Stocks to Buy Now

Stocks to Buy Now Ahead of Major Bank Industry Takeovers

By , Money Morning -

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.

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"Safe" Stocks You Need to Dump Right Now

By , Associate Editor, Money Morning • @DavidGZeiler -

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

By , Contributing Writer, Money Morning -

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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Two Dividend Stocks to Buy for Increasing Payouts

By , Money Morning -

Following a banner year for dividend stocks in 2012, 2013 is delivering more of the same as an increasing number of companies are either initiating cash dividends or boosting existing payouts.

From Feb. 1 to Feb. 8, at least 15 companies increased their cash dividends. That list included familiar names such as Dow component 3M Co. (NYSE: MMM), Allstate Corp. (NYSE: ALL) and Archer Daniels Midland Co. (NYSE: ADM), a new addition to Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) equity portfolio.

It was more of the same when 14 companies raised their payouts in the week ending Feb. 15. That list includes Comcast Corp. (Nasdaq: CMCSA), PepsiCo Inc. (NYSE: PEP) and United Parcel Service Inc. (NYSE: UPS).

With all these familiar blue chips delivering ever-increasing dividends, it is not surprising that some stocks of the same caliber go overlooked by investors. Here are a couple of those unheralded names investors on the hunt for dividend stocks should become more familiar with.

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Five Energy Stocks to Buy That Offer Juicy Dividends with Low Risk

By , Associate Editor, Money Morning • @DavidGZeiler -

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

By , Money Morning -

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?

By , Contributing Writer, Money Morning -

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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Are Insiders Signaling These Companies are Stocks to Sell?

By , Money Morning -

Recently Money Morning Chief Strategist Keith Fitz-Gerald pointed out that insider selling has been soaring of late. He pointed out that according to Vickers Weekly Insider Report the ratio of insider selling to buying by officers and directors stood at better than 9 to 1.

This is a level that has been predictive of near-term tops in the stock market and individual investors need to be on alert for potentially falling stock prices ahead. While this indicator is not a precise timing measurement it is a red flag telling us that the people running publicly traded companies have concerns about valuation and prospects as we head deeper into 2013.

Insiders can tell us something about the potential performance of individual companies as well.

As far back as the mid-1960s Victor Niederhoffer and Jim Lorie combined on studies that showed insider cluster selling was predictive and indicative of lower prices over the next 12 months. Professor Nejat Seyhun of the University of Michigan has also done extensive research and concluded that when insiders sell in clusters it is likely that lower prices are ahead.

Given that insiders in the aggregate are warning of a market decline it is useful to take a look at which stocks are also showing warnings of lower prices ahead.

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Stocks to Buy: 5 Picks Buffett and Insiders Love Right Now

By , Contributing Writer, Money Morning -

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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10 Dividend Stocks to Buy Now

By , Contributing Writer, Money Morning -

Near-zero interest rates have lots of savers clamoring for yield and plunging into dividend stocks.

Compared with paltry yields on a bevy of bonds, dividend stocks - especially those with the potential of capital appreciation - have become progressively more attractive to income-seeking investors.

Now's a good time to hunt for dividend stocks, as more companies increase payouts. Dividend payments grew sharply in Q4 2012, with 1,262 dividend increases reported, a 94.5% gain over the 649 increases in Q4 2011, according to S&P Dow Jones Indices.

And rich dividend payments are expected to continue among companies flush with cash since
they have curtailed expansion and investment amid growing global uncertainty.

In fact, more than 5,000 analyst estimates compiled by Bloomberg News forecast that companies in the MSCI World Index will boost payments by 3.8% to a combined $39.43 a share this year, up from a low of $29.58 in 2009.

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The Best Stocks to Buy, According to Top Strategist

By , Money Morning -

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

By , Contributing Writer, Money Morning -

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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Dividend Stocks to Buy Now: The Only New "Aristocrat" Worth a Bet

By , Contributing Writer, Money Morning -

Weary investors scouring the landscape to find decent dividend stocks to buy should take a hard look at the latest list of Dividend Aristocrats.

The S&P 500 Dividend Aristocrat Index measures the performance of companies in the S&P 500 Index with amarket value of at least $ 3 billion that have increased dividends for at least 25 consecutive years.

In 2013, only 54 companies, approximately 11% of companies in the S&P 500, made the cut.

Actually, it's no surprise this group of dividend stocks is tiny.

Think about it.

These companies have raised dividends for the last 25 years - a period of time that included the Great Recession, numerous oil price shocks, at least two major market meltdowns and wars in Iraq and Afghanistan.

If they can steadily raise their dividends in the face of that kind of adversity, you can be pretty confident they're going to be around for awhile.

They're the kind of companies that consistently deliver the goods, having outperformed the rest of the S&P 500 on a regular basis. The Aristocrats returned 4.59% annually over the last five years, while the group as a whole produced a negative 0.25% return for the period.

These are businesses with strong balance sheets, healthy earnings and cash flow generation that can help you protect your portfolio - regardless of the market's direction.

But not every Aristocrat is worthy of your hard earned dollars.

Some drop by the wayside. Others are increasing their dividend by draining capital from their business.

Here's what to look for when choosing the best dividend stocks to buy.

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The Best Energy Stocks to Buy According to Industry Insiders

By , Money Morning -

It is no secret to investors that energy stocks lagged the market in 2012 - but now in 2013 some are becoming the best stocks to buy as they head for huge gains.

The Energy Select Sector SPDR ETF (NYSE: XLE) has gained about 6.5% over the past year, below the 8% gain in the Dow Jones Industrial Average and the 11.5% rise in the Standard & Poor's 500 Index.

But just looking at 2013, you'll see XLE has risen 8.7%, compared to the Dow's 6% gains and the S&P's 5.13%.

And money is pouring into this sector from a key group of investors: corporate insiders.

As far back as 1968 legendary speculator Victor Niederhoffer and his mentor Professor James Lorie discovered that cluster buying of stock by corporate insiders offered substantial excess returns over the market. When three or more officers and directors of a company break out their checkbooks to buy their own stock there is a good chance that the stock price is headed higher.

This anomaly had been confirmed many times by academics and investors over the year and still holds true today.

The other metric with tracking when it comes to corporate insiders is buying by those two executive officers who are in the best position to evaluate the company's conditions and prospects - the chief executive officer and chief financial officer. If they are buying more shares in the open market chances are high they think the shares are cheap and good things are about to happen.

Best Stocks to Buy Now: What Energy Insiders Like

We are starting to see a substantial amount of insider activity in a few oil production and energy services names, like the following:

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Dividend-Paying Stocks to Buy: High Yield from an Unexpected Sector

By , Money Morning -

Until recently you rarely if ever heard technology mentioned as a good sector to search for dividend-paying stocks to buy.

Technology companies for decades have eschewed paying dividends to shareholders - to grow, you had to spend money. They plowed their annual profits back into the company, spending on research and development or acquiring smaller tech companies that improved their product offerings.

Only the largest tech companies like International Business Machines Corp. (NYSE: IBM) ever paid meaningful dividends to their shareholders. If a tech stock paid a dividend, investors would take it as a sign that the company had matured and was no longer a growth stock with meaningful opportunities for appreciation.

In fact, a dividend declaration by a technology company could often lead to a sizable stock decline.

But those days have changed.

How Tech Companies Evolved Into Dividend-Paying Stocks

Tech stopped shunning dividends in the 1990s when tech stocks went through a boom phase.

That's because institutional investors have mandates that prevent them from buying anything other than dividend-paying stocks, and they felt they were missing the action in the technology and Internet sector. They began to pressure tech stocks to pay a small dividend so they too could participate in the runaway rally.

Since then we have seen many of the tech giants initiate regular dividend payments to their shareholders. They were never intended to be significant but things have changed dramatically in the last decade.

Today many of these tech giants have seen their stock prices decline as their cash balances increased. They have raised the dividend to the point that tech stocks can now be a meaningful addition to income portfolios - especially for pre-retirement investors looking for income streams that will still be healthy 10 years from now.

Here are a couple examples of some of the best sources of yield in tech.

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