My Stock Picks for 2011

Happy New Year!

What would the beginning of 2011 be without a list of great stocks to invest in? I wanted to find solid blue-chips that had either been trading at their lows, were punished for lower than expected earnings, and were poised for a rally. I also wanted to look at sectors I think will do well in the coming years. Oil, technology, and big consumer food and entertainment companies could be the winners. You will notice I haven’t included any Income Trusts in my list. I certainly think there are some great buys for trusts converting to corporations, however I would prefer to wait and see what happens when many of them start cutting their dividends. Of course the 2011 Stock Picks are only my personal opinions, not a recommendation to buy. Do your own research and only invest in what you understand!

Index Funds and Index ETFs

Index Investors who simply tracked the TSE did well in 2010. TD’s Canadian Equity Index for example returned 15.9% for the year, whereas some dividend stocks were actually trading lower. If you don’t have an Index ETF or Index Fund consider adding one to your portfolio for 2011. The TSE Index and individual stock prices are not always correlated, so an index can outperform individual stock prices. Although markets have had a good run already in 2010, it looks like they will continue to rally for a good part of 2011. If you need more information on individual index funds and ETFs to buy, see the Canadian Couch Potato. Of course index investors miss out on the dividend gravy train, but it’s a simple and proven way to invest.

Cisco Systems CSCO-QCisco Systems

I’m bullish on Cisco. I was even bullish on the company before the dramatic plunge in its share price on November 10th, plummeting the stock some 20%. As I pointed out in a previous article, Cisco provides the backbone of the internet, and the demand for that infrastructure will only continue to grow. Cisco doesn’t pay a dividend, but it will be in 2011 – that’s already been confirmed. I’m not expecting a large yield, but what I am expecting is a recovery in share price. I purchased at $19.50 but it’s still a bargain below $21 US per share, and I am expecting it could easily reach $24 or $25 in the first half of 2011. Not to mention if you are a Canadian investor, you might be able to make a spread on the dollar if the US dollar strengthens.

Corby Distilleries CDL.A-T

This is a stock that Derek Foster originally recommended, though he has sold it according to his latest book. I think that was a mistake since Corby is currently on the rise. The fact is people are going to the liquor store to buy alcohol and they will continue to do so. I’m sure you can recognize some of these big brand names that Corby produces and distributes: Polar Ice vodka, Seagram’s Coolers, Beefeater, Malibu rum, and Kahlúa amongst others. This company was established in 1859, and continues to offer a reasonable dividend yield of 3.30%. They have a low Liabilities to Equity Ratio of 0.13, but a high P/E ratio of 22.30. One thing about Corby is every few years they do offer a special dividend, whether that continues remains to be seen.

Corby DistilleriesCorby has been in a long sideways trading pattern between $15 and $16, and it just recently broke through the $16 boundary. Although the stock is trading at its 52 week highs, I think there is even more upside potential. This is one of those stocks I should have and could have bought in 2010 for $15.25 and didn’t. Next time you enjoy your liquor and spirits, think of Corby.

Husky Energy HSE-T

Husky Energy (a made in Canada oil company) hasn’t exactly rewarded its shareholders over the years except for the dividend yield. The stock declined over 50% from its highs of over $50 in 2008. But if you look at the 5 year chart, and the huge volume spike this year at the beginning of December, you can easily see this is a turnaround stock. The balance sheet fundamentals are solid. And a new CEO Asim Ghosh who took the reins on June 1st, is committed to making Husky a turn around as well. What I really like about Husky, unlike EnCana or other energy companies, is the diversification of its holdings. It has interests in oil drilling, oil refineries, natural gas, the tar-sands, and even has interests in Asia. Not to mention it’s owned by Li Ka-Shing, who isn’t going to be selling this company any time soon. At $24.50 to $25.00 Husky was on my buy list, but has already climbed past its breakout level of $26. Husky Energy also has an excellent dividend yield of 4.60%, a price to book ratio of 1.5, and a low liabilities to equity ratio of 0.87. However the P/E ratio is already above 18.

Le Chateau CTU.A-T

Le-ChateauI had to think twice about recommending this stock, since fashion and style can change on a whim, and profits are governed by economic conditions – not a sure thing at all. But Le Chateau has been around for a long time, since 1959 actually, weathered economic recessions, and is still thriving. They currently have 221 retail locations, of which 217 are located in Canada and 4 in New York. They also have 9 stores under license in the Middle East. I don’t shop at Le Chateau, and for that matter I don’t know anyone who does. But this made in Canada clothing company from Quebec, that creates, markets and sells their own fashion line must be doing something right! Although their sales were down in the 3rd quarter and they missed expectations, in reality they still had a profit of $74 million, opened nine stores (though they closed 4) and expanded 17 other retail locations. The company currently has a P/E Ratio of 9.5, a very low liability to equity ratio of 0.45, and most importantly a nice dividend yield of 6.10%. Although the one year chart looks like a good buy point, you may want to look at the 5 year chart before making your decision, and wait patiently for further downside potential, especially post Christmas earnings.

McDonalds Corp MCD-N

I already recommended McDonalds back on October 1st, when it was trading at $74.51 per share. It’s one of those stocks that are fuelling the American Economy since the 2008 crash. As I mentioned you can’t really go wrong supporting this global fast-food empire. While a hamburger may be a bargain at McDonalds the stock price certainly is not. McDonalds is not the kind of stock you will ever buy at a low price. McDonalds hit over US $80 on December 7th, and is currently showing some downward pressure and selling – a little patience will pay off. But be nimble and quick, because this stock will be a buy sooner than later. While the P/E ratio is high at 17.06, it does have a nice McDividend of 3.2%. I can taste the grease and long-term profit just thinking about it.

The Canadian Banks

Here is the irony. Go to your bank and open a one year GIC with a 5k minimum and you will be lucky to get 1.65%. On the other hand buy a Canadian bank stock, and you will get at least a 3.5% dividend yield and potential capital appreciation on the share price as well. Not to mention most of the Canadian banks will be raising their dividends in 2011.

I wrote about the Canadian Banks on October 9th, as to whether they were overvalued or a good buy. I’m not sure exactly where Canadian Banks are headed in 2011, or whether they are good value or twice the price they should be. Regardless the Canadian Banks have good dividend yields, are going to be increasing their dividends in 2011, and have reasonable Price to Equity ratios. TD and Scotiabank are showing the most promise for the year, but Royal Bank may be the underdog. I would have chosen BMO because of its higher dividend yield, but it currently shows negative cash flow, and a negative cash to price flow ratio.

Happy New Year in 2011, and happy stock picking!

Disclaimer

The Dividend Ninja is not a professional financial advisor or an investment dealer. This website does not offer professional or financial advice, and is intended to provide general information only. The Dividend Ninja is not responsible for the investment decisions you make. You should consult with a professional financial advisor before making any investment decisions. Please note this site also offers advertising by third parties. The Dividend Ninja does not endorse or guarantee these services. Be prudent and cautious. Do your own research, and only invest in what you understand!

16 Responses to “My Stock Picks for 2011”

  1. Agree on the Canadian banks. I’m picking BMO for 2011.

    Reply to this comment
  2. The Dividend Ninja

    Jan 08. 2011

    @Jaymus BMO is looking good! A better choice than Royal Bank I think. I chose Royal Bank at the time instead of BMO. Hmmm, time will tell.
    @Andrew Thanks !! :)

    Reply to this comment
  3. Good list. I took a further peak at CDL.A

    Reply to this comment
  4. The Dividend Ninja

    Jan 13. 2011

    @PIE You’ll like Corby Distilleries, it’s a good dividend paying stock, stable and well established. I estimate its worth $20 per share and has recently broken from the $16 support level. Thanx for posting!

    Reply to this comment
  5. youngandthrifty

    Jan 16. 2011

    I LOOVE your site! Very eye-catching and clean.

    Love this post too- I picked up BMO earlier on and am excited for the dividends.

    I HAD NO idea that Le Chateau gave out a 6% dividend! I always walk by Le Chateau (and used to buy Le Chateau clothes in Grade 9) and wonder: “who on earth would buy these trashy clothes?” Obviously lots of people do otherwise it wouldn’t stay in business for 60+ years. :)

    And a P/E of 9 in the clothing industry? That’s pretty awesome.

    I was watching on BNN the other day how Aeropostale has been doing really well too (it’s like Le Chateau but more casual and cheaper)

    Reply to this comment
  6. The Dividend Ninja

    Jan 16. 2011

    @youngandthrifty
    Hey thanks so much for the compliments, I’ve really enjoyed creating the Dividend Ninja :) Yah Le Chateau, who would think? – especially through the recession in the 90′s. But the numbers speak for themselves! Aeropostale looks interesting as well, but I think it will be slower growth than Le Chateau,but definitely more stable. It all depends on their branding and popularity. Have a nice evening, like UR site as well.

    Reply to this comment

Trackbacks/Pingbacks

  1. Some lazy linking to things I liked this week « RealizedReturns - January 7th, 2011

    [...] My Stock Picks for 2011 – Dividend Ninja » New Years Resolution: I quit – Yes, I Am Cheap » Truly [...]

  2. Weekend Reading 1/8/2011 — Dividend Monk - January 8th, 2011

    [...] My Stock Picks for 2011 Dividend Ninja shares his views on some specific stocks for the new year. [...]

  3. Weekend Reading 1/8/2011 — Dividend Monk - January 8th, 2011

    [...] My Stock Picks for 2011 Dividend Ninja shares his views on some specific stocks for the new year. [...]

  4. Weekly Reading Links 1.8.2011 - January 8th, 2011

    [...] Stock Picks for 2011 by The Dividend Ninja [...]

  5. The Dividend Ninja » Stock Picks for the Dividend Growth Index - October 4th, 2011

    [...] dividend investor’s flock to this company. I covered Husky Energy back in December 2010 – My Stock Picks for 2011. I outlined the reasons why I felt Husky was an excellent long-term investment opportunity, even [...]

  6. The Dividend Ninja » Is McDonalds Overpriced? Part-1 - December 20th, 2011

    [...] was one of my Stock Picks for 2011 in December 2010. I also recommended MCD in Three US Stocks For Your RRSP back in October 2010, [...]

  7. The Dividend Ninja » The Dividend Growth Index – Q4 Results 2011 - January 4th, 2012

    [...] one of my favourite stock picks since I started writing about the company back in December 2010, in My Stock Picks for 2011. Even Young & Thrifty chose Husky recently for her HOT Stock Picks for 2012. Husky currently [...]

  8. The Dividend Ninja » The Dividend Growth Index – Q4 Results 2011 - January 4th, 2012

    [...] one of my favourite stock picks since I started writing about the company back in December 2010, in My Stock Picks for 2011. Even Young & Thrifty chose Husky recently for her HOT Stock Picks for 2012. Husky currently [...]

  9. The Dividend Ninja » Ninja’s 2012 Canadian Stock Picks – Part 1 - January 12th, 2012

    [...] first recommended Husky Energy back in December 2010, in My Stock Picks for 2011. At that time Husky was trading over $26 share. If you had of bought husky then, your stock would [...]

  10. Is McDonalds Overpriced? Part-1 | The Dividend Ninja - January 7th, 2014

    […] was one of my Stock Picks for 2011 in December 2010. I also recommended MCD in Three US Stocks For Your RRSP back in October 2010, […]

Comments are closed on this blog