Top picks 2013: GE, CDI Corp.

These engineering and industrial stocks are seeing strong turnarounds in their operations.

By TheStockAdvisors Dec 28, 2012 1:12PM
GEBy Benj Gallander and Ben Stadelmann, Contra the Heard

For diversification, we recommend General Electric (GE), our top conservative idea for 2013. This behemoth, with revenues of around $150 billion, operates in many sectors and also offers geographic diversification.

For more speculative investors, one pick that we feel could double from here is CDI Corporation (CDI), which specializes in engineering, technical and staffing solutions.

After suffering dramatically during the recession, General Electric's stock price dropped below $6 and the company -- prudently -- slashed its dividend.

However, General Electric has seen an excellent recovery in its stock price. The dividend has been increased and it is likely that further boosts are ahead.

Our initial sell target for GE is $35.24 so we suspect that lots of price appreciation remains. If it indeed happens, coupled with the dividend, that would make for a lovely return.

As for CDI, the company has implemented a new strategic plan. It seems to be working as revenues have grown nicely to top the billion dollar mark, while net income has doubled in the most recent quarter from last year to $5.4 million, equivalent to $0.27 per share.

The balance sheet remains almost unblemished by debt. Throw on a dividend of about 3% and the returns could be grand.

Insiders are aligned with shareholders' interests as they own almost 28% of the company.

Even though CDI has made an excellent recovery over the last few years, it would not surprise to see another enterprise make a bid for this corporation. If this comes to pass, it would likely be at a significant premium to the current trading price.

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