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TheStreet Open House

Merrill Lynch's 10 Favorite Stocks for 2012

Stocks in this article: LNC MRO CTL AAPL APD CBS UNP

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1. Lincoln National (LNC - Get Report)

Company Profile: Lincoln National, with assets of $153 billion, offers annuities, life insurance, 401(k) plans, savings plans, and comprehensive financial planning and advisory services.

Sector Representation: Financials

Share Price: $20.85 (Dec. 5)

Potential Upside: 82.3% based on a price target of $38

Investment Thesis: Analyst Edward Spehar prefers insurance out of the entire financials industry, and Lincoln National stands out because of the potential for dividends and buybacks.

"The company has a 10% return on equity today with some upward bias given that tangible ROE (or an indicator of potential new business returns) is closer to 13% and excess subsidiary capital and free cash flow should allow for balance sheet deleveraging and increased payouts to shareholders (dividends and share buybacks) over time," Spehar writes. "All of these factors suggest that the share price should conservatively move to a 10%-15% discount to book value, in our view."

>>To see these stocks in action, visit the Merrill Lynch's 10 Favorite Stocks for 2012 portfolio on Stockpickr.

-- Written by Robert Holmes in Boston.



>To contact the writer of this article, click here: Robert Holmes.

>To follow Robert Holmes on Twitter, go to http://twitter.com/RobTheStreet.

>To submit a news tip, send an email to: tips@thestreet.com.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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