This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The 3 Hottest Sectors for 2012

Auto-parts suppliers such as Lear (LEA) and Magna International (MGA) are 30% to 40% off of their 52-week highs and look awfully tempting trading at seven or eight times projected 2012 profits. Yet two publicly-traded auto stocks may be the biggest bargains of all, trading at even lower multiples. GM (GM) represents the biggest value in the group, as its entire operations are assigned zero value after its net cash is excluded from the market capitalization. Ford (F) represents the better operator of the two. Which one appeals the most depends on your investing preference.

3. Consumer discretionary

For the past three years, we've been hearing tales of consumer deleveraging. Millions of Americans have sought to repair their personal balance sheets by paying off credit card loans, shortening vacations and getting a little more use out of old clothes and appliances.

The retrenchment in spending has been partially fueled by fears that the U.S. economy may fall off a cliff. But it's becoming apparent that the worst-case scenarios for the U.S. economy simply won't come to pass. This should, with each passing month, make consumers a little less cautious. Few expect a spending boom in consumer discretionary spending, but even a modest upturn would have an outsized effect for any businesses that operate with high-fixed costs and low-variable costs.

Does this mean consumers will replace aging washing machines and dishwashers? If so, then Whirlpool (WHR - Get Report), trading at around six times projected 2011 profits, looks like quite the bargain. Will Mom and Dad treat the kids to a vacation instead of a "stay-cation?" If so, then Disney (DIS - Get Report), trading at levels seen back in 1998, may get a solid lift.

For my money, the major airline and hotel stocks stand out as consumer discretionary subsectors with the strongest upside potential. Both of these industries may sell more plane seats and hotel rooms, respectively, so they may be able to boost prices for each seat and room as well -- a double-barreled gain that could greatly enhance profit margins. Delta Airlines (DAL - Get Report) should fare very well in a slowly-improving economy -- if oil prices don't shoot through the roof. In the lodging space, keep an eye on Starwood Hotels (HOT - Get Report), Marriott International (MAR) and lodging REIT Host Hotels (HOST), all of which are well off of their 52-week highs.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
C $46.68 0.86%
DAL $42.17 1.20%
DE $84.29 0.21%
DIS $104.36 1.07%
HOT $82.12 8.25%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs