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These 4 Investments Look Like Great Deals In 2012

 December 22, 2011 11:52 AM
 

What a year! If nothing major happens in the next week or so, it looks like the S&P 500  will finish the year down by about 3.6%. Try to be careful as you jump for joy.


It's hard to argue against the fact that there's a sideways bias to the market. So how do you make money? Savvy investors have embraced the beauty and power of dividends. And that's exactly where I plan to keep searching for investment ideas in 2012.

Next year, I'd stay away from utilities and integrated oil companies for the most part. Utilities look OK from an interest rate and regulatory standpoint, but many stocks such as Southern Company (NYSE: SO) and Consolidated Edison (NYSE: ED) look a little pricey from a valuation standpoint. As for integrated oil stocks, I think a strengthening dollar (thanks to the euro crisis) will continue to be a problem for oil prices (oil and other commodities are priced in dollars). Stick a fork in this trade. It's done for now...

So... what will work?

Big... Big Pharma -- In the past few years, smart investors who stayed defensive have been well compensated. That's still a good strategy. But it will also pay to play defense with an eye on growth. Large drug companies fit this sleeve. My favorite in this space is still Eli Lilly (NYSE: LLY), which I wrote about earlier this year. Lilly shares have had a more than respectable year, with a total return of about 23%. The company is still sitting on mountains of cash and has a full pipeline of new drugs, half of which are in some sort of regulatory review. The stock still looks cheap with a forward price to earnings (P/E) ratio of less than 10 and a 4.8% dividend yield.

The Two "T's"--Technology and Telecom --
The smartphone will continue to reign supreme as Google's (Nasdaq: GOOG) Android platform and Apple's (Nasdaq: AAPL) iOS continue to duke it out. The real beneficiaries, ironically, aren't these two stocks.

I'm not making any predictions of about either of these stocks one way or the other. Let others do that.


Next Page >>123

Rich
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