We’re halfway through 2013 and our Best Stocks for 2013 Buy List on InvestorPlace.com has had plenty of time to shake out.
The good news: Three InvestorPlace contributors including myself, Louis Navellier and Charles Sizemore, are in the top three spots with market-beating returns.
The bad news: As a whole, the list itself is underperforming – including one pick 34% in the red.
As for the winners, paint manufacturer Sherwin Williams ($SHW), automaker Daimler ($DDAIF) and semiconductor stock Intel ($INTC), they happen to share one commonality: an unpopularity several months ago that has been replaced by turnaround hopes and optimism. The reasons are different, but the themes are the same.
Watch or listen in above to get complete details from me and Charles on our picks and the outlook for the next few months.
The annual InvestorPlace contest has a host of double-digit winners, including $DDAIF and $INTC.
It has been an interesting ride for the stock market in 2013, with the S&P 500 up about 16% year-to-date.
As a whole, not bad. Here’s the rundown as of the closing bell Thursday, May 23:
- Sherwin-Williams (SHW): +21%
- Intel (INTC): +19%
- Mylan (MYL): +16%
- Two Harbors (TWO): +15%
- Daimler (DDAIF): +11%
- Fomento Economico Mexico (KOF): +10%
- Global X Funds Greece ETF (GREK): +8%
- Qualcomm (QCOM): +4%
- Great Lakes Dredge & Dock (GLDD): -7%
- Vale (VALE): -24%
Daimler is going strong with a nice dividend and upside potential in China’s luxury market, even if some data in the nation isn’t looking so hot.
As for Intel, the semiconductor company has a wide moat and a big market share even if it has mobile struggles in a post-PC age. We’ll have to see how the new CEO steps up to the plate.
It’s worth noting that collectively, the list has unperformed in 2013. But there still are many months left to go before the end of the contest … so stay tuned to see which pick wins!
This piece was originally published on The Slant.
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This piece orginally appeared on InvestorPlace as Charles Sizemore’s submission for the 10 Best Stocks of 2013 contest.
The auto industry is a truly wretched business to be in. You have high labor costs and the constant threat of labor unrest. You have vicious competition among existing competitors. And perhaps worst of all, you have enormous capital expenditure needs coupled to a highly cyclical business that is prone to booms and busts.
So, you might be surprised to see that Daimler AG (OTC:DDAIF)—the maker of the iconic Mercedes-Benz—is my recommendation for the InvestorPlace Best Stocks of 2013 contest.
Normally, I hate the auto sector and would refuse to touch an auto stock. But right now, I believe that Daimler may be one of the best opportunities in the world at its current price. As a cyclical auto stock—and one based in crisis-wracked Europe, no less—Daimler has gotten no love from investors in recent years. But their timidity is our opportunity.
Whenever I think of Daimler’s flagship brand Mercedes, I will always think of the “Indiana Jones of Finance,” Jim Rogers. In a road trip across six continents chronicled in his book Adventure Capitalist, a customized Mercedes was Rogers’ vehicle of choice. Why? Because “every dictator and mafioso in the world drives a Mercedes…even in countries with no roads to speak of.” Rogers knew that if he had car trouble anywhere in the world, he would be able to find a mechanic who could work on a Mercedes.
Rogers wasn’t joking about that. Mercedes is the premier global luxury automobile. And it is a fantastic way to get “backdoor” exposure to emerging markets, which I expect to enjoy a nice rebound in 2013. Daimler gets well over a third of its sales from emerging markets, with China being a major contributor. China is already the world’s largest consumer of the high-end S-Class, and China accounted for 10 percent of Daimler’s revenues in the first three quarters of 2012—and this despite a marked slowdown in the Chinese economy.
And Mercedes cars are by no means Daimler’s only product; Daimler is also a world leader in industrial trucks, which make up more than a quarter of revenues. And as you might expect, emerging markets are a major source of demand. Approximately half of Daimler truck sales come from Asia and Latin America.
China appeared to hit bottom in late 2012, and I expect a rebound in Chinese demand to benefit high-end luxury firms in general and high-end autos in particular. Even in a “bad” year (if you can call 7.5% GDP growth in 2012 “bad”) China was a major contributor to Daimler’s success.
Investors fret that 34 percent of Daimler’s revenues come from Western Europe, where unemployment is high and overall consumer demand is weak. This does not particularly worry me. Daimler’s high-income customers are less at risk of financial distress than the average European, and sales have remained stable throughout the crisis.
But let’s say I’m being too optimistic about the Eurozone and that the atmosphere of austerity makes a large delayed dent in European sales in 2013. Even so, the stock price offers more than a sufficient margin of safety. The shares trade for less than 8 times earnings and yield over 5 percent in dividends.
Yet none of this tells the full story about how cheap this company is. Daimler trades at accounting book value and for just 0.39 times sales. It also has €46 billion in cash short-term investments, and receivables—and a market cap of just €44 billion. Yes, the cash in the bank and receivables are actually worth more than the entire company at current prices.
Daimler is simply too cheap to pass up. This is the maker of the premier global luxury car trading at prices that would suggest the Mayan calendar was correct about the world ending in 2012.
Disclosures: Sizemore Capital is long DDAIF.
Charles Sizemore is the Editor of Peak Income and Peak Profits and a contributing writer to The Rich Investor. As Dent Research's retirement expert, he specializes in income solutions. (Read More)
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