Thursday, October 25, 2012

5 Screaming Blue Chip Buys

�Top Stock Picks for February

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Some of my favorite blue chip stocks have sold off recently, including AutoZone Inc. (NYSE: AZO) and F5 Networks (NASDAQ: FFIV). But rather than being worried about their futures, I view it as an exceptional buying opportunity. That’s why I’ve included them on my list of best stock picks along with other top blue chips that I think will reward investors in the month ahead.

We are in a sweet spot for blue chip stocks as we’re in the midst of earnings season, we have the New Year enthusiasm and market recovery on our side, and the presidential election cycle is creating an environment of certainty that the stocks on this list will thrive in. So, here are the best blue chip stocks to buy for February.

    1. AutoZone (AZO)

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AutoZone Inc. (NYSE: AZO) is my favorite blue chip stock to buy at the moment. A large round of profit-taking and a spike in car sales resulted in the dip that we saw in the stock during the past month. However, these instances should be considered minor setbacks. A 7% dip over the course of the month isn’t something to run screaming toward the hills over.

Rather, this should be treated as a great buying opportunity. AutoZone’s long-term outlook remains strong. And with the release of its earnings at the beginning of March, I’m convinced we’re going to see a fantastic report from the company. Currently, analysts are expecting AutoZone to bring in earnings of $3.04 per share on $1.6 billion in revenue. The company has a long history of beating analyst estimates, which I’m sure it will continue with its next report. Buy AZO below $271.

    2. Novo Nordisk (NVO)

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Novo Nordisk A/S (NYSE: NVO) is the leading producer of insulin products, dominating the diabetes treatment field. In addition to its highly effective and cost-efficient products, the company recently announced a new program to help manage diabetes. Cornerstones4Care is a comprehensive, online resource that allows diabetes patients to customize treatment and management plans for their condition. This addition is one of several new products that the company plans to unveil this year, which is sure to boost its business and reputation.

The stock reached a new 52-week high last week, of $117.44 per share, but has since pulled back, offering a better entry point. Buy NVO below $119.

    3. F5 Networks (FFIV)

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F5 Networks (NASDAQ: FFIV) has had a volatile month to say the least. The company reported on Wednesday that sales were up 41% versus expectations of 41.4%, and its earnings were up 90% versus expectations of 59.6%. The stock experienced a vicious sell-off, falling around 25% the day after reporting. Cisco Systems’ (NASDAQ: CSCO) warning about slowing network traffic incited fear that affected F5.

On Monday, FFIV lost another 3%. However, even with the sell-off, the stock is still up more than 7% in the past three months and more than 100% in the past year. I think the stock is a screaming buy below $121.

    4. Magna International (MGA)

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Magna International (NYSE: MGA) is one of the best auto industry suppliers around. Recently, Magna announced its performance forecast for 2011. The company expects 2011 sales to grow 9%-13% ranging from $25.6 billion-$27.1 billion, up from $23.5 billion-$24 billion in 2010.

When Magna announces earnings at the end of February, you can be sure that we’ll see another huge performance from the company. The consensus estimate is for Magna to post earnings of 98 cents per share on $6.22 billion revenue. Buy MGA under $61.

5. Baidu Inc. (BIDU)

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Baidu Inc. (NASDAQ: BIDU) remains one of my favorite blue chip stocks as it is poised for another outstanding performance year in 2011. As the Chinese economy continues to heat up, more and more corporations are searching for successful advertising outlets. And the favorite trend is to use online advertisement, which is great news for Baidu. As China’s largest search engine provider, the company is a top pick for businesses wanting to advertise their products. So expect further big gains from Baidu as its business increases.

The company is set to report earnings in early February. Analysts expect the company to bring in earnings of 45 cents per share, but with its strong history of posting big surprises, I’m expecting that Baidu will perform much better. Buy BIDU under $120.

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