Great Stocks To Hold 2013

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As investors watch the tape on the first trading day of 2013, don’t think that the lessons of 2013 are going to be forgotten just yet.

 

After all of the volatility that swung the market from gains to losses in 2013, the S&P 500 index closed flat for the year, making a non-interest-bearing checking account a better risk-adjusted investment than stocks for the last 12 months. In the real world, market performance over the course of a calendar year is a fairly arbitrary measure — but for investment managers, who live and die by their annualized performance, returns from the first trading day of January to the last trading day of December are crucial.

 

Not all stocks were created equal last year — the 30 blue-chips that comprised the Dow, for instance, rallied more than 5.5% on average in 2013. At the same time, the Nasdaq Composite closed the calendar down 1.8%. And investors’ flight to quality is definitely still factoring into returns.

 

This week, we’ll aim to take advantage of those broad market tailwinds by looking at a new set of Rocket Stocks. For the uninitiated, Rocket Stocks is our list of companies with short-term gain catalysts and longer-term growth potential. To find them, I run a weekly quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises to identify rising analyst expectations, a bullish signal for stocks in any market. After all, where analysts’ expectations are increasing, institutional cash often follows.

Great Stocks To Hold 2013:Credit Suisse Asset Management Income Fund Inc. (CIK)

 Credit Suisse Asset Management Income Fund Inc. is a closed-ended fund launched by Credit Suisse Asset Management, LLC. It is managed by Credit Suisse Asset Management, LLC and Credit Suisse Asset Management Limited. The fund invests in the fixed income markets of the United States. It invests in companies operating across diversified industries. The fund primarily invests in United States high-yield corporate debt. The fund benchmarks the performance of its portfolio against the Merrill Lynch US High Yield Master II Constrained Index and Citigroup High-Yield Market Index. Credit Suisse Asset Management Income Fund Inc was formed on February 11, 1987 and is domiciled in the United States.

Great Stocks To Hold 2013:Natural Resource Partners LP (NRP)

 Natural Resource Partners L.P., through its subsidiaries, engages in the ownership and management of coal properties in Appalachia, the Illinois Basin, and the Northern Powder River Basin regions of the United States. The company leases its properties to coal mine operators in exchange for royalty payments. It also owns preparation plants, coal handling facilities, and transportation infrastructure, as well as owns and manages aggregate reserves in Washington, Texas, Arizona, and West Virginia. As of December 31, 2009, the company owned or controlled approximately 2.1 billion tons of proven and probable coal reserves. Its coal and aggregate reserves were subject to 214 leases with 76 lessees. NRP (GP) LP operates as the general partner of Natural Resource Partners L.P. The company was founded in 2002 and is based in Houston, Texas.

Great Stocks To Hold 2013:REX American Resources Corporation (REX)

 REX American Resources Corporation engages in the production and sale of ethanol and distillers grains. It also leases real estate properties. The company was formerly known as REX Stores Corporation and changed its name to REX American Resources Corporation on June 10, 2010. REX American Resources Corporation was founded in 1980 and is headquartered in Dayton, Ohio.

Great Stocks To Hold 2013:EarthLink Inc. (ELNK)

 EarthLink, Inc. provides communications services to individual and business customers in the United States. It operates in two segments, Consumer Services and Business Services. The Consumer Services segment offers Internet access and related value-added services. It provides dial-up Internet and narrowband access, broadband access, and voice-over-Internet-protocol services, as well as value-added services that include products for protection, communication, and performance, such as security products, premium email only, home networking, email storage, and Internet call waiting. This segment offer its products and services primarily through its call centers, search engine marketing, affinity marketing partners, resellers, and marketing alliances. The Business Services segment offers integrated communications services, such as secure IP-based networks, virtual private networks, Internet access, local telephone and long distance services, enhanced services, access trunks, private line services, asynchronous transfer mode/frame relay services, and mobile data and voice services, as well as installation, managed network, remote access, and disaster recovery services. It also provides wholesale services comprising broadband transport services, including private line, Ethernet private line, and wavelength services; local communications and local dial tone communications services; live and automated operator, and directory assistance services; and dedicated Internet access services and direct connectivity. In addition, this segment leases server space and provides Web hosting services that enable customers to build and maintain an online presence, including domain names, storage, mailboxes, software tools to build Web sites, e-commerce applications, and 24/7 customer support. This segment offers its services through direct sales, and independent dealers and sales agents. The company was founded in 1994 and is headquartered in Atlanta, Georgia.

Advisors' Opinion:

• By Vatalyst At 2! 011-10-2 2

  Shares are trading at $6.50 at the time of writing, as against their 52-week trading range of $6.04 to $9.29. Earnings per share for the last year were $0.45, and it paid a dividend of $0.20, yielding 3.10%.

  Earthlink has shown tremendous growth in its internet and telephonic connectivity markets lately. But is this growth soon to blow out? In a market that is dominated by the larger companies, At&T (T), Verizon (VZ), and even AOL (AOL), it is hard to see that these three will allow too much trampling on their markets by the far smaller Earthlink. Gross margins at At&T, Verizon, and Earthlink are similar at around 58%, and there is not much difference in the resultant operating margins, either (15.5%, 17.5%, and 18.5%, respectively). Dividends are twice covered by earnings at AT& T and Earthlink, and marginally covered by earnings at Verizon. If the sector develops into a price war, AT&T’s dividend of yield of 6%, and undemanding price to earnings ratio of 8.39 will be more attractive to investors, and easier to achieve. Switch from Earthlink into AT&T.

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