3 top buys for novice investors

These picks in oil, autos and finance offer something important for beginners.

By InvestorPlace Dec 7, 2011 11:06AM
Adam Gault/OJO Images/Getty ImagesBy Hilary Kramer


Are you a novice investor wondering which stocks to buy first? Or perhaps you're just looking to put your money to work? Either way, these three stocks are perfect choices for beginners.


Cenovus Energy (CVE) has dipped in recent weeks before bouncing higher alongside the market's surge. Oil prices have firmed up, but even so, CVE isn't a story about near-term earnings. Investing in CVE means investing in long-term growth from Canada's Alberta oil sands as world oil supplies continue to tighten. Production from oil sands increased 14% last quarter and now equals conventional oil production. At a time when many oil companies are expected to have trouble replacing reserves, CVE is set up for double-digit production growth over the next 10 years.


In addition, the stock is attractively valued at just a little over 12 times earnings estimates of $2.35 a share, making it a bargain.


Johnson Controls (JCI) is another quality company with a history of maintaining profitability in tough economic conditions. Longer term, JCI is well-positioned to grow from increased auto usage in emerging markets and the need to conserve energy -- sales in JCI's building-efficiency unit increased 14% last quarter.


The current consensus estimate for fiscal year 2012 earnings of $3 per share may end up too high if the global economy struggles. But with the stock trading below $30, this is largely baked into the share price already. Johnson Controls also raised its quarterly dividend 13% to 18 cents a share. The resulting yield of 2.3% adds to its attraction.


Evercore Partners (EVR)has expanded its role as an emerging leader in merger and acquisitions (M&A) advisory services by participating in many top deals this year, including AT&T's (T) potential acquisition of T-Mobile. I expect to see more of this as Evercore continues to recruit many leading bankers away from bigger firms. Low interest rates should keep M&A attractive because corporations can feel comfortable putting their large cash balances to work and try to gain greater efficiencies in a low-growth environment.


One other interesting note: EVR was in the news recently when it was announced that the U.S. Postal Service had retained it to help with a restructuring. Evercore Co-Chairman Roger Altman is well-connected politically, and federal and state government agencies seeking assistance in streamlining operations could be an additional source of revenues for the company.


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2Comments
Dec 7, 2011 7:02PM
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I don't get the title of this article.  In what way are these three stocks especially suited for novice investors?  How do these stocks "offer something important for beginners?"  Sure, these might be good stock picks, I haven't done any research on them, but what makes a stock good for beginners in particular?  Perhaps these have low volatility or other such characteristics, but those features could be desired by a lot of experts trying to get a balanced portfolio.

 

My first impression after reading the title and then finding nothing in the article saying why these were good for beginners was that this is a high profile (front page of MSN) pump and dump scheme: get new investors who don't know any better to put money into these stocks to raise the price so the author (or someone paying her off) can sell their shares at a profit before these stocks crash.  By giving it this title, it causes most experts to not even look at the article, allowing it to fly under the radar.  I wasn't going to read the article because I don't consider myself a novice, but I decided to read it when I realized how odd the title sounded. 

 

I suppose the real reason for the title is the more mundane explanation that the author wanted the title to be something a little more interesting than "Three Potentially Good Stock Picks," and didn't think through the implications of the title she choose.

Dec 7, 2011 10:11PM
avatar
           Yeah I agree with Which way,

                This article doesn't give good picks for a novice.  I thought a McDonalds or General Mills two companies people have heard of at least.

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