10 Stocks for 2013

Barron's list of top 10 stocks for 2013 includes big names like Apple and JPMorgan. Plus, we look at last year's list to see how those stocks did.

As the year comes to a close, there will be a host of predictions about the new year, all of which should be taken with a grain of salt. Even the best investors and advisors can make bad predictions that are terribly off.

There’s a lot of uncertainty for 2013. If America goes over the fiscal cliff, it could fall into another recession as taxes increase and government spending is slashed. However, Barron’s makes the argument that regardless of how the market goes next year, a well-run company should still deliver higher revenue and profits.

This will undoubtedly be the first of a number of stock-picking lists, the majority of which will include some of the same companies.

Barron’s picks from last year are outpacing the S&P 500, but there are some major misses in the midst of their hits. For instance, Freeport-McMoRan, a producer of copper and gold, decreased by 22.5%; however, Seagate Technology gained 76.5%. Overall, the S&P 500 increased by 12.6% while Barron’s list of 10 stocks had an average gain of 17%.

Barron’s is already predicting that all of the stocks listed below could produce between 15% and 20% total returns (including dividends) in 2013.

(In alphabetical order)

Apple

Sector: Technology

Current stock price: $529.79

Three-month percent change: -20%

The tech giant has had a rough few months after two disappointing quarters. Currently Apple is selling near its lowest price/earnings ratio in five years, so it might be time to snap up some shares.

Barnes & Noble’s

Sector: Services

Current stock price: $15.74

Three-month percent change: 39.29%

The company’s bookstore dominates the field and its e-reader holds its own against Amazon’s cheaper device and Apple’s iPad. And yet, the stock price is flat, which could mean there’s room to run.

Blackrock

Sector: Financial

Current stock price: $195.70

Three-month percent change: 10.05%

Just a few months back the company was part of one of the largest insider purchases in the past decade. Clearly someone within the company sees value.

General Dynamics

Sector: Industrial Goods

Current stock price: $68.24

Three-month percent change: 2.9%

This defense contractor also has a valuable nondefense business that makes corporate jets and accounts for almost 30% of General Dynamics’ profits. As of now, that valuable business isn’t reflected in its share price.

JPMorgan Chase

Sector: Financial

Current stock price: $42.31

Three-month percent change: 9.16%

One of the top banks and yet it’s trading at a below-average price, according to Barron’s. Sure, it was embarrassed by the $6 billion of trading losses, but Barron’s has reported that JPMorgan could benefit at the expense of weaker European banks.

Marathon Petroleum

Sector: Basic materials

Current stock price: $62

Three-month percent change: 18.41%

Dividends are tricky business next year. The tax on dividends could shoot up to more than 40%. If that doesn’t worry you, though, Marathon’s dividend is at 2.4% now and will probably rise in 2013.

Novartis

Sector: Health care

Current stock price: $62.58

Three-month percent change: 6.16%

Novartis just lost patent protection for its blood pressure drug, but it has a new drug for multiple sclerosis, plus it owns two big assets: eye-care outfit Alcon and generic-drug maker Sandoz.

Royal Dutch Shell

Sector: Energy

Current stock price: $67.55

Three-month percent change: -4.83%

RDS has a dividend yield of 4.4%. Its big bet on liquefied-natural-gas projects has investors worried. However, Barron’s believes that concerns are overdone and the company is a low-risk way to play the energy market.

Viacom

Sector: Communications

Current stock price: $54.71

Three-month percent change: 6.34%

Shares have been hurt by persistent ratings declines at cable networks. Some investors think Viacome is steadily going private; others say it could fetch a sizable premium in a takeover.

Western Digital

Sector: Technology

Current stock price: $38.46

Three-month percent change: -6.61%

Western is the rival of one of Barron’s picks last year, Seagate, which had the biggest gains of any stocks on the 2012 list. Now they prefer Western, which has trailed Seagate all year.

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The information contained in this article should not be construed as investment advice or as a solicitation to buy or sell any stock.