Stocks to Buy: Fortune’s 10 Picks for 2013 (ALGN, PNR, GILD, MCO, PAY, USB, F, CMCSA, UL, FMS)

December 5, 2012 by Jon C. Ogg

Fortune is out with its top 10 stock picks for 2013. The list was divulged on CNBC late on Wednesday afternoon and was based on a survey of fund managers based upon solid companies with solid fundamentals. We have shown the stock, a brief note on each, and what the consensus one-year price target is on each from Thomson Reuters. Two tech plays are not going to feel like tech for those of you looking for the next Apple, but there are picks in finance, health, large cap, and even two picks for Europe.

Align Technology Inc. (NASDAQ: ALGN) has the Invisalign lock for dental braces. What is amazing here about this $2 billion market cap is that the stock is around $26.25 against a 52-week range of $22.39 to $39.82. The consensus analyst target is about $34.10 here, implying a consensus upside expectation of about 20%. There is no dividend here.

Pentair Ltd. (NYSE: PNR) was another pick for fluids and water as well as other valves. With shares around $48.25, this is very close to its 52-week high as the range in the last year has been $32.50 to $48.99. The consensus target on this is about $53.65, implying upside of roughly 11% expected. It also has a dividend yield of about 1.8%.

Gilead Sciences Inc. (NASDAQ: GILD) was surprising to see on the list because this winner of HIV and Hepatitis C was one of the best 10 S&P 500 stocks of 2012 so far. It is always interesting when a prior winner is selected again, particularly when this has a $56 billion market cap. At $74.40, its 52-week range is $36.98 to $76.28. The consensus price target of $82.50 offers an implied upside of about 11%. No ongoing dividend here.

Moody’s Corp. (NYSE: MCO) was interesting to see here because of the ratings agencies under so much pressure. The need for new European ratings was the catalyst here. Shares just hit a new 52-week high as well of $49.94 and the prior 52-week range was $32.27 to $49.50 and the market cap is about $11 billion. This one trades above the consensus price target of $48.00 and the yield is only about 1.3%.

VeriFone Systems Inc. (NYSE: PAY) was chosen for its post-turnaround opportunity in payment solutions. This one recovered handily over the last year but has since tanked. Even after a 7% gain on Wednesday to $32.54, the 52-week range is $27.33 to $55.89. With a consensus price target of $43.77, the implied upside to the consensus target is a whopping 34%.

U.S. Bancorp (NYSE: USB) is the big financial winner on this list and it was even one of own picks earlier in 2012 as being one of the 7 safest banks in America. At $31.75, the 52-week range is $25.43 to $35.46 for this $60 billion market cap financial giant. With a consensus price target of $36.83, the implied upside is about 16%. U.S. Bancorp also carries a 2.4% dividend yield, which is likely to rise further in 2013.

Ford Motor Co. (NYSE: F) was chosen for great leadership and being the strongest of the auto companies with bright days ahead. At $11.30, its 52-week range is $8.82 to $13.05. There is also an implied upside of almost 30% here if Ford can reach its consensus price target of $14.67 over the next year. Ford has a market cap of $43 billion and a dividend yield of about 1.8%.

Comcast Corp. (NASDAQ: CMCSA) has been on fire for 2012 and the pick here was based in part on the new revenue streams from NBC. Shares have risen more than 50% from the lows to $36.88 as the 52-week range is $22.37 to $37.96. What stands out here is that Comcast now has a market cap of $98 billion. The cable giant also has a dividend yield of 1.8%.

Unilever PLC (NYSE: UL) is one of the picks from Europe. The consumer goods giant is a mega-cap and its share price of $38.70 compares to a 52-week range of $30.85 to $39.03. This ADR has a 3.3% dividend yield. We would caution that the analysts covering this ADR have a consensus price target that is just under $38.00 here.

Fresenius Medical Care A.G. (NYSE: FMS) was also selected due to it being a dialysis winner here in the U.S. At $35.10, its 52-week range is $31.79 to $39.10 and its market cap is about $21.5 billion. Fresenius yields only 0.9% and its recent adjustment for a 2-for-1 stock split implies an expected upside of roughly 7%.

JON C. OGG

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