Kiplinger’s 2014 Stock Picks: Readers Weigh In
What's old is seemingly new again. Of the top two finishers in our online poll assessing the potential of seven stocks featured in the January 2014 issue of Kiplinger’s Personal Finance, one company boasts ties to Thomas Edison and the other traces its roots to Aaron Burr. Both stocks would’ve looked equally at home in your grandfather’s portfolio as they would in yours today.
See Also: 2014 Investing Outlook: Special Report
The two venerable stocks that proved most appealing to our readers are General Electric (GE) and JPMorgan Chase (JPM). GE, founded in 1892 through the merger of electric-light manufacturers Edison General Electric and Thomson-Houston, garnered a decisive 29% of the 1,043 votes cast. In 2014, the global conglomerate should benefit from an improving world economy, we wrote in the January issue. GE investors, in turn, should benefit from dividend hikes, share buybacks and an above-average stock yield.
Twenty percent of readers think runner-up JPMorgan will be the best-performing stock among the seven choices in 2014. Despite being mired in controversies over the past two years, it’s “one of the best-run banks, with a strong balance sheet and a compelling international investment-banking operation,” we wrote. Its legal and regulatory woes have suppressed the stock, so its valuation remains attractive. Incidentally, JPMorgan is no stranger to controversy. It began as the Bank of the Manhattan Co., established in 1799 by Burr, who gained notoriety for killing Alexander Hamilton in a duel in 1804.
The next two stocks favored by readers are those of energy companies, albeit from different ends of the energy spectrum. In third place, with 19% of the votes, is Occidental Petroleum (OXY), an oil-and-gas firm that also has operations in chemical manufacturing. We like the fact that it derives the bulk of its energy from North America rather than from unstable regions of the world, plus Occidental “boasts a superb balance sheet, with plenty of cash for dividends and share buybacks.”
Coming in fourth is Cree (CREE). It’s not a household name—at least not yet—but 12% of voters think highly of the company’s status as a leader in the manufacture of energy-efficient light-emitting diodes, or LEDs. The U.S. and other nations are phasing out traditional incandescent bulbs, which paves the way for sales of LED bulbs as replacements. Cree is also dipping its toes in the solar-power industry.
The next two stocks on the list earned just 7% of the votes apiece. Honeywell International (HON), an industrial giant that makes everything from jet engines to smoke detectors, “has turned skeptics into believers,” we wrote in the January issue, as a result of management meeting the ambitious goals laid out in a five-year plan unveiled in 2010. Air Lease (AL), as the name implies, leases planes to more than 75 airlines. The stock has had a bumpy ride since its market debut in 2011, but the share price should take off in 2014 if profits climb, as analysts expect.
In last place, with just 5% of the votes, is Eaton Corp. (ETN). The company, based in Ireland, manufactures all manner of power-management components and systems for cars, trucks, heavy equipment, planes and more. Eaton has the potential to “fire on all cylinders” in 2014, we wrote, as long as the commercial-construction market rebounds.