Top picks 2013: Aflac, Thermo Fisher Scientific

These stock picks are top-ranked according to a quantitative rating system.

By TheStockAdvisors Dec 25, 2012 11:17AM
CorbisThis post is one in a series in which over 50 newsletter advisors share their Top Picks for 2013.

By Richard Moroney, Dow Theory Forecasts

Aflac (AFL), a U.S.-based insurer that draws nearly 80% of its sales from Japan, is our top pick for 2013 for yield-oriented investors.

For capital gains, our top idea for the coming year is Thermo Fisher Scientific (TMO), which furnishes research labs with instruments, equipment, flasks, solvents, and analytical software.

Aflac generated record highs for revenue, operating cash flow, and earnings per share in the last 12 months. Growth seems likely to continue in 2013, though at a slower pace.

The stock has returned more than 25% this year but still looks cheap at just nine times trailing earnings, 48% below its 10-year average orice-to-earnings-ratio. Aflac also looks attractive relative to the 10-year norm based on its 2.6% dividend yield, and the dividend has been raised in 30 consecutive years.

In our Quadrix stock-rating system, all six of Aflac's category scores rank in the top 25% of our research universe, and the Overall score is the maximum of 100. Aflac, yielding 2.6%, is a Long-Term Buy.

Thermo Fisher Scientific's free cash flow rose 34% over the past year to $1.63 billion, and management seeks to return half of free cash flow to investors through stock buybacks and dividends.

Budget constraints could put pressure on Thermo Fisher's academic and government research clients (25% of sales). However, the stock's valuation -- just 14 times trailing earnings, a 31% discount to its three-year average, discounts those budget worries.

In our Quadrix stock-rating system, all six of the stock's category scores exceed 50, contributing to an Overall rank of 92. Thermo Fisher is a Long-Term Buy.

More from TheStockAdvisors.com
Tags: AFLTMO
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
274
274 rated 2
447
447 rated 3
698
698 rated 4
633
633 rated 5
652
652 rated 6
650
650 rated 7
491
491 rated 8
268
268 rated 9
125
125 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.