11. General Electric (GE) is, at last, ready to roar. This another firm that somehow believed the market is dumb enough, and its participants stupid enough, to accept finance profits with the same love that they do industrial profits. That era had a shelf life, and it has come and gone. Now GE gets it. It's done shutting down the really toxic part of its portfolio, and now it is going to spin off the part that is actually likeable but not core, like U.S. credit cards. The remaining company is a solid manufacturer of important parts of planes, turbines, locomotives, appliances, medical equipment (just an OK business) and oil and gas. If GE makes two more acquisitions in the oil-and-gas area, I think it will be able to call itself an energy and energy-saving company, although that would be deeply aided by selling the slower-growing healthcare business.
I believe this stock will get back to the $40s this year based on solid worldwide economic growth, and given the cutting loose of the millstone around the company's neck. Action Alerts PLUS owns some. I want to double down, because I think the order book will be much more robust this time next year than it is now, and this stock is going to begin trading on orders, not tax shenanigans and sale leasebacks.
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12. Goldman Sachs (GS). This is another company that will benefit from the Volcker rule. What people don't realize about Goldman Sachs is that it used to be the foremost customer-centric house, and that it shunned the making of profit with its own money. It was all about the client, and I think that was one of the reasons the stock always had a premium multiple and not a discount one. The shackles for the stock were all Volcker in nature, meaning the risky transactions were very unrewarded by the marketplace because of that potential risk.
As a Goldman Sachs alumnus, I for one am grateful for the change, and I don't even think it will damage the firm's earnings power. In fact, I believe it will increase the price-to-earnings multiple dramatically. The Street is looking for earnings of $16 per share in 2014, but I think initial public offerings will continue to be strong, and that mergers and acquisitions will get much stronger, so I believe Goldman could do $20 and it will get at least an 11x on that. Yep, I think $220 is in the cards for Goldman Sachs as the Volcker rule allows its old glory to return. Hey, did I ever say I was from the consensus?
13. Home Depot (HD) stock has been stalled in the high $70s long enough. If housing prices are coming back despite the increase in U.S. Treasury interest rates, then we are going to begin to see the real spend on the home. Right now, as CEO Frank Blake told me in a recent interview, the U.S. is still running way below its traditional spend on homes as a percentage of gross domestic product. That should step up very big in 2014, especially if employment improves.