The trend is your friend. It's one of the most basic and
powerful concepts ofinvesting .
The past four years have been a great example of that. After
rebounding sharply In March of 2009, the averages have been on a
miraculous run higher, defying all the bears and negative data to
hit a series of new multi-year highs. Any pullback in the past four
years was a chance to buy low and score quick gains. Take a look at
the big rebound in the S&P 500 below.
Thebullish trend in 2012 lifted many individualstocks to even
bigger gains. The list includes
Priceline Inc. (Nasdaq: PCLN)
, up 24%;
Apple Inc. (Nasdaq: AAPL)
, up 25%; and
Amazon (Nasdaq: AMZN)
, up an impressive 43%.
But even though these were the stocks that stole the headlines
in 2012, there was another group of stocks that beat them all.
In fact, the lowest return in the group was 74%, with the
high clocking in at an eye-popping 173%.
I'm talking about the 10 stocks in the S&P 500 with the
mostrelative strength in 2012.RSI (relative strengthindex ) is an
important and closely-watched indicator on the Street, helping
traders andfund managers identify overbought or oversold
conditions. The top 10 RSI stocks in 2012 have posted huge gains,
pushing many to new all-time highs. But even though that has pushed
some RSI stocks into overbought territory, signaling potential
weakness in the short run, others are rolling into 2013 with this
kind of momentum.
And that's a good thing. With momentum in hand and a full head
of steam heading into 2013, these stocks are banking on the trend.
Here they are...
Of these 10 stocks, three stand out as particularly good picks
entering the new year...
1. Pulte Group (
Home builders saw huge gains in 2012 as the housing industry began
showing signs of recovery. That definitely includes this
homebuilder, which produced a massive 137% return on the year. And
those gains weren't based on purespeculation , because Pulte has
seen a sharp rebound inearnings as well. The full-year 2012
estimate is up 33% in just the past 90 days, with analysts calling
for earnings of 68 cents per share. The outlook into 2013 is also
bullish, with earnings expected to almost double to $1.29 per
share. These bullish earnings and earnings projections have Pulte
trading at just 13 times expected earnings in 2013, a discount to
themarket and its peers.
2. Expedia Inc. (Nasdaq: EXPE)
Online travel agents have been red-hot, lifting Expedia to a
big-time 95% gain in 2012. Expedia recently made a move to beef up
its international presence, purchasing a majority stake in
German-based travel website Trivago for $628 million.
Theacquisition is expected to give the company access to key
markets all across western and central Europe that are less
saturated than the United States. Expedia is also benefiting from
the mobile trend, with higher booking volumes being driven by
purchases routed through smartphones. Looking forward, analysts are
expecting earnings of $3.28 per share in 2013, a 20% growth
projection from 2012. Although Expedia's forward price-to-earnings
(P/E ) ratio of 25 isn't considered value, higher-growth companies
in high-growth industries typically trade with higher valuations
3. Marathon Petroleum Corp. (Nasdaq: MPC)
Refiners were the best performers in the energy industry in 2012,
posting huge returns as crack-spreads (the profitability of
refining a bare of crude) spiked to record highs. That lifted
Marathon to an 85% gain in 2012. That's the highest amongst
refiners in the S&P 500 Index, according to Bloomberg
Marathon's outsized gain was driven by big upward revisions in
earnings estimates. In the past 90 days, the full-year 2012
estimate has jumped 20% to $9.63 per share. That hasshares of
Marathon trading at just six times projected 2012 earnings, a sharp
discount to the market and its peers.
Risks to Consider:
These stocks have high RSI readings right now, making them
vulnerable to short-term weakness. Momentum stocks are also known
for more volatility than the index or large caps.
Action to Take -->
The bullish trend in the market has lifted many individual stocks
to even bigger gains. These 10 stocks were some of the biggest
winners in 2012, producing returns that trounced the S&P 500.
With the bullish trend still in play, these 10 stocks are in
perfect position to ride that momentum into the new year.
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