5 Top Stock Picks to Start the Summer

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Our list of stocks to buy for this month all pack a punch in three different ways.

First, following my prediction that retail stocks would be the place to be for 2012, June’s best stocks are those whose bread-and-butter is the American consumer.

In addition, investors are increasingly favoring companies engaged in aggressive stock buyback programs, so I’ve included a few of our biggest share repurchase players in this list.

Finally, with first-quarter earnings under our belt, this list of  stocks represents some of the biggest winners from the past earnings season.

In the current narrow market, the following five stocks represent some of the best buying opportunities out there.

1) Alexion Pharmaceuticals

Alexion Pharmaceuticals (NASDAQ:ALXN). Ever since I first highlighted ALXN in October, this stock has been on a steady climb, gaining nearly 40%.

Sales of Alexion’s blood disorder drug Soliris continue to gain, helping to fuel strong first-quarter operating results. Profits boomed 69% to $45.5 million, or 45 cents per share, and net sales jumped 47% to $244.7 million. Better yet, Alexion was able to beat the Street earnings view by 15%.

Looking ahead, management remains bullish; it has raised its 2012 sales guidance to between $1.07 billion and $1.09 billion and its earnings guidance to a range of $1.65 and $1.75 per share. This also tops analyst estimates of earnings of $1.74 per share on $1.07 billion in sales.

2) Dollar Tree

Dollar Tree (NASDAQ:DLTR) has been on a great run since October, gaining more than 30%. But there’s plenty of upside left to this stock considering its $1.5 billion buyback program and its most recent earnings announcement.

The company recently reported record first-quarter sales and earnings. Earnings jumped 16% to $116.1 million, or $1.00 per share. Over the same period, net sales increased 11% to $1.72 billion. Although the company’s second-quarter guidance just missed analyst expectations, I’m encouraged that Dollar Tree raised its full-year guidance.

3) O’Reilly Automotive

O’Reilly (NASDAQ:ORLY) may have started out as a mom-and-pop auto parts business, but with a $500 million share repurchase program currently under its belt, this company has clearly grown into a major force in the Auto Parts industry.

This company recently announced stunning first-quarter operating results. To start, compared with Q1 2011, net income jumped 44% to $147.5 million, or $1.14 per share. Adjusted earnings weighed in at $1.14 per share, which topped the $1.04 consensus by 10%. Over the same time frame, sales rose 11% to $1.53 billion, beating analyst estimates by 3%.

Looking ahead to the second quarter, the company expects earnings to weigh in between $1.13 and $1.17 per share, while the Street sees $1.17 in earnings per share. The company also raised its 2012 earnings guidance to $4.47 to 4.57 per share, compared with the Street view of $4.51 per share.

4)  Ross Stores

Ross (NASDAQ:ROST) is a bargain apparel and home fashion chain that is known for letting its customers “Dress for Less.” And, as shoppers continue to be judicious with their spending, this business model is clearly paying off.

Thanks to robust sales growth across many of its markets, the company reported a 21% year-over-year jump in profits. Over the same period, total sales jumped 14% to $2.36 billion. Looking forward, the company plans to more-than double its store count and buy back $450 million of its stock in 2012.

I fully expect Ross to continue to show relative strength into the summer months.

5) Verisk Analytics

Verisk (NASDAQ:VRSK) is a newcomer to our list that I added in April, and it’s already posted a tidy little gain.

One reason that this is such an exciting company is that it recently expanded its business operations to include crime-related risk management. Thanks to a series of product launches and acquisitions, Verisk now has national crime databases at its disposal — opening Verisk up to new clients and increasing its attractiveness with existing customers. Plus, it should be accretive to next quarter’s earnings.

In the most recent quarter, Verisk posted 11% sales growth and 13% earnings growth; the company also topped the consensus earnings estimate by 2%. Verisk is also in the middle of an aggressive stock buyback program; the company plans on repurchasing an additional $267.9 million of its own shares.


Article printed from InvestorPlace Media, https://investorplace.com/2012/06/5-top-stock-picks-to-start-the-summer-alxn-dltr-orly-rost-vrs/.

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