Starting the Year with the Other Experts …

By Travis Johnson, Stock Gumshoe, January 3, 2012

Most of the time I write about the investment newsletter business — the pundits who sell their expertise, the copywriters who make the mundane seem otherworldly, and the outrageous promises and teases that the publishers use to convince us to subscribe to newsletters that proffer investment research and stock tips.

But it’s worth noting that these newsletters have some similarities to the mainstream financial press — particularly the weekly and monthly magazines published by the big publishing goliaths like Dow Jones, Time Warner and the various publishing behemoths. After all, we read investment newsletters to be better informed, to get interesting investment ideas, and to help ourselves make more money — the same reasons, one assumes, for subscribing to publications like Barron’s, Money, SmartMoney, Fortune, etc.

So as the year begins I like to gather up a few handfuls of the big investing magazines and check out there prognostications and picks for the year ahead to see if there’s any interesting thread that makes us want to follow their lead … or to be concerned about an emerging consensus and take a contrarian path. And as we do with the newsletters, we’ll track these picks and see if the magazine you get for $12 a year through the local Boy Scouts subscription drive competes with the $1,000 letters from your favorite huffed-up investing gurus.

Here are the ones I’ve picked up so far, and their top picks for 2012.

Barron’s

Barron’s cover story back on December 12 was “Our 10 Favorite Stocks for 2012,” so that’s as good a place as any to start. Here’s how they describe their list:

“We compiled a list of 10 stocks that could reward investors in 2012, including blue chips like Berkshire Hathaway (BRKA), Procter & Gamble (PG), Royal Dutch Shell (RDSA) and Britain’s Vodafone Group (VOD). In this diversified selection, nearly all pay dividends, the exception being Berkshire, which is understandable given CEO Warren Buffett’s extraordinary investment skills. The average yield is 3%, in line with that of the 30-year Treasury. Half of them have price/earnings ratios below 10 on next year’s projected profits. The most expensive stocks, Berkshire and P&G, are valued at about 15 times estimated ’12 earnings.

“Four of our top 10 are European, reflecting depressed markets and high dividend yields there. European investors and managements have a preference for dividends over share repurchases, the reverse of the situation here.”

And the list?

Berkshire Hathaway (BRKA or BRKB)
Comcast (CMCSA)
Daimler (DDAIF)
Freeport McMoran (FCX)
MetLife (MET)
Procter and Gamble (PG)
Royal Dutch Shell (RDS.A)
Sanofi (SNY)
Seagate (STX)
Vodafone (VOD)

I own Berkshire Hathaway and Vodafone myself, and bought both this past year — VOD at prices near today’s, and Berkshire when it got finally close to book value before the buyback provision shot the shares back up, so I can’t argue against either of those (though I’d hope for a sub-$70 BRK.B share price).

Interesting list, with Daimler and Sanofi having particular appeal as global companies that might be undervalued in part due to euro fears. I’d much rather invest in oil service names than in big oil majors like Shell, and Seagate is so hated that their forward PE is below 5 and their dividend is now over 4%, so clearly plenty of folks still think their business (hard disk drives) is withering on the vine, and not just because of the Thailand floods.

And yes, their picks at this same time last year have so far trailed the market (as they measure it, they were down 6.9% vs. the market’s fall of 1.9% at the publication date).

SmartMoney

The SmartMoney “annual stock-picking guide” is in their January issue, which was available sometime in December … and they picked ideas based on five investing themes for the year:

Emerging Markets — growing consumption demand for power, food, etc.
PotashCorp (POT)
CNOOC (CEO)

European Exporters — exporters, particularly German ones, getting boost from weak Euro.
SAP (SAP)
Siemens (SI)

SAP is slightly more expensive than competitor Oracle (ORCL), and about half the size, with lower margins — ORCL has been far stronger over the past five years, but that’s mostly because of a much sharper fall for SAP during the financial crisis … the two stocks have pretty closely mirrored each other more recently. Siemens is one of those $100 billion companies that not many people know in the US, but they’re similar to GE in the long reach of their conglomeroctopus arms.

Dividend Payers — everyone seems focused on dividends, their appeal to baby boomers, and the huge yields relative to interest rates.
AT&T (T)
Excelon (EXC)

Hard to argue with those, though I prefer VZ and VOD (both of which I own) to T … and utilities like Excelon were among the few good performers in 2011, SmartMoney is picking them in part as a contrarian play post-Fukushima because Excelon is the biggest US nuke operator.

Gold Miners — like many, they’re saying that “as long as gold doesn’t tank” (it kind of already has depending on how you calculate a “tanking”), then miners have a long way to go to catch up with the price of the physical metal. The two they like:
Newmont Mining (NEM)
New Gold (NGO)

Not unlike Barron’s in that they chose one gold miner with a big copper business (Newmont for Smartmoney, Freeport for Barron’s) to hedge their bets a bit. Lots of folks have argued that the huge gold miners will be outperformers and huge cash generators, though in many cases those predictions were made before gold dropped a few hundred dollars from the recent highs. I’ve mostly given up on miners, personally, and have focused on royalty/streaming companies to cut my exposure to mine-specific risks and rising production costs.

Internet Advertisers — more business continues to move online, more advertising dollars follow.
Google (GOOG)
Baidu (BIDU)

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Google is one of my largest holdings, so I obviously have some sympathy with that pick and would argue that it will be the dominant advertising company in the world for many years. I have stayed away from BIDU in recent years, to my detriment, because of regulatory concerns and an often sky-high valuation — but they certainly make a lot of money.

Fortune


Fortune’s
“Investor’s Guide 2012” echoed many of the same themes we’ve heard before — “reliability and income matter more than ever” and a focus on “undervalued” large companies. Of course, they also note that they picked “reasonably priced growth compa