10. Don't Just Stand There. Do Something.
Final theme? I am calling it the "Don't just stand there, do something" theme. I am seeing the companies that buy other companies, and the companies that split themselves up into separately traded parts, really bring out a lot of value. When PVH (PVH) bought Warnaco to create a Calvin Klein house of brands, shares vaulted much higher and never came back. After Hormel's (HRL) deal to pick up Skippy, the stock immediately gained altitude and didn't surrender it. ConAgra's (CAG) deal to buy Ralcorp (RAH), and Eaton's (ETN) purchase of Cooper? These were all tremendous moves. As were the break-ups of MeadWestvaco (MWV), Abbott (ABT), Marathon Oil (MRO), ConocoPhillips (COP) and Kraft (KFT).
All of these deals brought instant valuation hikes. They are a reminder that when companies sit there and wait for things to get better, they miss the best opportunities. I believe we are at the infancy of a new merger wave because of all of the cash on the balance sheets -- as well as a new break-up wave, because so much value has been created from those that have already done so.
This is a market desperate for conviction -- desperate to find stocks that can be bought on weakness without worry about Washington. But when that weakness comes, more people leave stocks than return to them. I hope this list helps to remind you what worked in 2012 under those circumstances, and which I believe could work again in 2013.
Looking for more 2013 investment outlooks? Don't miss Jim Cramer's 10 M&A predictions for 2013 and Doug Kass's 15 surprises for 2013.
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