Here we are nearing the end of 2012 and still feeling the crunch of the great recession that began in 2007. The Feds have gone through QE1, QE2, QE3...and who knows...there could probably be a QE4 of some sort (or maybe it's already going on in the form of "Operation Twist"). As a result of the tough economy and the Feds printing efforts, the stock market itself has become a tricky place. So I decided to put my thoughts in writing on which stocks to buy now for 2013.
Before I let you in on my procedure for stocks to buy now...I want to let you know that the stocks presented in this article are stocks that I already own. You can buy or not buy them if you want. I'd like to also let you know that this is just my opinion as I am not a registered investment advisor.
But the main objective for this article is to show you how I made my decision for the stocks that I own - and perhaps you can take the knowledge and apply it to any other stocks out there in the marketplace. In other words, I'd rather show you how I fish...instead of just giving you a fish (remember this old adage? lol).
So before selecting my stocks, I like to look at a few factors to show me what are the stocks to buy now:
First, I like to look at a company's market cap. I like to know whether the company whose stock I'm purchasing is a small cap, mid cap, or large cap investment. This tells me which company is better poised for faster growth and advancement, or steady growth and stability. There were some researchers (Fama & French) that took notice on how small cap equities (stocks) have more potential for faster growth than other caps. However, they are also the most risky. On the other hand large cap equities are very stable companies that have been around for decades with the least risk and offer slow and steady growth.
Next, after I've selected which cap I'd like to invest in, I review a company's Earnings Per Share (EPS) with respect to their Dividend/Yield payout. This tells me if the company is making money or not. If the EPS is $1.00/share, but the company is paying $2.00/share in dividends - this tells me that the company is spending way too much money and the stock price could be on its way down unless the company's earnings increases.
Another ratio to check is the company's Beta. Beta tells us how does this stock move in comparison to the overall stock market. For instance, if Beta = 1, then the stock moves up or down in the same manner that the stock market moves. If Beta = 2, then the stock will increase by a higher percentage when the overall stock market is going up...and in contrast, the stock will decrease by a higher percentage when the overall stock market is going down. Just in case you're wondering where to find all of these terms I'm mentioning - check out Google Finance and look up a company's stock...Google provides all of the aforementioned terms for every stock.
Now that you know my beginning process - here is what I've selected thus far:
Given that the Feds have identified inflation targets for our economy, and will do anything to make sure we get there....I've decided that inflation is a major concern, and the numbers they're reporting now are manipulated. Therefore, I like purchasing ETFs (exchange traded funds) such as, SLV and GLD. These ETFs invest primarily in gold and silver, so if and when inflation comes in 2013, these stocks should increase along with it.
I also like commodity plays such as Arch Coal Company (ACI), Penn West Petroleum (PWE), Archer Daniels Midland (ADM), and British Petroleum (BP). As our dollar's purchasing power decreases, and as taxes steadily increase for the middle class, the cost of commodities will increase as well. Might as well make a little money for myself in the meantime!
These are just a few stocks that I own and believe they have great potential for 2013. These are my stocks to buy now should you decide to take my advice and do so.