JPMORGAN: These Are The 28 Best Stocks For 2012

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J.P. Morgan recently unveiled its top investment ideas for 2012 in its U.S. Year Ahead 2012.  Though the company is constructive on fixed income securities, the focus is on equities.Specifically, the investment house sees the S&P 500 heading to 1430 by year’s end.  They recommend 65 stocks, with 28 having a 30% or greater implied upside potential.

“Valuation for stocks continues to remain extremely attractive, in our view,” says Thomas Lee, chief U.S. equity strategist at J.P. Morgan. “We believe the most notable distortion is that the equity risk premium remains elevated.”

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[slide
permalink=”st-jude-medical-new-product-launches-1″
title=”St. Jude Medical: New product launches”
content=”Potential to Upside: 30%

Ticker: STJ

Sector: Medical Supplies & Devices

‘St. Jude still has, by our estimation, one of the best pipelines in large-cap MedTech. Over the next 12 months new product approvals should pave St. Jude’s entry into two major new markets: transcatheter aortic valve replacement and renal denervation for drugresistant hypertension.’

Source: J.P. Morgan”
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permalink=”brinker-international-restructuring-core-systems-and-services-2″
title=”Brinker International: Restructuring core systems and services”
content=”Potential to Upside: 30%

Ticker: EAT

Sector: Restaurants

‘We came away impressed with the company’s “better not bigger” focus with all operational initiatives geared toward–and succeeding in–driving improved employee/customer satisfaction to improve shareholder returns.’

Source: J.P. Morgan”
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permalink=”cvs-pharmacy-growth-through-generic-launches-3″
title=”CVS: Pharmacy growth through generic launches”
content=”Potential to Upside: 31%

Ticker: CVS

Sector: Retail

‘We believe healthy PBM operating income growth (driven by generic launches, new business, and streamlining benefits) coupled with stability in the retail pharmacy and ongoing share buybacks should lead to accelerating earnings growth in 2012.’

Source: J.P. Morgan”
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[slide
permalink=”lam-research-leadership-in-emerging-technologies-4″
title=”Lam Research: Leadership in emerging technologies”
content=”Potential to Upside: 31%

Ticker: LRCX

Sector: Semiconductor Equipment

‘Lam Research is poised to capitalise on share gain momentum in its core Etch equipment business as well as benefit from Single Wafer Wet and Bevel Clean, two equipment segments that are relatively small but have significantly outgrown the WFE market over the past 10 years.’

Source: J.P. Morgan”
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[slide
permalink=”viacom-growth-in-cable-television-revenue-5″
title=”Viacom: Growth in cable television revenue”
content=”Potential to Upside: 31%

Ticker: VIA.b

Sector: Media

‘In a healthy but sensitive macro environment, cable networks stand out as attractive earnings generators given their dual revenue streams of advertising and high visibility affiliate fees.’

Source: J.P. Morgan”
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permalink=”crown-holdings-market-share-growth-in-emerging-countries-6″
title=”Crown Holdings: Market share growth in emerging countries”
content=”Potential to Upside: 33%

Ticker: CCK

Sector: Paper & Packaging

‘By 2013, CCK should be on track to gain 5-10 points of market share in key emerging markets such as Brazil and China, along with its dominant share in the Middle East and SE Asia, all of which should drive higher long-term earnings power and FCF generation once volumes are fully ramped.’

Source: J.P. Morgan”
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[slide
permalink=”apple-inc-product-line-refresh-and-momentum-7″
title=”Apple, Inc.: Product line refresh and momentum”
content=”Potential to Upside: 34%

Ticker: AAPL

Sector: Computer and Mobile Hardware

‘Our current estimates point to above-peer revenue and earnings growth, despite current macroeconomic challenges and a large revenue base. Key drivers include increasing sales momentum for iPhone and iPad, as well as sustainable market penetration with the Mac, particularly MacBook Air.’

Source: J.P. Morgan”
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[slide
permalink=”owens-corning-higher-margins-8″
title=”Owens Corning: Higher margins”
content=”Potential to Upside: 35%

Ticker: OC

Sector: Home building & Building Products

‘We note that margins for one of its three main segments–Insulation–remain near trough levels and therefore represent a compelling upside opportunity, while we believe the Roofing segment’s margins can remain well above normalized levels at least through 2012.’

Source: J.P. Morgan”
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[slide
permalink=”the-fresh-market-strength-in-core-customer-demographic-9″
title=”The Fresh Market: Strength in core customer demographic”
content=”Potential to Upside: 36%

Ticker: TFM

Sector: Food Retail

‘Fundamentally, we think TFM is poised for significant growth and has found a niche–the higher-income consumer who is not as price sensitive and wants a quality shopping experience.’

Source: J.P. Morgan”
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[slide
permalink=”las-vegas-sands-positioning-in-macau-and-singapore-10″
title=”Las Vegas Sands: Positioning in Macau and Singapore”
content=”Potential to Upside: 40%

Ticker: LVS

Sector: Gaming

‘In our view, LVS’s growth prospects are superior to those of any other company in our coverage universe, given its strong positioning in the growth markets of Macau and Singapore, low exposure to the U.S. market, and no exposure to Europe.’

Source: J.P. Morgan”
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[slide
permalink=”mylan-new-product-launches-11″
title=”Mylan: New product launches”
content=”Potential to Upside: 41%

Ticker: MYL

Sector: Specialty Pharmaceuticals

‘We see a very strong 2012 ahead for Mylan (MYL) driven primarily by the company’s core U.S. business, which is poised for an extremely strong new product cycle next year.’

Source: J.P. Morgan”
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[slide
permalink=”agilent-organic-growth-and-regional-exposure-12″
title=”Agilent: Organic growth and regional exposure”
content=”Potential to Upside: 43%

Ticker: A

Sector: Life Sciences Tools & Diagnostics

‘We are Overweight on Agilent due to the company’s above-peer organic growth, favourable geographic exposure, credible management, operational excellence, and disciplined capital deployment.’

Source: J.P. Morgan”
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[slide
permalink=”robert-half-international-growing-market-share-and-bottom-line-returns-13″
title=”Robert Half International: Growing market share and bottom line returns”
content=”Potential to Upside: 46%

Ticker: RHI

Sector: Accounting

‘Robert Half International (RHI) is the King Kong of accounting staffing with ~20% market share in the U.S. and should benefit from much faster growth and higher profitability than most staffing companies through the cycle.’

Source: J.P. Morgan”
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[slide
permalink=”allstate-corp-improving-margins-14″
title=”Allstate Corp.: Improving margins”
content=”Potential to Upside: 47%

Ticker: ALL

Sector: Insurance

‘We have identified three areas that should help ALL achieve this normalized EPS goal, including 1) returning homeowners’ margins to the levels of 2003-2007; 2) achieving underwriting profitability in Florida and New York auto, and 3) growing life earnings in areas with high margins and low capital intensity.’

Source: J.P. Morgan”
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[slide
permalink=”broadcom-new-customer-ramp-up-15″
title=”Broadcom: New customer ramp up”
content=”Potential to Upside: 50%

Ticker: BRCM

Sector: Semiconductors

‘We believe BRCM continues to exhibit solid fundamentals that will enable it to keep outperforming the market for the foreseeable future. In 2012, we anticipate the company will experience multiple new customer program ramps utilising its combo connectivity, Ethernet controller and switch, microwave backhaul, and settop-box solutions.’

Source: J.P. Morgan”
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[slide
permalink=”freeport-mcmoran-undervalued-compared-to-fundamental-valuations-16″
title=”Freeport-McMoRan: Undervalued compared to fundamental valuations”
content=”Potential to Upside: 50%

Ticker: FCX

Sector: Metals & Mining

‘We believe, however, that FCX’s stock price is pricing in too negative an outlook for copper prices and not fully valuing the financial strength and flexibility of the company.’

Source: J.P. Morgan”
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[slide
permalink=”accretive-health-demand-for-healthcare-it-17″
title=”Accretive Health: Demand for healthcare IT”
content=”Potential to Upside: 52%

Ticker: AH

Sector: Healthcare IT

‘At a high level, we like Accretive for its unique business model which requires no upfront or incremental investment from a hospital and yet delivers revenue gains to the hospital by bringing efficiency to the collection process.’

Source: J.P. Morgan”
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[slide
permalink=”halliburton-healthy-oil-markets-in-us-18″
title=”Halliburton: Healthy oil markets in U.S.”
content=”Potential to Upside: 63%

Ticker: HAL

Sector: Oilfield Services & Equipment

‘Halliburton is our top pick within the large-cap service sector, heavily discounted because of its high exposure to North America (60% of ’12E revenue). Yes, this market is more cyclical than the others, but is by no means poised to turn down, in our view.’

Source: J.P. Morgan”
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[slide
permalink=”hca-inc-heavy-presence-in-growth-regions-19″
title=”HCA Inc.: Heavy presence in growth regions”
content=”Potential to Upside: 64%

Ticker: HCA

Sector: Healthcare

‘The company’s facilities–with a portfolio biased toward higher quality-ranked properties–are mostly situated in urban markets with faster population growth, and often have one of the leading shares in those regions.’

Source: J.P. Morgan”
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[slide
permalink=”denbury-resources-growth-in-oil-20″
title=”Denbury Resources: Growth in oil”
content=”Potential to Upside: 69%

Ticker: DNR

Sector: Oil & Gas

‘The company is among the oiliest in our coverage group (93% of current production is oil). Since trough E&P stock prices in March 2009, DNR is up only 52% versus the EPX which is up 151%.’

Source: J.P. Morgan”
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[slide
permalink=”nrg-energy-strong-stable-cash-flows-21″
title=”NRG Energy: Strong, stable cash flows”
content=”Potential to Upside: 70%

Ticker: NRG

Sector: Electric Utility

‘NRG Energy matches a naturally short retail supply position with a naturally long power plant fleet. We project this drives stable EBITDA and FCF, which represents a FCF yield of ~20% today.’

Source: J.P. Morgan”
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[slide
permalink=”pioneer-natural-resources-undervalued-compared-to-peers-22″
title=”Pioneer Natural Resources: Undervalued compared to peers”
content=”Potential to Upside: 77%

Ticker: PXD

Sector: Oil & Gas

‘One operational catalyst stands out: drilling results from its new Horizontal Wolfcamp Shale play. If Pioneer can deliver strong well results, the stock likely will perform well.’

Source: J.P. Morgan”
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[slide
permalink=”citigroup-undervalued-compared-to-peers-23″
title=”Citigroup: Undervalued compared to peers”
content=”Potential to Upside: 82%

Ticker: C

Sector: Financial Services

‘On a full-year 2012 basis, we recommend Citigroup (C) because it has been overly beaten down due to concerns about weak markets and fallout from the Eurozone including in the emerging markets. However, emerging markets should have a lesser impact and likely quicker recovery from a slowdown.’

Source: J.P. Morgan”
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[slide
permalink=”cree-industries-sector-growth-24″
title=”Cree Industries: Sector growth”
content=”Potential to Upside: 87%

Ticker: CREE

Sector: Semiconductors

‘Cree is our top pick in the LED sector as roughly 75% of its revenue already comes directly from sales related to LED-based lighting. We expect this to increase further in 2012.’

Source: J.P. Morgan”
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[slide
permalink=”consol-energy-strong-shale-reserves-25″
title=”Consol Energy: Strong shale reserves”
content=”Potential to Upside: 94%

Ticker: CNX

Sector: Coal

‘We believe Consol Energy is a special situation within the coal sector with some of the best remaining coal assets in Appalachia and a rapidly growing gas business.’

Source: J.P. Morgan”
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[slide
permalink=”nexen-new-lines-begin-production-26″
title=”Nexen: New lines begin production”
content=”Potential to Upside: 95%

Ticker: NXY

Sector: Oil & Gas

‘We believe NXY offers a rich catalyst slate as new volumes from the Usan project come online in 1H12, delivering higher margins and loftier cash flows; exploration and appraisal activity continues, especially in the Gulf of Mexico and West Africa.’

Source: J.P. Morgan”
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[slide
permalink=”zipcar-strong-balance-sheet-and-growth-prospects-27″
title=”Zipcar: Strong balance sheet and growth prospects”
content=”Potential to Upside: 111%

Ticker: ZIP

Sector: Transportation

‘Zipcar is the global leader in auto-sharing, with over 75% share of the market and competitive advantages through scale and reach, size of balance sheet, unrivalled transactional and customer data, differentiated technology infrastructure, and branded self-service experience.’

Source: J.P. Morgan”
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[slide
permalink=”united-continental-holdings-best-in-class-pick-28″
title=”United Continental Holdings: Best-in-class pick”
content=”Potential to Upside: 124%

Ticker: UAL

Sector: Airline

‘With AMR’s recent bankruptcy filing, we believe the benefits to UAL will prove most pronounced given UAL’s network overlap and a more favourable labour cost outcome.’

Source: J.P. Morgan”
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[slide
permalink=”barclays-2012-global-top-picks-29″
title=”Barclays 2012 Global Top Picks”
content=”Barclays has its own list out, choosing handful of the same names, but with a variety of others.
Click here to see Barclay’s Global Top Picks for 2012 >
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