks that have had sustainable insider buying in the past 90 days.
And who knows better than insiders? These folks are privy to the most current information on their companies' prospects, and research shows stock prices rise more after insiders' net purchases than after net sales.
MarketWatch and Insider Monkey came up with the following five stocks to buy now, based on Buffett's holdings and insider buying.
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Find the Best Stocks to Buy Now as M&A Activity Heats Up
The return of major deal making in 2013 could deliver huge profits to investors who know the right stocks to buy now.
After the financial crisis, deal making - once quite common a decade ago - came to a near halt. But corporate mergers, takeovers and LBOs started heating up at the end of last year.
The last three months of 2012 saw the highest three-month deal totals and highest deal spending in the past two years, with the year ending on a high note.
According to FactSet Research Systems Inc., "U.S. M&A activity went up in December, increasing by 20.2% with 918 announcements compared to 764 in November, the second largest increase in 2012."
The trend is expected to accelerate further this year.
Standard & Poor's predicts a whopping $1 trillion in mergers will be announced in 2013. That would be an 11% increase over last year and would mark the first time mergers would hit the $1 trillion mark since the Great Recession.
LBO volume is also expected to trend higher this year. LBO volume dipped in 2012 to $98 billion, down from $111 billion in 2011.
In fact, Dell Inc.'s (Nasdaq: DELL) announcement Tuesday that it agreed to a leveraged buyout (LBO) with Silver Lake Partners stoked plenty of talk about the best stocks to buy ahead of increased M&A activity in 2013.
Dell's $24.4 billion LBO wasn't the only activity fueling 2013 deal talks.
Also announced was a $16 billion deal between John Malone's Liberty Global (Nasdaq: LBYTA) and U.K. television and Internet provider Virgin Media (Nasdaq: VMED). In addition, rumors swirled Tuesday that Hewlett-Packard Co. (NYSE: HPQ) is considering breaking up the company.
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The Best Stocks to Buy, According to Top Strategist
It doesn't hurt to have help narrowing down the best stocks to buy - especially when the advice comes from one of the country's best stock analysts.
Tobias Levkovich, Citigroup Inc.'s (NYSE: C) chief equity strategist, has sent a note to clients consisting of 18 recommended stocks and their end-of-year price targets. We've sifted through the list to bring you the 10 stocks that have the highest projected returns based on Citi's targets.
Those returns range from 10.14% to 27.27%.
Here are the companies and their price targets, accompanied by a summary of Citi's analysis for each stock:
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Stocks to Buy Now: How to Profit from Higher Food Prices
If you thought your grocery tab was high in 2012, brace yourself because this year will be even worse- but that just means there are stocks to buy now that will let you cash in on higher food prices.
Last year's drought drove up prices of grains such as corn, wheat and soybeans. Soybean prices jumped 40% earlier in 2012 while wheat prices soared about 50%. Prices declined in the fall as crops were harvested, but remained elevated.
Because of the higher prices of animal feed such as corn and soymeal, many ranchers had to slaughter animals earlier than planned. This caused a brief bump up in meat supplies in 2012, but threatens to lead to tight meat supplies and higher prices in 2013.
The Livestock Information Center in Denver forecasts that this year's U.S. beef production will come in at 24.8 billion pounds - the lowest level since 2005.
In 2014, the Livestock Information Center forecasts only 23.6 billion pounds of beef will be on the market - the lowest level since 1993.
And Larry Pope, the CEO of the world's largest pork producer, Smithfield Foods Inc. (NYSE: SFD), told the Financial Times in 2012 he thought pork and chicken would soon join beef on the list of increasingly expensive meats.
The U.S. Department of Agriculture forecasts food prices overall will increase 3.5% to 4% in 2013.
However, like most government estimates, those could be on the low end due to these three main factors driving higher prices.
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