1-3 TFB Best Stock Picks For 2012 Contest Or The Best Demonstration That Investing Doesn’t Rhyme With Gambling!
We are at the beginning of the year and I hope you had a great Holiday Season! It’s time for me to get back to work and start the year with our traditional Best Stock Picks For 2012 Contest. So before we get to my stock picks for this year, let’s take a look back at what happened in 2011.
The Perfect Proof that Gambling is Not Investing
Since the goal of this friendly competition is to finish first and we only have 4 stocks to pick, some of us (including me!) took some important risks. These risks were not calculated as we are not investing real money into them and there is not much to lose (besides the fact that my ego hurts!).
So if you think that you can pick any stock for your portfolio based on what you read on a few blogs (besides what is written on The Dividend Guy Blog ) and what you see on TV, you are dead wrong. Investing is far from gambling and I have a great proof; take a look at my stock picks:
HUZ – 13.02%
RIM – 74.51%
POT – 19.66%
CVX + 20.28% (including dividends)
I actually took 3 guesses in 2011; 1 with a commodity (betting on the fact that silver will follow the price of gold), 1 with a techno stock (betting on the fact that RIM had gone through the worst and was ready to kick ass in 2011) and 1 on an eventual rumor of merger or acquisition (betting on the fact that the first hostile bid for Potash was only the beginning).
Well, I got it wrong 3 times out of 3 and this is why my stock picks sucked in 2011!
Here are the full results:
Dividend Growth Investor +15.36%
Million Dollar Journey +3.12%
Intelligent Speculator -4.90%
Money Smarts Blog -9.55%
Where Does All My Money Go -17.04%
My Traders Journal -19.00%
The Financial Blogger -21.73% (bravo!)
Wild Investor -33.34%
Beating The Index -44.08%
And we got beaten by 3 TFB commenters!
Yup, that’s right! Last year, I’ve asked you to participate in this contest and Steve Zussino (+17.83%), Robert @ The College Investor (+20.29%) and JT McGee (+34.50%) beat all of us! Here are the results from all the readers:
Robert @ The College Investor 20.29%
Steve Zussino 17.83%
Passive Income Earner 2.09%
101 Centavos -9.25%
Kevin @ Thousandaire.com -9.86%
Financial Cents -15.16%
Jaymus (RealizedReturns) -18.44%
Financial Uproar -43.07%
Stock Glory -52.77%
Congratulation to JT McGee with a +34.50% Result! I’ll send him a $100 Amazon Gift Card!!
Now back to the Best Stock Picks for 2012
We all agreed to start the very same contest again this year with the very same rules:
4 stocks picked at the beginning of the year
Could be CAN or US
No trades allowed
Dividends count in the yield calculation
This year, I’ll use a different approach as I will pick stocks that I own or that I have analyzed carefully. I’m doing this for 2 reasons:
a) I’m not good at guessing (obviously!)
b) In a highly volatile environment, strong companies will perform better
My Top Stocks for 2012:
National Bank – TSE: NA
I know I can’t really go wrong with any Canadian bank but I think that NA will outperform its peers in 2012. One of the main reasons is that the company is almost done spending hundreds of millions in new software for its branches. We will start seeing productivity gains that will boost both commercial and individual banking results. Their recent acquisitions (Wellington West, the brokerage segment of Montrusco Bolton & HSBC) will also bring in additional income in 2012.
5N Plus – TSE:VNP
This Montreal based company is the leader in speciality metal and chemical products found in the manufacturing of solar panel, smartphones and tablets. They also produce rare earth metals such as tellurium, cadmium and zinc. In 2011, they posted record results after acquiring MCP a company way bigger than them. The stock price hasn’t followed the great results due to global economic uncertainties. Sooner or later, investors will realize that VNP should not be trading at a P/E ratio of 9!
INTEL – NASDAQ:INTC
Intel has proven its stability by showing strong financial results in 2011. With a dividend yield of 3.50% and a low P/E ratio, INTC will certainly do well in 2012. Intel is the leader in its industry and has the biggest R&D budget to make sure they stay ahead of the competition.
Chevron – NYSE: CVX
The price of oil is not slowing down in my opinion and this is why I’m coming back to the only stock that served me well in 2011! Chevron is highly stable and will continue to generate great profits in 2012. A little push on the oil barrel and we should see the stock up by another 10% this year .
Here are the other best stock pick contestants:
Do you want to join in?
We had to say good bye to Mike Holman from Money Smart Blog this year and we are welcoming 2 newcomers: Dividend Mantra and Passive Income Earner. I’d also like to do the same contest with TFB readers (regardless if you have a blog or not). So if you include your 4 stock picks in the comment, I will be following your picks and the best performer will win a prize in early 2013. How about that?
You don’t have enough yet?
If you are looking for more stocks to buy in 2012, I can tell you that you will find great ideas in The Dividend Growth Index, and my 29 Dividend Stock Picks for 2012 are 2 other projects I started with my Dividend Blog. Please make sure that you do additional research before trading any of these stocks. They are not recommendations.
Disclaimer: I hold NA, INTC, CVX & VNP in my RRSP portfolio.
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