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Author: jjaym Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2753  
Subject: Stocks for 2010 Date: 12/30/2009 10:12 AM
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This is year nine of my end of year exercise to identify what I believe are my top 10 holdings for the coming year. These are the 10 stocks that I already have in my portfolio, that for one reason or another I feel have the best chance of doing well in the next year or so. These are all, of course, only my opinion, and I'd hate for anyone to invest in these, lose their money and blame me. So don't even think of investing in these without doing your own research. Targets are my naive idea of what I think is fair value for each of these. Some turnover this year (not unexpected given 2009’s excellent returns) and a change in focus from retail to Pharma and Biotech. In fact, this may be my most focused New year’s list. This is more from a change in my perception of value than a change in strategy. Once healthcare reform is resolved, there will be less uncertainty and better visibility in the healthcare area, which I think should be positive either way. In general, this years stocks have trailing P/Es of 15 or lower and dividend yields of 2-6%, with a couple of exceptions.

1) MRK – Pharma underperformed in 2009 and MRK has just about the best fundamentals of the Pharmas that I hold. P/E in low teens and around a 4% yield. I’ve held Merck for several years and it has been on my list before. My target price is around $60.

2) AMGN - Amgen is a new holding. Fundamentally sound in a currently underperforming sector. Highest sales and among the lowest p/e of any in the Biotech sector. Target $100.

3) BMY - Bristol Myers is another long-term holding which is still cheap and paying a good dividend. Target $40.

4) BBOX - Black Box moves up another notch and is my first repeat from last year. Still looks good fundamentally and in good shape financially. A Tech stock for a little diversification. Target reduced to $50.

5) PG - Proctor and Gamble has been on my watch list for several years and finally looked attractive enough to buy this year. A pretty safe large-cap. Target of $100.

6) JNJ - Johnson and Johnson is another ultra-safe large-cap healthcare stock that I’ve held for several years. It is well diversified within the healthcare sector. Good P/E and dividend. Target of $95.

7) PFE - Pfizer moves down my list to number 7. Good (but reduced) dividend yield and reasonable earnings. Pipeline concerns are already baked into the price and the Wyeth acquisition may help alleviate some of that. Target reduced to $30.

8) MDT - Medtronic repeats on the list. Had a good, but not great year in stock appreciation. Continues the healthcare theme in medical devices. Target remains at $70.

9) BKS - Barnes and Noble repeats, having given back a lot of the gains from earlier in the year. Earnings are down a bit, but the dividend is still attractive and I expect earnings to eventually recover. Target reduced to $30.

10) T - AT&T has appeared on my list before, but absent last year. Another low p/e; high yield pick. Adds a little diversification by virtue of not being a healthcare stock. Target of $35.


Gone from last year's list are JAS, SCHL, LTD, MSFT, DIS, and AMAT. I continue to hold them all, but in somewhat smaller amounts.
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