By Michael K. Farr, Managing Director Farr, Miller & Washington, CNBC Contributor

NEW YORK ( CNBC) -- Every year for the last five years, Farr, Miller & Washington publishes our ten favorite names for the upcoming year. I own the list personally. I will sell the previous year's portfolio on December 31st and buy the new year's list.

Names can remain on the list for more than a year, and therefore will be rebalanced to a one-tenth weighting. There is no trading during the year. In the event that a company on the list is taken over, the cash proceeds or exchanged shares (if a stock purchase) will remain in the account for the balance of the year.

Last year's list was defensive, and performance trailed the S&P 500. This list does not represent any offer to buy or sell securities nor does it represent any recommendation to buy or sell any of the names mentioned.
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1. Exxon Mobil ( XOM)

ExxonMobil lagged for much of 2010, but the stock has begun to perform better relative to peers and the S&P 500 in the past two months. This company, like many larger, well-capitalized companies, has been largely ignored this year despite posting positive production growth the past two quarters.

XOM is well diversified between oil and natural gas. Both oil and natural gas demand will improve if the global economy continues its recovery. Longer-term, we believe that there will be upward pressure on oil and gas prices given outsized growth in emerging economies such as India and China. The company has long been known for its capital discipline and thus has generated one of the most stable track records in the energy space.

Moreover, it is one of the last companies on the planet to enjoy a AAA-rated balance sheet. The stock trades at a discount to the market (12.3x 2010 est. EPS and 11.2x 2011 est. EPS) and offers investors a 2.4 percent dividend yield. We find the current risk/reward attractive for long-term investors.

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