Top Stocks

By Jeff Reeves, editor of InvestorPlace.com

If you're wondering whether the economic downturn is over on Wall Street, it depends what you mean by "Wall Street."

If you're talking about stocks and investing, the answer is maybe. In 2010, the S&P 500 index was up about 13%, and most people saw a pretty good year for their 401ks and brokerage accounts. Of course, the S&P is still in the red over the past 10 years, but we've started to see equities bounce back. And January 2011 went down as the best for stocks since 1997, so we could be on the way up.

Then there are those folks who work on Wall Street. If you’re asking whether the downturn is over for them, the answer is decidedly yes. In 2010, total compensation and benefits at the big financial firms hit a record $135 billion.

According to an analysis by The Wall Street Journal, the pay, bonuses and benefits at publicly traded banks and trading firms is up 5.7% from $128 billion in 2009. Of course, it's worth noting that revenue at these companies also hit a record, rising to $417 billion.

 

There are a gazillion reasons Exxon Mobil (XOM) should be going up. It's showing some growth again. It is re-exerting itself as the best, most disciplined integrated oil company. Oil is spiking because of Middle East tension.

But the main reason I like it for the rally is that the analysts actually have cottoned on to the XTO acquisition. Exxon's management got a boatload of questions about it -- in fact it dominated as a topic -- and made you feel like it was a stroke of brilliance -- not the failed overpay that had been the rap, as XTO is natural gas and natural gas was at its peak when Exxon made the purchase.

 

This is a very significant change. Part of the newfound love for Exxon is that the company has got some serious growth -- maybe not earnings but growth -- from this acquisition. To me, that means that others, notably Chevron (CVX), Shell (RDS.A) and Occidental (OXY), are watching, and that means I expect a slew of similar acquisitions now that Exxon is no longer being hectored about it.

 

 

KFC is killing McDonald's (MCD) in China, making all the right moves in the world's second-largest economy.

KFC's owner, Yum Brands (YUM), now has a 40% market share in China compared to only 16% for McDonald's, Bloomberg reports. Yum opens a new restaurant every 18 hours. How is the company so successful? By doing a better job of becoming Chinese.

For investors looking for more exposure to China without buying Chinese stocks, Yum is one way in. Yum shares are at $47.66, up 33% from a year ago.

McDonald's focuses on selling the same style burgers that it sells in the U.S. And there's nothing wrong with that; the Chinese have taken to the burger with, er, relish. 

By Scott Moritz, TheStreet

 

At 3 a.m. Thursday, Feb. 3, on the Verizon Wireless (VZ) Web site, the virtual stampede for Apple's (AAPL) CDMA iPhone is set to begin.

 

But on the eve of this long-awaited arrival, naysayers might wonder if the presumed success of the Verizon iPhone may be just a little bit overblown.

 

The answer will come quickly.

 

Based on the first hours of order volume, Verizon and Apple will have a good idea of how demand stacks up to their internal projections and whether they are likely to hit the 11 million iPhone target that analysts forecast and Verizon has adopted.

 

So what could impede Apple on its latest road victory?

 

By Debra Borchardt, TheStreet

 

"All the trading on Egypt happened last week," said Ben Willis of Sunrise Securities.

 

That may be true for the stock jocks, but the Egyptian crisis is still rippling through the broad market. The Asia is showing the most damage from market fears. Both the Indian BSE Sensex 30 Index and the Philippine SE Index have fallen sharply. Johnson said that for now, the crisis does not look catastrophic, as "Egypt is not that big a part of the global economy."

 

"Geopolitical risk has historically led to temporary market weakness, and that creates an opportunity for buyers," said Jason Pride, the director of investment strategy at Glenmede Wealth Management. The key areas that Egyptian turmoil is affecting are energy, gold, shipping, defense and commodities.

 

Five lawmakers in South Dakota are pushing legislation that would require adults in the state to buy a gun starting in 2012.

This is great news for gun makers like Smith & Wesson (SWHC) and Sturm Ruger (RGR), both of which have seen shares fall since early December. The bill doesn't say what kind of gun people would be required to buy. It suggests only that residents look for something "suitable to their temperament, physical capacity, and personal preference."

There's no chance of this proposal actually becoming law. And the politicians who introduced the bill know it. But they're trying to make a point by comparing the bill to . . . federal health care reform?

"Do I or the other cosponsors believe that the State of South Dakota can require citizens to buy firearms? Of course not," one of the bill's sponsors, a Republican from Sioux Falls, told the Argus Leader. "But at the same time, we do not believe the federal government can order every citizen to buy health insurance." 

If you need a knee or divine a spine, you and your doctor may soon be looking through the Zimmer catalog for a replacement. Fool analyst Michael Olsen sees this stock benefiting from strong demographic trend and a cheap valuation.

 

Rex Moore, Motley Fool Top Stocks editor

 

I'll be the first to admit: I can't measure the environmental consequence of an acidic raindrop halfway across the world. Likewise, as newspapers blare headlines of unprecedented domestic health care reform, a still jobless recovery muddles on, and record budget deficits plague our nation, I'll be the first to acknowledge that a considerable uncertainty surrounds health care stocks.

 

I can say one thing: At around 13 times free cash flow, Zimmer Holdings (ZMH) -- the dominant purveyor of replacement knees and hips, and one of the widest-moat firms out there -- looks screamingly cheap. It boils down to this: People in this fine country (and the world) are getting older, and body parts fail.

 

By Anthony John Agnello, InvestorPlace.com
 

We just finished the best January since 1997. That means we triumphed over so many things: dollar strength (somehow always viewed negatively now that we are an export nation), Chinese inflation, European weakness, Portuguese bond auctions, Irish collapse, weather damage and, so far, chaos in Egypt.

 

We did it without employment growth. We did it without any sign of a turn in housing, just stability, and even that's been questioned or dismissed by people bearing a survey or two that shows things aren't up to what we expected by now. We did it in the face of rampant commodity inflation that was supposed to destroy the margins of just about everything but has really impacted only the likes of Procter & Gamble (PG) in a way that nobody seemed to see coming.

 

We had a January rally despite constant harping that we were already too high, that we have stretched valuations and that we have come up too far too fast. We did it despite tremendous hand wringing that the best trade was the short trade -- betting against stocks.

 

 

If you believe in the Super Bowl Indicator, then Sunday's game is a win-win for the market.

The indicator refers back to the time when there was a National Football League and an American Football League, and says that stocks see full-year gains when an NFL team wins. This indicator proves correct nearly 80% of the time.

If that holds true, then investors can't go wrong this year. Both the Pittsburgh Steelers and the Green Bay Packers hail from the old NFL (before the league merged with the AFL). If that isn't enough reason to cheer, the Pittsburgh Post-Gazette points out that the market has never had a losing year when the Steelers were in the championship game.

So full speed ahead, right? Not so fast. The Wall Street Journal says the man credited with coming up with the Super Bowl Indicator simply meant it as a joke. 

By Don Dion, TheStreet

 

Here are six ETFs to watch this week.

 

1. Market Vectors Agribusiness ETF (MOO)

 

The agriculture industry remains on the minds of investors as rising food prices continue to steal headlines around the globe. Investors looking for equity exposure to this industry should turn their attention to MOO.

 

Boasting exposure to equipment producers such as Deere (DE) and agriculture chemical companies such as Potash of Saskatchewan (POT), MOO provides investors with broad access to companies responsible for satisfying global food demand.

 

On Tuesday, top MOO component Archer Daniels Midland (ADM) will release its quarterly earnings performance. The bar appears high because earnings performance so far from other agribusiness players -- including DE, POT, Monsanto (MON) and Mosaic (MOS) -- has been impressive.

 

By Anthony John Agnello, InvestorPlace.com

 

Amazon.com (AMZN) has always embraced new technology in its never-ending pursuit of consumers' digital dollars. From its one-stop retail model to its Kindle electronic reader, Amazon continues to break ground in the modern retail business.

But it has had a few notable blunders in its quest to remain the dominant shopping site for Americans. When music made the jump from CD to MP3, Apple (AAPL) and its iTunes all but cornered the market in 2003. Amazon didn't open its own MP3 store until late 2007. And as Netflix (NFLX) has revolutionized the home video biz via online streaming, Amazon has been left in the dust selling DVDs and the occasional downloadable movie with nary a streaming title to be seen.

But at least on the streaming video front, the online retailer is looking to make up lost ground. Amazon.com is overhauling its premium shopping service to help it evolve into an on-demand, instant video streaming service akin to Netflix.

 

You may be trying to cut MSG out of your diet, but you should consider some for your portfolio. Jim Royal is buying some today for his Special Situations port, and here's why.

 

Rex Moore, Motley Fool Top Stocks editor

 

If you've been following my Special Situations portfolio, then you know I like spinoffs. And the stock I'm buying today is just such a play. Madison Square Garden (MSG) was spun off from Cablevision Systems (CVC) about a year ago. While I usually try to get in closer to the spinoff date in order to take advantage of inefficient spin dynamics, Madison Square Garden still offers value, despite a run-up in the last six months.