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December 18, 2012

A Few Promising Stocks for 2013

By Abby Joseph 

The New Year is fast approaching and with it arises a mixed feeling of expectations and apprehensions about what it will hold for everyone. How will the stock market fare? Will the investors get good returns on their investments? Which stocks look promising in the long run?

Many internet users are hooked on Facebook, Twitter and other social media sites. In recent times, Facebook has been working hard to live up its expectations of the $100 billion valuation (which it had on the day of his IPO), but its efforts have not paid well as it faces stiff competition from peers like Google Inc. in this field. The sales of Facebook related to advertisement too look quite puny as compared with those of Google Inc. and have not developed more than 10% in the consecutive quarters this year.

With a market capitalization of about $73 billion that include options and restricted stock, it closed last week at $26.81. Facebook has striven hard to be in tune with the exclusive requirements of the advertiser and also restructured its marketing team to become industry - friendly around the retail and the automotive sectors.

The month of September saw its staff commence better marketing strategies by questioning advertisers about their requirements. With this background, Facebook looks all set to woo investors with a mobile ad strategy and revenue from the same will append the income that it gets from its “Ad Exchange”, “Search” and “Gifting” programs. So while some experts are of the opinion that Facebook shares may fall down as many companies; feeling that they are not getting apt returns on their investments here are pulling back, the new tactics could well act as a new face for Facebook and aim to lift its stock price to higher levels.

Tablet devices like the traditional smart phones (e.g. iPhone5) and iPads have become quite common these days. Those companies that bring about a revolution in this sector will have cause to see their stocks soar in value. Also those associated with the Phablet, which is the consumer touch-screen device having a screen between five and seven inches and which combines the facility of a smart phone and mini tablet will see brighter days ahead as far as the stock market predictions are concerned.

Netflix (NFLX) is a movie and television show rental service offering media to subscribers through Internet streaming and through the US mail as well. In its third quarter earnings this year, there was a 10% increase in its revenues to $905 million. There was a drop in its profits to $7.67 million by 87.7%. There was an increase of only about 1.2 million subscribers in Q3, which resultantly, downgraded their number from 7 million new users to only 5.4 million, which contributed to the drop in its stock value.

The company’s stock has been slipping in value due to bad news since more than a year. But suddenly it looks as if Netflix will soon see sunny days. In the first week of December a deal was announced between Disney and Netflix. While currently, Disney’s movies and shows are being aired on Starz network and the company is also searching for new paths for the distribution of its content, with effect from 2016, Disney's titles from Walt Disney Animation, Marvel, etc. can only be watched by Netflix's subscribers on the televisions, computers, phones and tablets. In addition, from the year 2013, the pay-TV rights over all the new Dreamworks releases will be taken by Netflix. All these are indications that Netflix could bounce back and its stock could be a force to reckon with in the year 2013, considering its advanced technology and enhanced interface with which the company compiles data based on the habits of viewers and which content producers desperately are in need of.

Eaton, a diversified industrial firm (ETN) is soaring high with its shares having risen more than 18% year to date. The last ten years have seen the company revolutionize itself from a cyclical truck-and-industrial equipment- maker into a power-management company that lays prime importance on energy-management solutions; a spectrum which has been witness to a strong material growth even as companies grapple with issues of mounting energy costs and resourceful equipment. The company’s stock has been performing well and now with the imminent acquisition of the Cooper Industries, it will be profitable news for Eaton’ stocks, considering the magnitude of the deal; the largest so far for Eaton, in fact, to the tune of $11.8 billion. Plus there is the advantage of the increased exposure to the North American market. All these conditions look favorable for Eaton to see its stocks rise in value as we enter into next year!   

About the author: Abby Joseph is a writer and investor in stock market. To know more about stock about latest stock predictions, visit here.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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