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10 Companies That Prove Stock Picking Is Still Alive

Written by: Frank Byrt 08/21/12 - 6:00 AM EDT
Tickers in this article: RF S STX SHW AAPL REGN GAP DFS TDC VRTX

Investor takeaway: Its shares are up 107% this year and have a three-year, average annual return of 39%. Analysts give its shares seven "buy" ratings, four "buy/holds," 14 "holds," one "weak hold," and four "sells," according to a survey of analysts by S&P. Analysts' consensus estimate is for earnings of $2.07 per share this year, and growth of 11% to $2.30 next year.

S&P reiterated its "sell" rating last week, noting the valuation, which it says indicates investors are assuming a second-half turnaround for retail sales that might come. But in July, Gap posted 10% higher same-store sales and 12% higher total sales.

3. Seagate Technology(STX)

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Company profile: Seagate, with a market value of $15 billion, manufactures hard disk drives used in computer servers, PCs, laptops and personal-entertainment players. Of the company's revenue, 65% to 75% comes from original-equipment manufacturers.

Dividend Yield: 3.59%

Investor takeaway: Its shares are up 122% this year and have a three-year, average annual return of 46%. Analysts give its shares seven "buy" ratings, two "buy/holds," 11 "holds," one "weak hold," and two "sells," according to a survey of analysts by S&P. Analysts' consensus estimate is for earnings of $7.54 per share this year and a decline of 9% to $6.87 per share next year.

S&P analysts recently lowered the firm's opinion on the shares to "buy" from "strong buy," on valuation concerns (the shares are now at S&P's 12-month price target of $35), but it says "we still believe it has strong fundamentals."

2. Sprint Nextel(S)

Company profile: Sprint Nextel, with a market value of $15 billion, is the third-largest wireless carrier in the U.S., serving 48 million customers directly and 8.4 million via resellers, using two separate nationwide networks.

Investor takeaway: Its shares are up 122% this year and have a three-year, average annual return of 11%. Analysts give its shares 10 "buy" ratings, seven "buy/holds," 16 "holds," two "weak holds," and three "sells," according to a survey of analysts by S&P.

UBS Securities upgraded it to "buy" from "neutral" at the end of July (the same rating as S&P) after second-quarter earnings indicated a significant increase in the outlook for EBITDA (earnings before interest, taxes, depreciation and amortization) and free cash flow over the next three years is warranted.

1. Regeneron Pharmaceuticals(REGN)