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TheStreet Open House

10 'High-Quality' Stocks for 2012

NEW YORK ( TheStreet -- Given the volatility the market's endured since August, it's still too early to get confident about a positive finish for 2011.

Europe's leaders seem to have done enough to placate Wall Street for now but the major U.S. indices are still beholden to the latest headlines from across the pond. After Friday's rally, the Dow Jones Industrial Average is up more than 5% for the year, but that gain is the result of an 8.5% surge in the past two weeks. The S&P 500 is flat on a price basis, so it really could go either way.

Whatever the rest of the year brings, S&P Capital IQ is feeling pretty bullish about 2012, especially the first half of the year. The firm lifted its year-end 2012 target for the S&P 500 to 1400 from 1360 on Wednesday, citing improved economic data of late and a belief that the low of 1100 in early October concluded a "near miss" correction phase. The index closed Friday at 1255.

The feeling is the rally will come early with the S&P 500 possibly reaching 1400 as soon as the first quarter then becoming vulnerable to another correction phase in the second and third quarters.

Sam Stovall, chief equity strategist at S&P Capital IQ, said in commentary Friday that the fact that the current bull market is entering its fourth year also bodes well with the average price gain coming in at 9.5% in previous instances, more than twice the average advance in the third year. The firm's suggested model portfolio is 60% stocks and 40% fixed income.

"We recommend that a hypothetical 'moderate' investor have a 45% exposure to U.S. equities, 15% holding of foreign stocks, a 25% weighting to bonds, which is below the normal 30% exposure, and a 15% holding of cash, which is up from our normal 10% recommendation," Stovall said.

As for individual stocks, S&P Capital IQ ran a screen to find high quality names for individual investors using its MarketScope Advisor research platform. The 10 stocks that follow met criteria of growing earnings over the past 10 years, having a dividend yield of 3% or more, and ratings from S&P Capital IQ's analysts of either strong buy or buy complemented by proprietary Quality Rankings of B+ or higher.

The full list of stocks highlighted by S&P Capital IQ is as follows: General Electric (GE), Hasbro (HAS), DuPont (DD), Altria (MO), Chevron (CVX), AT&T (T), Harris Corp. (HRS), Royal Bank of Canada (RY), UGI Corp. (UGI), and Abbott Labs (ABT).

Here's some background and a bit of analysis on five of these names: GE, Hasbro, DuPont, Altria and AT&T.

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