I'm not a big fan of predicting the future; it's much easier to second-guess the past. But each year, I grudgingly look back at my previous year's predictions and wince when I've been off the mark, and think it was probably dumb luck when I was right.
With that in mind, I'll try to divine what to expect in 20212 -- here it goes:
1. Metals move higher. I had gold at $1800 and silver breaching $40 in 2011. For 2012, I see gold breaching $2000 and silver again moving above $40. The money-printing presses have been on overdrive, inflation is on the way, and precious metals will benefit. (The Austrian economist in me is coming out.)
2. Agriculture stocks do well. I'm doubling down here; last year I was dead wrong and Limoneira (LMNR), Alico (ALCO), Cresud (CRESY) and Archer Daniels Midland (ADM) did not perform well. This year will be different.
3. In a hold-your-nose-and-vote election, Republican challenger Mitt Romney will defeat President Obama in November -- even if there's 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 had better deliver; there will be no honeymoon. The electorate is sick and tired and it does not matter which side of the aisle you're on, this is crunch time.
4. Presuming we see an uptick in the economy, tech-related stocks rebound. I prefer smaller cheapies with great balance sheets loaded with cash, such as Ingram Micro (IM), Tech Data (TECD), Benchmark Electronics (BHE) and Electro Scientific Industries (ESIO).
5. I expect good performance from restaurant-turnaround stories Denny's (DENN) and Wendy's (WEN), which is on the cusp of eclipsing Burger King for the second spot in the fast food space, behind McDonald's (MCD). I have an eye on Luby's (LUB), which trades below book value, owns significant real estate and has all but fallen off the radar. Also, keep an eye on Frisch's (FRS), which yields 3.3% and owns many of its locations.
6. Long shots. Troubled restaurant operator Cosi (COSI) will be the subject of continued intense activist efforts and forced to make major changes. Meanwhile, Premier Exhibitions (PRXI) will be the subject of a transaction involving its Titanic assets. Remember, these are long shots -- as much wishful thinking as they are predictions.
7. Nuclear power stages a comeback. Despite last year's Japan disaster, fears will subside with the realization that there are currently few, if any, viable energy alternatives. This bodes well for EnergySolutions (ES). Meanwhile, the very troubled USEC (USU) will get a reprieve and shares will rebound off the current $1 area. (You might want to put this one in the long-shot category, too.)
8. General Motors' (GM) troubles 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" knock. This goes against the smart money.
9. Real estate finally bottoms out. Companies like Tejon Ranch (TRC) and Texas Pacific Land Trust (TPL) -- even St. Joe Co. (JOE) -- will begin to look more attractive to investors. (Did I really just write that about JOE? I'd actually be a buyer at $10.)
That's it for 2012. I'll try it again next year.
