Grading the Graders: Analyst Stock Picks for 2012
The research firm says its PowerPicks Portfolio, chosen by its analysts' at year-end 2011, "represent(s) the collective best ideas of its U.S. equity research staff" with the goal of "superior total return" for the coming year.
So far, so good.
Given that each of the firm's industry analysts make picks, the resulting portfolio of 20 stocks are from all 10 economic sectors comprising the benchmark S&P 500 Index .
This year the PowerPicks rose an average of 14% at the end of the first quarter, versus the S&P 500's 12% gain.
But they've done even better since, as they're up an average 14.2% through Monday, versus the S&P's 9.6% gain, and have outperformed the 12.8% return of the average large-cap growth mutual fund tracked by Morningstar.
Each of the stocks in the portfolio carries at least a four-star ("buy") S&P rating and the majority a five ("strong buy"), under the firm's Stock Appreciation Ranking System (STARS), a qualitative stock-selection methodology based on fundamental research by S&P's equity analysts.
Given that pedigree, the 20 stocks are all large-caps and leaders within their industry, and they tend to be dividend-paying multinationals.
Seven of the companies have better than 20% gains this year, led by IT database systems conglomerate EMC(EMC) , with a 34% jump.
There were two stocks in the group with declines this year, although they're not worth fretting about. One is the second-largest oil company in the U.S., Chevron(CVX) , down 3.8% this year on volatile oil prices, but with a 10-year average annual return of 11%; and the other is cereal and packaged foods behemoth General Mills (GIS) , the owner of the Pillsbury and Cheerios brands, which is off 2.6%, but has a 10-year average annual return of 6.4%.
Here are the 20 stocks that make up S&P Capital IQ's PowerPicks Portfolio for 2012 and their year-end target prices as set by the firm's analysts:
Company profile: Chevron is the second-largest oil company in the U.S. and one of the biggest integrated energy companies in the world with exploration, production and refining operations worldwide.
Investor takeaway: Its shares are down 3.8% this year to $103.68, and have a three-year, average annual return of 19%. They carry a 3.19% dividend yield. S&P's year-end price target is $132.
S&P analysts say: "We view positively its aim to develop (liquefied natural gas) projects and build a top gas supply position in emerging Asia-Pacific markets."
19. General Mills (GIS)
Company profile: General Mills is a leading global manufacturer and marketer of branded consumer foods, such as ready-to-eat breakfast cereals, refrigerated dough and other baking items, snack foods, ice cream, and yogurt. It is the second-biggest producer of ready-to-eat cereals in the U.S. and has recently partnered with Nestle(NSRGY) to distribute cereal products in more than 130 countries. Last July it bought a controlling interest in the maker of Yoplait yogurt.