The first week of 2008 was a rocky one for Wall Street, but as far as the overall market is concerned, my outlook for the rest of the year is overall, an optimistic one. U.S exports are surging, our current-account deficit is shrinking and our central banks are fighting inflation. And thanks to solid job growth, and better-than-expected productivity and rising wages, the underlying demand for housing is, believe it or not… rising. Yes, tide is turning, which means great news for the beaten-down banking and housing industry stocks.

So what do we have to look forward to in 2008? The odds are definitely in our favor. The biggest and best surprise will come when the housing market stabilizes and the mortgage industry recovers later in the year. My best advice to you is to stay fully invested in the following 10 stocks for double-digit gains come 2009.

Stock #1:  The first stock that tops my 2008 list is one of the nation’s largest drug-distribution companies. In the first fiscal quarter, revenues rose 9%, and earnings rose 15%. On November 25, after first-quarter results were reported, this company’s Chairman and CEO bought 20,000 shares at $57.50, at a cost of more than $1.1 million. That is a clear statement of his belief that the stock is undervalued, which makes it my first stock to buy in 2008!  

Stock #2:  This popular restaurant chain not only serves up huge portions, it recently increased its share buyback program by five million shares, totaling 7.5 million (10%) of its outstanding shares. Here is a financially strong company with an outstanding track record and solid plans for growth. A year from now, Wall Street will be forecasting earnings of $1.60 to $1.65, and the stock should be on its way to $35! The 2008 prospects for this stock are sweet!

Stock #3:  Not only does this company have a brand-new CEO who vows a “front-to-back” cost overhaul, it also has a huge international consumer business, which is a source of cash and profits that is not yet reflected in the current stock price. Buy this beaten-down bank now… before it makes a full comeback!

Stock #4:  When it comes to family entertainment, this company has it all… network ratings… theme parks… and a CEO who is now orchestrating a major stock buyback program. Best of all: This stock’s price pulled back from $37 (mostly due to the current writers’ strike) creating the ultimate buying opportunity for investors! Click here to get my 12-month target price!

Stock #5:  Two words: Black gold. This big-name oil services company rounds out my top 5 with historically high profit margins. Earnings for 2007 are expected to be $2.55 a share, up 13% from 2006. The long run average P/E ratio is 17, indicating a stock price of $51 within 12 months. Now, oil prices are likely to decline somewhat in the coming months. However, that will not diminish what is the best environment for oil services in three decades. Get my buy price here before you start drilling for profits.

Stock #6:  Liquidity is not an issue for the second bank stock that made my 2008 list. In fact, at the end of the third quarter, this bank had a record $6.3 billion in liquidity! In November, Standard & Poor’s upgraded this beaten-down bank from sell to neutral, and just after the markets closed on New Year's Eve, a well-known analyst did the same thing. I have a good feeling that this is just the beginning of upgrades for the financial sector—there’s no doubt about it: This bank is a survivor!

Stock #7:  After the secondary mortgage market crashed in August, this stock took a dive. But I refuse to give up on it, and here’s why: This company has had an excellent third quarter, reporting earnings of $1.34, up 23%, and its well-diversified. The company’s subdued outlook is due entirely to one of its holdings, which is suffering from the credit crunch. When the credit markets are back to normal again, this stock will take off.

Stock #8:  As one of the world’s largest pharmaceutical giants, this company has an enormous cash flow from a basket of diversified drugs. The stock now trades at a little over 11 times depressed earnings and offers a dividend yield of 5.6%—which is extraordinary for a pharmaceutical company. Stock #8 is also revamping its research and development in an effort to improve the number of promising drugs in its pipeline. This stock is a low-risk investment with above-average potential for capital gains. 

Stock #9:  This drugstore retailer is anything but generic. Recent acquisition of a major competitor chain gives this company a better opportunity to increase sales and profits than originally estimated. Management is already changing the signage, appearance and merchandising to match this company’s brand. One noted analyst says this acquisition could add $2 billion in sales, so he raised his rating to a Buy. Morningstar has even weighed in, aiming for $6 fair value, but I believe this stock’s potential is much greater than that!

Stock #10:  Last but not least, is it finally time for investors to cash in their chips? Not when it comes to this semiconductor giant! This company makes big profits of all of those small memory chips found in leading laptops, cell phones and digital cameras. As consumers spend more and more on their favorite digital toys in 2008, demand for semiconductor chips is certain to skyrocket.

So there you have it: My Top 10 Stocks for 2008! All of the businesses that made this year’s list are all flush with cash, buying back stock like crazy and offering better balance sheets than we’ve seen in decades. So, start the New Year off right by adding my Top 10 to your portfolio today!

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