|Forbes.com, Winter, 2012. This article was written with Oliver Pursche, the Co-Portfolio Manager of GMG Defense Beta Fund. It was part of a series of articles developed under an agreement with forbes.com to work with a variety of contributors and assist them in delivering actionable investment ideas each week. The site, forbes.com is one of the top 500 sites in the world with nearly 10 million subscribers and nearly 100 million page views a month.|
Earnings season is adding to the deafening roar of the news these days that includes a debt crisis, an election, a rising in the Middle East and the perennial favorite, the U.S. economy. What’s an investor to do?
Let me try to make it simple: regardless of what’s going on in the world, focusing on earnings, quality, diversity in revenue streams and dividends should continue to prove to be the best way to invest. So pay close attention to earnings, and, unless you fancy yourself a market timer or technician, let the other news recede to the background.
With that said, here’s my top picks I’ve been buying across a few key sectors where I expect earnings, and investment prospects to be good.
I am confident in two software giants who recently made significant acquisitions.
Intel (INTC): Three Points Make Me Bullish on the Stock
Demand for chips is expected to remain strong, giving the company a positive outlook
The acquisition of McAfee, focusing on Internet security
Making strong inroads in the cloud computing and mobile computing market
Microsoft (MSFT): After a long decade of underperformance, the company may regain some of its swagger.
Windows 7 is extending its reach into the PC market
The Skype acquisition is putting MSFT at the forefront of new technologies and cloud computing. And with over $500 billion cash at its disposal, the company could make some additional acquisitions.
Consumer Discretionary/Food Services:
Unilever PLC (UL):Revenues continue to grow at a strong pace
Emerging market economies (such as China), some of the greatest opportunities for UL, are faring better than most expected.
The stock’s valuation is more attractive due to the recent pullback in shares.
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Heinz (HNZ): Plenty more than just ketchup
The market of baby food, baked beans, pasta sauces, and Weight Watchers Smart One’s meals should do well in 2012
Emerging market sales will continue to drive revenue and increased profit margins, causing us to expect earnings growth to continue to accelerate, particularly in the second half of 2012.
Simple innovation–The recent reinvention of ketchup and the new dip-and-squeeze packets are gaining momentum in fast food chains.
Total SA (TOT): One of my favorite names in the energy sector
Boasts a dividend that is well above 5%
Impressive management team that performed amongst the best in the industry during the “Arab Spring” uprising where Libyan and other North-African Oil shipments temporarily ceased in the summer of 2012
Royal Dutch Shell (RDS-A): A European energy company that should continue to do well
The company’s pursuit of unconventional assets through a focus on innovation and new technology has me very excited
I see a possible dividend hike this year, supplementing an already solid dividend