During the past half century, the financial media has tried to stay abreast of ever-changing investor interest. In the 1950s and 1960s, that meant a deep emphasis on value investing, as investors searched for stocks that looked like great bargains in relation to their balance sheet strength. In the 1970s, the focus shifted to stocks with high-dividend yields in a bid to stay ahead of rising inflation. In the 1980s, 1990s and the aughts, growth investing was the name of the game, though more recently, dividend-paying stocks have shown renewed popularity.
What's next? Perhaps it's wisest to focus on stocks that have all of these characteristics. So I went in search of stocks that do just that:
- Trade below book value
- Have a tradition of rising dividends
- Are expected to boost sales and profits in 2013.
While dozens of stocks meet these criteria, only a few stand out as especially solid values. Here they are...
1. Bunge (NYSE: BG)
This stock trades at 89% of book value, has boosted its dividend every year for the past decade (an average 10% hike), and is expected to boost sales and profits at least 6% in 2012 and again in 2013. Shares currently trade for around nine times next year's profits.
I profiled this stock back in July as a possible beneficiary of our nation's current drought and I noted that analysts at Citigroup expected Bunge to subsequently report a better-than-expected set of second-quarter profits. The stock actually missed the consensus forecast, but has managed to rise anyway in anticipation of an improving 2013 outlook, when analysts expect earnings-per-share (EPS) to rise by 15% to $5.66.
Analysts at Citigroup see earnings topping $8 per share by 2014, and the stock continuing its upward move toward their $95 price target, which is 38% above current levels.