Solid corporate earnings pushed the Dow Jones Industrial Average ($INDU)back above 12,000 on Feb. 1, and may be helping restore the confidence of individual investors, who poured an estimated $6.7 billion more into U.S. stock funds in the first half of January than they took out, according to the Investment Company Institute.
Investors have also been buoyed by evidence that the U.S. economic recovery, while the slowest since the Great Depression, is gaining momentum. Gross domestic product rose at an annual rate of 3.2% in the fourth quarter, faster than the third quarter, which, in turn, exceeded the pace of economic activity in the preceding three months.
MSN Money's StockScouter tool has generated a list of 50 stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price this month, based on how those factors have influenced stock prices in the past. Here are StockScouter's best investment ideas for February:
| Benchmark portfolio for February | |||
| Company | Sector | Jan. 31 close | Scouter score |
|---|---|---|---|
| Cellcom Israel (CEL, news) | Cellular communications | $30.54 | 8 |
| MV Oil Trust (MVO, news) | Oil and natural gas | $38.65 | 10 |
| Statoil (STO, news) | Oil and natural gas | $24.42 | 9 |
| Enterprise Products Partners (EPD, news) | Oil-field services | $43.56 | 10 |
| CMS Energy (CMS, news) | Electric utilities | $19.50 | 10 |
| Empresa Nacional de Electricidad (EOC, news) | Electric utilities | $52.20 | 10 |
| TC PipeLines (TCLP, news) | Natural gas | $51.75 | 10 |
| Spectra Energy (SE, news) | Natural gas | $26.23 | 10 |
| Allegheny Energy (AYE, news) | Electric utilities | $25.78 | 10 |
| Energen (EGN, news) | Gas utilities | $55.90 | 10 |
| Core Laboratories (CLB, news) | Oil-field services | $91.26 | 10 |
| Eni (E, news) | Oil and natural gas | $47.50 | 10 |
| Natural Resource Partners (NRP, news) | Coal | $36.37 | 10 |
| Alliance Resource Partners (ARLP, news) | Coal | $70.25 | 10 |
| Pioneer Natural Resources (PXD, news) | Oil and natural gas | $95.16 | 10 |
| National Oilwell Varco (NOV, news) | Drilling equipment | $73.90 | 10 |
| National Fuel Gas (NFG, news) | Gas utilities | $68.34 | 10 |
| Whiting Petroleum (WLL, news) | Oil and gas drilling | $126.28 | 10 |
| El Paso (EP, news) | Natural gas | $15.88 | 10 |
| Ormat Technologies (ORA, news) | Electric utilities | $30.76 | 10 |
| Full House Resorts (FLL, news) | Casinos | $4.49 | 10 |
| Aqua America (WTR, news) | Water utilities | $23.12 | 9 |
| Dominion Resources (D, news) | Electric utilities | $43.54 | 9 |
| Great Plains Energy (GXP, news) | Electric utilities | $19.68 | 9 |
| ITC (ITC, news) | Electric utilities | $65.70 | 9 |
| Petrohawk Energy (HK, news) | Oil and natural gas | $19.89 | 8 |
| Cabot Oil and Gas (COG, news) | Oil and natural gas | $41.63 | 8 |
| ShoreTel (SHOR, news) | Communications equipment | $7.58 | 8 |
| Manitex International (MNTX, news) | Machinery | $5.58 | 8 |
| Oceaneering International (OII, news) | Oil-field services | $77.23 | 8 |
| GeoResources (GEOI, news) | Oil and natural gas | $27.64 | 8 |
| Boise (BZ, news) | Paper | $8.99 | 8 |
| On Track Innovations (OTIV, news) | Electronics | $3.43 | 8 |
| ConocoPhillips (COP, news) | Oil and natural gas | $71.46 | 9 |
| América Móvil (AMX, news) | Telecommunications | $56.99 | 9 |
| Entergy (ETR, news) | Electric utilities | $72.17 | 9 |
| El Paso Electric (EE, news) | Electric utilities | $26.95 | 9 |
| Williams Partners (WPZ, news) | Natural gas | $47.46 | 9 |
| PetroChina (PTR, news) | Oil and natural gas | $139.27 | 9 |
| Linn Energy (LINE, news) | Oil and natural gas | $39.71 | 9 |
| Total (TOT, news) | Oil and natural gas | $58.77 | 9 |
| Occidental Petroleum (OXY, news) | Oil and natural gas | $96.68 | 9 |
| EV Energy Partners (EVEP, news) | Oil and gas drilling | $43.45 | 9 |
| Companhia de Saneamento Básico do Estado de S?o Paulo (SBS, news) | Water and sewer utilities | $49.57 | 9 |
| Millicom International Cellular (MICC, news) | Mobile communications | $93.25 | 9 |
| Nexen (NXY, news) | Oil and natural gas | $25.15 | 9 |
| Main Street Capital (MAIN, news) | Investments | $19.54 | 9 |
| EchoStar (SATS, news) | Satellite TV | $27.25 | 9 |
| Mizuho Financial (MFG, news) | Banking | $3.88 | 9 |
| Southwestern Energy (SWN, news) | Oil and natural gas | $39.60 | 9 |
Put StockScouter to work
Investment research firm Gradient Analytics uses StockScouter to create daily and monthly stock lists. Writer Jon Markman, at the time a columnist for MSN Money, collaborated with the company to devise strategies for putting the tool to work.
One of Markman's strategies involved investing an equal amount of money in each of the stocks in the computer-generated portfolio, selling them six months later, then beginning the process again. For investors who prefer to handle fewer stocks, Markman recommended using the strategy with just the top 10 stocks on the list.
An investor who followed Markman's 10-stock strategy since it was launched would have realized a gain of 673% through Jan. 31, 2011, according to Gradient Analytics, and would have had an average annual return of 23.6%.
Over the same period, the S&P 500 rose by 6.2%.
An innovative mix
StockScouter depends on advanced mathematics and software and an innovative mix of measurements and historical testing to forecast the short- and long-term outlook for all U.S. companies that have traded on the major exchanges for at least the past six months.
The analytical tools are applied to score stocks on fundamental, valuation, technical and ownership components.This score is combined with each company's StockScouter rating to come up with the list in the above chart. Only stocks with a final closing price above $3 are eligible for the list.
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