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Top Picks 2012 Updates Part 3

Today’s Daily Alert features updates on the 2012 Top Picks that begin with letters L through R.

L

Up 75%, Lennar Corp. (LEN, $39) was the second-best performing Top Pick this year. LEN was recommended by Cabot Market Letter Editor Michael Cintolo. Investment Digest subscribers were advised to sell one-third of their...

Today’s Daily Alert features updates on the 2012 Top Picks that begin with letters L through R.

L

Up 75%, Lennar Corp. (LEN, $39) was the second-best performing Top Pick this year. LEN was recommended by Cabot Market Letter Editor Michael Cintolo. Investment Digest subscribers were advised to sell one-third of their position around $36 in the October 10, 2012 Investment Digest (and September 27 Daily Alert). Cintolo currently rates his remaining position in LEN a HOLD. He recently wrote in the December Cabot Market Letter: “Lennar and most homebuilders remain in no-man’s land; they’ve lost some momentum in recent weeks, even as the market has gotten off its duff, but many, including LEN, aren’t far from new-high ground. This company will be reporting earnings in early January (possibly January 11, but there’s no set date yet), and all eyes will be on new orders, backlog and management’s comments about the strength of the housing recovery. Our gut tells us LEN needs more time to digest its excellent gains this year, but over time, we think this leader of the new housing advance has plenty of upside. If you have a profit, sit tight.”

M

Mad Catz Interactive, Inc. (MCZ, $0.55), chosen as a mid-year replacement Top Pick by The Cheap Investor, is down about 5% so far.

McDonald’s Corp. (MCD, $90) was recommended by The Chartist. MCD is down about 10% since the recommendation.

Mobile Integrated Systems, Inc. (MIBI, $0.20), recommended at mid-year by Conservative Speculator, is down about 40% since the recommendation.

Murphy Oil Corp. (MUR, $60) was picked by Hughes Investment Management owner Douglas Hughes. MUR is up about 4% since the recommendation.

N

Netflix, Inc. (NFLX, $91) was picked by $100k Portfolio Editor Ian Wyatt. In a November update, Wyatt wrote, “Netflix got a huge boost when it was revealed that Carl Icahn and his partners took a 10% stake in the stock. And there were brief rumors that Microsoft was interested in acquiring the company. The stock shot from around $60 to nearly $80 during the last week of October amid the news. And the shares have held on ever since, a positive sign of more upside. Whitney Tilson of T2 Partners LLC remarked that Icahn didn’t buy the stake in Netflix because he wants to replace management or monkey with resource allocation or the company’s strategy. He wrote, ‘If someone puts Netflix into play, there will be the mother of all bidding wars.’ ... While I appreciate the pop in the stock, I’m looking for the shares to return to triple-digit territory if and when the company is put on the auction block.”

NovaGold Resources, Inc. (NG, $4) was picked by MMA Cycles Report Editor Raymond A. Merriman. Merriman noted in our July update issue that he was not pleased with his choice, writing, “Unless gold gets back above 1750, I don’t think this stock will do well until gold bottoms, ideally now due in October 2012-Feb 2013. ... Overall, I am not behind this recommendation at this point until the gold cycle bottoms.” As of the latest MMA Cycles Report, Merriman is watching gold for a bottom.

O

Up 110%, OfficeMax, Inc. (OMX, $10) was the best-performing Top Pick this year. OMX was picked by The Turnaround Letter Editor George Putnam III. Putnam still rates OMX a BUY up to $12.

OncoGenex Pharmaceuticals, Inc. (OGXI, $12) is about break-even for the year. OGXI was picked by Medical Technology Stock Letter. Editor John McCamant still rates OGXI a BUY under $20, with a target price of $75.

P

Paychex, Inc. (PAYX, $31) was picked by Hendershot Investments Editor Ingrid Hendershot. Although she declared it fairly valued and downgraded it to a hold in September (reported in the September 19 Investment Digest), Hendershot just returned PAYX to buy last week, in response to a dividend increase. She wrote, “Paychex recently increased its dividend 3% to an annual rate of $1.32, which represents an attractive 4.1% dividend yield. The company also authorized the purchase of up to $350 million of its common stock through May 31, 2014. The increase in the dividend and stock repurchase reflects management’s goal of balancing strategic investment in the business with a long history of enhancing shareholder value. During fiscal 2012, Paychex returned $460.5 million, or 84% of net income, to shareholders as dividends. Buy.”

Up 48%, Royal Bank of Scotland Preferred ‘Q’ (RBS-Q, $23), picked by Global Investing, was the fourth-best performing Top Pick of 2012. In a recent update, Global Investing Editor Vivian Lewis wrote of RBS’ preferred issues, “They still shine in the model portfolio but I am not recommending them again this year because I am worried about taxation of dividends.”