'Nine for 2012' First Quarter Review

 | Mar 28, 2012 | 11:29 AM EDT
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With one quarter nearly over it's time for a little review and reflection on my nine calls for 2012. 

1.  Metals will move higher. I had gold at $1,800 last year and silver breaching $40. For 2012, I see gold breaching $2000, and silver again moving back above $40.  The printing presses have been on overdrive, inflation is on the way, and the precious metals will benefit.  This is the Austrian Economist in me coming out.

Gold prices are up about 7% year-to date, while silver is up 17%. Still, there's a long way to go to hit my target prices. But with the government printing presses still running nonstop, metals will continue heading higher. 

2.  Agriculture stocks will do well in 2012. I'm doubling down here; last year I was dead wrong, and the likes of Limoneira (LMNR), Alico (ALCO), Cresud (CRESY) and Archer Daniels Midland (ADM) did not perform well. This year will be different.

So far, this group of agriculture stocks is up an average of about 14.5% year-to date, which is better than the S&P 500 (+12%), but still about as boring as watching the grass grow. Cresud is the winner so far, up more than 22%.

3. On the political front, in a "hold your nose and vote" election, Obama will be defeated in November by Mitt Romney; even if we see an uptick in the economy. The past three years have been a disaster and someone new will be residing in the White House. Republicans will keep the House and take back the Senate. They best deliver. There will be no honeymoon. The electorate is sick and tired, and it does not matter what side of the aisle you prefer. It's crunch time.

No change here. The process is making me weary, though. Make it stop!

4.  Presuming that we see uptick in the economy, tech-related stocks will rebound. I prefer the smaller cheapies with great balance sheets that are loaded with cash, such as Ingram Micro (IM), Tech Data (TECD), Benchmark Electronics (BHE) and Electro Scientific Industries (ESIO) to name a few.

Not much of a rebound here, yet. This group of names is up an average of 10.5% year to date, but that's no great shakes considering how the broader markets have performed. Benchmark is the best performer here, up 25%.

5.  I expect good performance from restaurant turnaround stories such as Denny's (DENN) and Wendy's (WEN), which is on the cusp of eclipsing Burger King for the No. 2 slot in fast food. In addition, I have my eye on Luby's (LUB), which trades below book value, owns significant real estate and has all but fallen off the radar and Frisch's (FRS), which yields 3.3% and also owns a lot of its locations.

This group is up an average of 17% so far in 2012, with Frisch's leading the way (up 39%). Luby's has also done well, (up 25%). Wendy's has officially become No. 2 in fast food, but the stock is sucking wind so far in 2012 (down 6%).

6. In long-shot land, troubled restaurant name Cosi (COSI) will be the subject of more intense activist efforts and the company will be forced to make some major changes. Meanwhile Premier Exhibitions (PRXI) will be the subject of a transaction involving the company's Titanic assets. Remember this is longshot territory and both of the above are as much wishful thinking as they are predictions.

Wins all around here, so far anyway. Cosi shares are up 75% year to date and the activist in this case, Brad Blum, has joined forces with the board. There's also been some speculation that Cosi might be a nice fit for Panera (PNRA).  We'll see about that. As for Premier, which is up 42%, the company is in the process of auctioning the Titanic assets and the results of that auction will be revealed on April 15, the 100th anniversary of the disaster. Hopefully there's a buyer that's willing to pay north of $200 million. This may be the most valuable collection ever on the auction scene. But it must be purchased as an entire collection.

7. Nukes will stage a comeback. Despite last year's disaster in Japan, fears will begin to subside with the realization that there are currently few if any viable alternatives. This will bode well for Energy Solutions (ES).  Meanwhile, the very troubled USEC (USU) will get a reprieve and shares will rebound off of the current $1 area. You might want to put that one in the longshot category, too.

It appears that the fear is subsiding here, although there have been some incidents in the US, including the shutdown of the San Onofre plant in Southern California two months ago. On a brighter note, in February Southern Co (SO) was given approval to build two new reactors at the company's Vogtle plant in Burke County Georgia. That's the first approval of a new reactor in the US since 1978. Meanwhile USEC shares are up 13% year to date, but the company is struggling, as the future of its' American Centrifuge project remains uncertain. Keep USEC in longshot territory at this point.  Energy Solutions is faring much better, and shares are up 66% so far this year.

8. General Motors' (GM) troubles will continue. The Volt will continue to disappoint as will the Cruze. Investors will not embrace this stock in 2012 and it will ultimately live up to the value trap theory. This goes against a great deal of smart money.

GM shares are faring well so far in 2012, up 25%. But the Volt is not doing so well. The demand just isn't there. GM sold just 1626 through early March and three weeks ago the company shut down production. But the Volt is just a bit player for GM. The company did regain its No. 1 status in the industry and some are calling this one of the greatest comebacks in history. Don't tell that to the bondholders, whose position in the capital structure was greatly compromised (putting it mildly) in the bankruptcy. Time will tell. I remain skeptical (and wrong so far in 2012).

9. Real estate finally bottoms out in 2012 and companies such as Tejon Ranch (TRC), Texas Pacific Land Trust (TPL) and even St. Joes (JOE) will begin to appear more attractive to investors.  Did I really just write that about JOE?  I'd actually be a buyer of the company at $10.

Real estate has not yet bottomed, but the three names mentioned above are up an average of 23% year to date, with St. Joe's leading the way (up 31%). I never got a shot at $10 JOE, but who knows?


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