StreetAuthority’s Most Popular Stock Picks of 2012

The past year was a profitable one for most investors: The Dow Jones Industrial Average rose nearly 10%, while the S&P 500 and the Nasdaq rose around 15% each. Toss in dividends, and total returns were a few percentage points higher.

Of course, the goal of investing — especially for active investors like the folks who read Street Authority — is to beat these benchmarks.

How did we fare? Well, here’s a look at the 10 most popular picks of 2012 and a look at how they fared.

1. “Forget Oil…This Could be the Biggest Story in Energy”
Nathan Slaughter wrote this story in May 2012, before natural gas kicked off a solid summer rally. The spot price for natural gas surged from just above $2 per thousand cubic feet (MCF) to above $3.80 in November, before a modest 20% retrenchment.

Nathan’s timing was solid and he continues to deliver ongoing coverage of what he calls the “North American Energy Boom” in his Scarcity & Real Wealth newsletter, including the best ways to profit.

 

2. “The Man Who Made $15 Billion from the Housing Bubble Just Bought These 5 Stocks
James Brumley’s focus on investing guru James Paulson
was also quite popular with readers. Of the five stocks profiled, three were subsequently acquired by other companies — at solid premiums — while United Rentals (NYSE: URI) and Delphi Automotive (Nasdaq: DLPH) have each risen roughly 20% since the article was published. As a group, this basket of stocks has returned more than 25% so far.

 

3. “This Company Could Kill the Gasoline Engine — and Make Huge Profits for Investors”
Andy Obermueller has been following Westport Innovations (Nasdaq: WPRT), maker of natural gas engines, in his Game-Changing Stocks newsletter for several years. By the time he looked at in this article, shares had slumped nearly 40% in just two months. Shares subsequently rallied anew but are now right back at $27.

Andy’s current take: “Westport Innovations is building heavy-duty engines that run on natural gas and has partnerships with six of the 10 top truck manufacturers. Worldwide, the market for heavy trucks is estimated to hit $340 billion in 2014, and Westport is positioned to grab a disproportionate share of the market given its broad reach within the industry.”

 

4. “This Unloved Stock Could Double”
Don’t catch falling knives. That’s the lesson I should have heeded when I predicted a 100% potential gain for MEMC Electronic Materials (NYSE: WFR). Shares of the semiconductor and solar equipment provider had fallen from above $80 in early 2008 to just $4 this past spring, but rather than rebounding, shares kept falling, until they bottomed out at around $1.60 in the summer.

Had I waited for the selling to abate, I would have looked wiser, as shares have finally started to reverse course. It’s cold comfort that this stock has finally doubled from its lows, though I’d add that shares have ample upside from current levels as management has finally begun delivering on the promise of a rising cash flow.

 

5. “Forget Coca-Cola: Buy This Stock Instead”
Again, Andy nailed this one. Shares of Sodastream (Nasdaq: SODA) had slumped from the 52-week high of $48 to just $30 by the time he profiled the beverage maker in May 2012 and they subsequently rebounded 50% right back to a recent $48.

 

6. “This Could be the World’s Best Oil Stock”
My colleague Tim Begany aimed to capture lighting in a bottle with Brazilian oil giant Petrobras (NYSE: PBR) after its stock had fallen from $70 in 2008 to $50 in 2009 to just $30 by the time of his profile. Well, this stock continues to vex investors, and now trades around $20. That’s right where shares stood in 2006 — before Petrobras announced it had found massive deposits of oil buried off the Brazilian coast.

Blame goes to a series of missed financial and development targets, though I share Tim’s view that this stock will find favor as production ramps in coming years and “Petrobras elevates Brazil to the status of an elite oil-producing nation.”

 

7. “Forget Facebook: This Social Media Stock is Ready to Break out”
Dave Goodboy’s spring-time suggestion to steer clear of Facebook (Nasdaq: FB) was a wise one, as shares slumped badly over the summer. However, shares have subsequently rebounded back to the level where Dave issued his “steer clear” message. Meanwhile, Dave’s suggestion to instead focus on RenRen (Nasdaq: RENN), the “Facebook of China” was a bit premature, as all kinds of Chinese stocks slumped into the summer and fall.

But RenRen has started to rebound in recent weeks — along with other Chinese stocks, so this pick now deserves a fresh look.

 

8. “It’s Time to Sell This Popular Oil Stock”
Tim Begany’s bullish view on Petrobras was paired with this bearish view of Diamond Offshore (NYSE: DO). He noted that a long period of under-investment meant that “Diamond Offshore now has one of the oldest fleets in the offshore drilling industry, with an average rig age of nearly 30 years.” Tim’s timing was initially impeccable as shares fell 20% in coming months, though they have subsequently re-traced those losses back to the levels that Tim initially saw them as overvalued.

 

9. “Is McDonald’s Stock Now a Buy?”
My colleague James Brumley answered the titular question with an emphatic “yes.” James figured the 10% pullback in the stock as we headed into summer was a fresh entry point for investors. Though shares have been range-bound, his conclusion still holds: “The bottom line is, McDonald’s is a ‘right company, right time’ proposition. Though many would still argue the trailing price-to-earnings (P/E) ratio is still frothy at 16.8, it’s not an unusual price tag for a blue chip as reliable as this one.”

 

10. “Forget Gold: Double Your Money with this Instead”
Michael Vodicka weighed on the classic “gold vs. silver” debate this past September and concluded that silver’s industrial uses provide it “with another layer of demand that goes far beyond its use as a hedge against inflation.” Though Michael’s focus on the Silver Shares Trust ETF (NYSE: SLV) has yet to pay off, I share his bullish view. In this more recent piece, I suggested that Silver Wheaton was an especially appealing stock, in tandem with Michael’s bullish exchange-traded fund play.

Action to Take –> Many of our stock ideas should be seen with a multi-year time horizon, so any time you take note of a stock pick that has failed to gain traction thus far, it’s worthwhile to give the investment opportunity a fresh look. They may be slow out of the gate, but could still race to the finish.

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