Today’s updates cover companies beginning with the letter M-O, several of which gave investors very nice returns. I’ve included the advisor’s current advice on the pick, whenever available, and given you the return from the date of recommendation through the end of 2013.
MGIC Investment Corp. (MTG) was recommended by George Putnam of The Turnaround Letter, and was our best Top Picks performer of the year, gaining 194.08%! In our Issue 747, July 24, Putnam had this to say: “Our Top Pick for 2013 has performed very well over the first half of the year, but we believe that the mortgage insurer still has plenty of gain potential remaining. MGIC raised new capital in early March, which removed much of the risk of regulatory problems. The ongoing recovery in the housing market will continue to boost the company’s performance. The rise in home prices makes it less likely that homeowners with older policies from MGIC will default, and this reduces losses from pre-2008 business. In addition, an increase in home purchases provides the company with the opportunity to write more new business at very profitable rates. As a result, we expect MGIC to post improving results which should boost its stock price.”
Misonix, Inc. (MSON) Issue 747, July 24, 5.24 Nasdaq), was picked by Geoffrey J. Eiten of OTC Growth Stock Watch. The shares have declined 20.48%.
MTR Corporation (MTRJY) was chosen by Carl Delfeld of Pacific Rim Confidential, and is down 6.13%.
NCR Corporation (NCR) was recommended by InvestTech. Editor Jim Stack said, “When you drive up to an ATM at the bank, use the self-service checkout at the supermarket, or search the gift registry kiosk in a department store, there’s a good chance that workstation was made by NCR Corporation. NCR has become the market leader in financial services hardware with the #1 position in ATMs worldwide. Looking ahead, this company appears to be on a compelling growth track. Earnings per share have been increasing at a double-digit rate over the last few years, and NCR has outlined some aggressive 2015 guidance. Revenue is projected to increase at a 7%-9% compound annual rate, while adjusted operating income is expected to grow at 15%-20% annually over the next three years. The profitability of this firm is also impressive. NCR expects to more than double its free cash flow from $188 million in 2011 to over $400 million in 2015, which equates to a healthy 12% free cash flow yield based on the current stock price. Also, the addressable market for NCR is expanding rapidly as global spending on banking technology is forecast to grow 24% annually out to 2015, while retail tech spending is expected to grow at a respectable 7% per year. Bottom line, NCR’s position as an industry leader, combined with its international expansion potential and solid financial position, should make this an attractive investment for growth-oriented investors.” The shares have risen 29.02%.
Nuance Communcations, Inc. (NUAN) was the choice of Gene Inger of the Inger Letter. The shares have declined 34.9%.
Oakmark International (OAKIX) was recommended by two advisors, Walter Frank of Moneyletter, and Janet Brown of NoLoad FundX. Frank noted, “Our Top Fund Pick is an unusual one for us. We try to avoid a fund that is already in investor’s eyes because of outstanding performance. It is next year’s performer we are looking for, not last year’s. However, we think Oakmark International has the potential to repeat this year. The reason is that Oakmark goes its own way. Its approach digs deep issue by issue to estimate the ‘intrinsic value’ of any investment. Individual stock picking is the pride of Oakmark. But there is something else that contributes to the success of this international fund: asset allocation, which led the fund to an allocation of 25% Japan and 55% Developed Europe. No emerging markets. It is such thinking that makes us pick Oakmark International as our Top Pick for 2013.”
In our Issue 747, July 24, Janet Brown updated her pick, saying “My top investment choice in January was Oakmark International, and it’s done respectably well in 2013, up 9.3% this year through June 30, 2013, and continues to outperform the majority of other funds with similar risk. If you bought OAKIX in January, I’d suggest that you continue to hold it. If you are looking for a fund to buy now, my current choice is Sound Shore (SSHFX). SSHFX has been around since 1985, but the Fund’s value approach is aligned with market leadership in 2013. SSHFX is a value fund that invests in large-cap U.S. stocks. Nearly half of its portfolio is concentrated in financials and healthcare, two of the leading sectors in 2013. SSHFX’s managers aim to buy solid companies at low prices. They focus on large-cap U.S. companies that have a low price/earnings ratio and aim to sell these companies when they’ve regained market favor. If the value funds continue to lead in the second half of 2013, SSHFX should be well positioned, but if market leadership changes in the next six months, I’ll move on to the new leaders.” OAKIX is up 23.39%, and SSHFX has risen 12.71%
Oil Search Ltd. (OISHF) was chosen by Australian Edge. Editor David Dittman commented, “Oil Search is an aggressive growth story with a modest income component. The firm’s key asset is its 29% stake in the high-quality Papua New Guinea liquefied natural gas venture, which is operated by Exxon Mobil. LNG from the project is fully contracted to four key buyers. Oil Search stock slumped in mid-November 2012 after Exxon reported that costs for the project would be higher than previously forecast. A higher Australian dollar has also had an impact, as have torrential rains that have prompted Exxon to bring in special equipment. However, the LNG venture remains on track to deliver strong and stable long-term cash flow for Oil Search beginning in 2014. Oil Search is a strong buy for long-term growth up to $8.” The shares have gained 4.04%.
Oracle Corporation’s (ORCL) was picked by John Reese of Validea Hot List Newsletter. Reese wrote, “Heading into 2013, the sluggish economy has businesses continuing to cut costs wherever they can. They’re also looking more and more to the ‘cloud’ for their technology operations. Both of those factors should mean strong demand for 34.44 Nasdaq) array of cloud-focused, cost-saving products and services. Perhaps more importantly, the firm’s fundamentals are excellent. It’s upped earnings per share each year of the past decade, one reason it gets strong interest from my Warren Buffett-inspired ‘Guru Strategy.’ My Buffett-based model also likes that Oracle could, if need be, pay off its $18.5 billion in long-term debt in less than two years given its $10.3 billion in annual earnings. And it likes Oracle’s 24.9% ten-year average return on equity—a sign the firm has the ‘durable competitive advantage’ Buffett likes to see. My Peter Lynch-based approach is also high on Oracle. Lynch famously used the P/E-to-Growth ratio to find bargain-priced stocks, and Oracle’s 15.9 price/earnings ratio, 19.1% long-term EPS growth rate (based on an average of the three-, four-, and five-year growth rates), and 0.7% dividend yield make for a very solid 0.8 yield-adjusted PEG, a sign that it’s a bargain. (I’m long ORCL.)” The shares have risen 11.79%.