Revealed: A Top-Ten Stock for 2010
It’s become an annual tradition among the research staff of Market Advisor — StreetAuthority’s longest-running publication.
Every December, through phone calls, emails, and meetings — heck, everything short of smoke signals — the office is abuzz with chatter.
You see, December is when we hammer out our “Top Ten Stocks” for the coming year. This is our chance to put our collective heads together to pinpoint the ten stocks — no more, no less — that we believe will be the best investments for the coming year.
When you put your neck on the line with only a handful of picks — which our Market Advisor subscribers can track throughout the year — you better be right. If you’re not, your performance is there for everyone to see.
Fortunately, our picks haven’t disappointed. And you couldn’t be happier if you’re a subscriber.
Last year we outperformed one of the strongest bull markets of the past decade. While the S&P 500 returned +26.5%, our “Top Ten Stocks” cleared that hurdle, delivering +36.7% for subscribers.
Our picks included Mexican airport operator Grupo Aeroportuario del Pacifico (NYSE: PAC), which returned +45.8%… gold ETF Market Vectors Gold Miners (NYSE: GDX), which saw +36.7% returns… and Brazilian electric utility CPFL Energia (NYSE: CPL), which returned +72.1%.
But this wasn’t some flash in the pan thanks to the bull market. Since we’ve started publishing our annual “Top Ten Stocks” report in 2003, our picks have given readers a compounded return of +96.6% through 2009. That compares to just +41.3% for the S&P 500.
With this performance in mind, I wanted to share a little tidbit with you — a “sneak preview” if you will. I’ve selected one my favorite picks from the 2010 edition of “Top-Ten Stocks” to share with you.
The Silver Stock Set to Soar
You’ve probably heard a lot of talk about gold lately — and for good reason. Gold is an indisputably reliable hedge against economic uncertainty. And given the unsteady dollar and ripe conditions for runaway inflation, it’s no surprise that spot prices have ascended.
But you may be surprised to know that silver has actually climbed almost twice the rate of its yellow sibling. Yet, silver can still be had for just 1/60th the price of gold, a ratio well beyond historical norms.
My staff and I are confident that silver prices could easily rally another +50%. Aside from shielding investors from inflation, silver is also prized for its electrical and thermal conductivity and other unique properties. With commercial applications ranging from photography to medicine, industrial usage eats up approximately 60% of the world’s supply each year.
None of this has gone unnoticed by retail investors. According to the U.S. Mint, the public scooped up 16.1 million American Eagle one-ounce silver coins in the first half of 2009, a sharp increase of +75% over the previous year. But you can do much better than bullion…
As the world’s largest silver streaming company, Silver Wheaton (NYSE: SLW) buys future silver production from gold miners for relatively fixed prices, often below $4 an ounce. These deals are a win-win for both parties: The mine owners get upfront cash for what they consider to be a byproduct, while Silver Wheaton gets mounds of silver without having to shell out a penny for mine exploration or maintenance.
Management recently locked up an agreement that will hand over 25% of whatever silver is dug up from Goldcorp’s (NYSE: GG) Penasquito mine in Mexico. That deal alone is expected to yield 7.2 million ounces of silver annually for the next 22 years. The firm has 16 other agreements in place that will generate 17 million ounces of silver this year and as much as 40 million by 2013.
That increased production could send sales soaring +135% within the next four years without any increase in silver prices. Keep in mind, the company has minimal future capital expenditures, so any incremental sales growth will be converted into earnings.
Last quarter, sales of just 4.3 million ounces resulted in a record-shattering cash flow of $45 million, a +70% year-over-year increase. The combination of new deals and buoyant silver could send that total soaring over the next couple years. And I expect the share price to follow suit.
P.S. — A little-known company that benefits with every iPhone sold… a stock poised to gain on the back of Washington’s landmark healthcare legislation…a fund ready to rise if inflation heats up or the dollar keeps falling…
These picks and more make up the rest of Market Advisor’s “Top Ten Stocks for 2010.” Visit this link to read more about these picks and see just why we’re so bullish on their prospects for 2010.