The Bullish Case for 2012: Stock Momentum Ideas

The Bullish Case for 2012: Stock Momentum Ideas

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"A lot of people get upset that I'm very bullish for 2012" says James Altucher. "A lot of people, both citizens and the warlords in our own government, want America, capitalism, the Internet, the economy, all of our established institutions, to go down in flames. I don't know why they want this."

Indeed, the country's economy could greatly benefit from good news. Fortunately, positive economic indicators have been pouring in. Slowly but surely things are starting to look up.

A Bullish Outlook for Year Ahead

Altucher is feeling bullish about 2012. Sure, he says, "housing prices stink," but inventory levels are dropping to the lowest levels since 2006. Home sales have even been up in the past few months.

Corporate profits are at an all-time high, and yes, that makes some people very upset considering the state of everything else, but there's a silver lining. Consider that higher corporate profits put more cash in the bank. "Do you know what happens when cash is sitting around doing nothing?"

Answer: Buybacks. "Announced buybacks for 2012 has hit over $1.1 trillion, the first time this number has breached a trillion. Oh, and guess what, the number of shares outstanding has now gone down for three years in a row, for the first time since 1990." Demand goes up, and so do prices.

Unemployment is 1.2% lower than it was a year ago, and consumer spending is rising. "Personal incomes are actually UP 4% over the past year," so are the number of temp jobs and the average hourly workweek. "Which means full time employment is going to continue to grow, as it has been all year."

Better yet: "Household debt obligations are the lowest since 1993. Mortgages, rents, car loans/leases and other debt services added together divided by income after taxes is the lowest since 1993."

Business Section: Investing Ideas

Each of the positive indicators mentioned by Altucher have had their impact on the markets. As a point of fact, many have speculated negative news was so heavily priced into the market that any good headlines will have a more significant upside than further negativity. This means good news can lead to some quick rallies.

So if you're bullish on the 2012 outlook for stocks, you're probably looking for momentum ideas…

To help you get started, we created a list of about 160 stocks that are in rally mode–trading above their 20-day, 50-day and 200-day simple moving averages (SMA).

In addition, all of these companies are more profitable than their competitors, based on gross and net profit margins.

These rallying momentum stocks have a track record of being more profitable than their competitors–does that make their upward momentum more sustainable?

List sorted by distance from the 200-day SMA.

 

 

1. Delphi Financial Group, Inc. (DFG, Earnings, Analysts, Financials): Provides integrated employee benefit services. The stock is currently trading 32.61% above its 20-day SMA, 51.35% above its 50-day SMA, and 62.21% above its 200-day SMA. TTM gross margin at 15.53% vs. industry average at 14.27%. TTM operating margin at 15.53% vs. industry average at 11.35%. TTM pretax margin at 13.32% vs. industry average at 10.03%.

 

2. Select Comfort Corporation (SCSS, Earnings, Analysts, Financials): Develops, manufactures, markets, and supports adjustable-firmness beds and other sleep-related accessory products in the U. The stock is currently trading 7.55% above its 20-day SMA, 9.61% above its 50-day SMA, and 34.57% above its 200-day SMA. TTM gross margin at 65.2% vs. industry average at 37.95%. TTM operating margin at 11.66% vs. industry average at 9.99%. TTM pretax margin at 11.65% vs. industry average at 9.33%.

 

3. Sinclair Broadcast Group Inc. (SBGI, Earnings, Analysts, Financials): Provides certain programming, operating, or sales services to television stations in the United States. The stock is currently trading 10.07% above its 20-day SMA, 19.90% above its 50-day SMA, and 27.42% above its 200-day SMA. TTM gross margin at 62.71% vs. industry average at 42.31%. TTM operating margin at 31.87% vs. industry average at 18.83%. TTM pretax margin at 17.43% vs. industry average at 15.%.

 

4. Fastenal Co. (FAST, Earnings, Analysts, Financials): The company is engaged as a wholesaler and retailer of industrial and construction supplies. The stock is currently trading 4.72% above its 20-day SMA, 9.44% above its 50-day SMA, and 27.25% above its 200-day SMA. TTM gross margin at 53.68% vs. industry average at 38.09%. TTM operating margin at 20.47% vs. industry average at 13.7%. TTM pretax margin at 20.49% vs. industry average at 12.88%.

 

5. Primoris Services Corporation (PRIM, Earnings, Analysts, Financials): Provides a range of construction, fabrication, maintenance, replacement, water and wastewater, and product engineering services. The stock is currently trading 2.55% above its 20-day SMA, 7.21% above its 50-day SMA, and 26.03% above its 200-day SMA. TTM gross margin at 14.86% vs. industry average at 12.76%. TTM operating margin at 7.09% vs. industry average at 5.46%. TTM pretax margin at 6.79% vs. industry average at 4.45%.

 

6. B&G Foods Inc. (BGS, Earnings, Analysts, Financials): Engages in the manufacture, sale, and distribution of shelf-stable foods in the United States, Canada, and Puerto Rico. The stock is currently trading 1.29% above its 20-day SMA, 7.66% above its 50-day SMA, and 24.59% above its 200-day SMA. TTM gross margin at 34.27% vs. industry average at 32.59%. TTM operating margin at 20.55% vs. industry average at 11.9%. TTM pretax margin at 14.57% vs. industry average at 9.36%.

 

7. NeuStar, Inc. (NSR, Earnings, Analysts, Financials): Provides technology and directory services to its communications service provider (carrier) and non-carrier, commercial business customers primarily in North America, Europe, and the Middle East. The stock is currently trading 0.49% above its 20-day SMA, 2.69% above its 50-day SMA, and 22.70% above its 200-day SMA. TTM gross margin at 77.97% vs. industry average at 48.59%. TTM operating margin at 38.3% vs. industry average at 27.04%. TTM pretax margin at 35.58% vs. industry average at 27.05%.

 

8. Texas Capital BancShares Inc. (TCBI, Earnings, Analysts, Financials): Operates as the holding company for Texas Capital Bank, National Association that provides various banking products and services for commercial and high net worth customers in Texas. The stock is currently trading 6.95% above its 20-day SMA, 11.51% above its 50-day SMA, and 21.43% above its 200-day SMA. TTM gross margin at 82.82% vs. industry average at 71.64%. TTM operating margin at 48.14% vs. industry average at 39.36%. TTM pretax margin at 28.6% vs. industry average at 22.63%.

 

9. Nu Skin Enterprises Inc. (NUS, Earnings, Analysts, Financials): Develops and distributes anti-aging personal care products and nutritional supplements worldwide. The stock is currently trading 0.52% above its 20-day SMA, 0.72% above its 50-day SMA, and 21.27% above its 200-day SMA. TTM gross margin at 84.88% vs. industry average at 71.31%. TTM operating margin at 15.14% vs. industry average at 12.99%. TTM pretax margin at 12.58% vs. industry average at 10.84%.

 

10. Sally Beauty Holdings Inc. (SBH, Earnings, Analysts, Financials): Engages in the distribution and retail of professional beauty supplies. The stock is currently trading 0.22% above its 20-day SMA, 3.43% above its 50-day SMA, and 20.72% above its 200-day SMA. TTM gross margin at 48.78% vs. industry average at 37.95%. TTM operating margin at 13.07% vs. industry average at 9.99%. TTM pretax margin at 10.28% vs. industry average at 9.33%.

 

(Written by Rebecca Lipman, list compiled by Eben Esterhuizen, CFA. Porfitability data sourced from Fidelity.)

 

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