3 Stocks That Could Rebound in 2011

MILLBURN, N.J. (Stockpickr) -- Every year, investors and the media seem to focus on those stock darlings of the year just passed. In 2010, we had Apple (AAPL), Netflix (NFLX), Chipotle Mexican Grill (CMG) and Salesforce.com (CRM), to name a few.

But what can we learn from looking at the past year's dogs? Sure, some of them sold off and are left to wither away and die. Others suffer from a financial version of the Cinderella complex. But certainly some offer compelling arguments for potential comebacks.

I've identified three such stocks poised for comebacks in 2011. These are not sure things, but they certainly are so disliked that they may provide some opportunities.

Related: 4 S&P 500 Stocks Poised to Rebound

Dean Foods ( DF)

Dean Foods is one of the largest producers of dairy products in the U.S. The company operates under many brands, including Land O'Lakes, Garelick Farms, Mayfield Dairy, Meadow Gold and Silk. What could be more basic to our dietary and health needs than milk, cheese and butter?

The company had a bad year in 2010, a very bad year, with earnings declining nearly 50% from 2009 levels. Dean Foods was one of the worst-performing stocks in the S&P 500, down nearly 50% for the year.

The company is saddled with nearly $4 billion of debt, which is tremendous compared with its market cap of $1.6 billion. This is likely due to historical acquisitions that have a cumulative effect of nearly $3.3 billion of goodwill on the balance sheet. All told, tangible equity for Dean Foods is negative $1.8 billion. Still Dean Foods will earn close to 80 cents for 2010 and could improve a bit in 2011 as it benefits from lower interest rates and increased capacity utilization.

The worst is likely in the rearview mirror for Dean Foods. With expectations so low, a better-than-expected quarter coupled with an analyst upgrade could nudge the stock back to the $12 level -- though not much further. Dean Foods ended 2010 at $8.84

Jake Lynch sees comeback potential in Dean Foods, too, flagging it as one of 10 unloved stocks with upside. Jim Cramer, however, recently recommended it as a stock to avoid.

Intel ( INTC)

Intel is the world's largest semiconductor manufacturer. The company has one of the most advanced teams of engineers developing new and improved semiconductors for use in computers, handheld devices and consumer electronics. During the tech boom of the 1990s, Intel was one of the most overanalyzed companies on Wall Street. It still is, with more than 40 mainstream Wall Street analysts covering the stock.

But Intel, the Rodney Dangerfield of the tech world, seems to get no respect. The company bettered analyst estimates in each of the last four reporting periods and more than doubled earnings from 77 cents in 2009 to an expectation of $2 in 2010. Despite all of that, Intel shares rose a paltry 3% from Dec. 31, 2009, to Dec. 31, 2010, not including its 3% dividend. This compares with a surge of nearly 17% for the Nasdaq Composite in 2010.

The consensus earnings estimates for 2011 of $1.95 are quite understated. With growing demand for technology around the globe and an improving economy, an earnings decline is unbelievable. The company made some excellent acquisitions in 2010, including the purchase of McAfee, which should close in the first quarter of 2011. This all-cash deal should be accretive to Intel's earnings.

In 2010, Intel traded in a range of $18 to $24 but spent most of the year between $19 and $22. In 2011, Intel could get some respect and break out over $25, finally rewarding the Inteloholics who have been patient with this tech giant.

Intel holders include Renaissance Technologies and Ken Fisher. Jim Cramer chose it as one of his favorite Dow stocks for 2011, and according to Jake Lynch, it's one of the 10 Dow stocks with the best three-year dividend growth

Sears Holdings ( SHLD)

Sears Holdings was down and out in 2010. The stock started out the year in glorious fashion, rising from about $90 to about $125 before falling to as low as $60 and finishing 2010 at $73.75. Sears had more twists, turns, climbs and dives than a Coney Island roller coaster.

Honestly, from an operational perspective, while many general merchandise, automotive lawn and garden and appliances and consumer electronics retailers delivered solid to excellent years in 2010, Sears flopped.

When the Kmart-Sears merger first took place, the surviving company held great promise under hedge fund manager Eddie Lampert. Unfortunately he was not able to monetize the company's real estate holdings once the financial crisis struck. Plans to unlock value in its premier Kenmore, Craftsman and DieHard brands have never materialized.

I am hearing some buzz that Lampert could be taking Sears private. While that is speculative, I do know that Lampert is not going to let an improving economy get in his way of finally making something out of this company. I have often said that Sears should buy BJ's Wholesale Club ( BJ) and convert unwanted Sears and Kmart units into wholesale stores.

2011 could be a better year for Sears after 2010, when the company was put on an altar as a paschal lamb to the retail gods. Furthermore, don't rule out a sale or IPO of its Land's End unit.

Sears is not without its fans. Chase Coleman at Tiger Global Management initiated a position in the stock in the most recent reporting period, and it makes up 9.2% of Bruce Berkowitz's Fairholme Capital portfolio.

-- Written by Scott Rothbort in Millburn, N.J.


Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, Rothbort was long AAPL stocks and calls, although positions can change at any time.

Scott Rothbort has over 25 years of experience in the financial services industry. He is the Founder and President of LakeView Asset Management, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of TheFinanceProfessor.com, an educational social networking site; and, publisher of The LakeView Restaurant & Food Chain Report. Rothbort is also a Term Professor of Finance at Seton Hall University's Stillman School of Business, where he teaches courses in finance and economics. He is the Chief Market Strategist for The Stillman School of Business and the co-supervisor of the Center for Securities Trading and Analysis.

Mr. Rothbort is a regular contributor to TheStreet.com's RealMoney Silver website and has frequently appeared as a professional guest on Bloomberg Radio, Bloomberg Television, Fox Business Network, CNBC Television, TheStreet.com TV and local television. As an expert in the field of derivatives and exchange-traded funds (ETFs), he frequently speaks at industry conferences. He is an ETF advisory board member for the Information Management Network, a global organizer of institutional finance and investment conferences. In addition, he is widely quoted in interviews in the printed press and on the internet.

Mr. Rothbort founded LakeView Asset Management in 2002. Prior to that, since 1991, he worked at Merrill Lynch, where he held a wide variety of senior-level management positions, including Business Director for the Global Equity Derivative Department, Global Director for Equity Swaps Trading and Risk Management, and Director for secured funding and collateral management for the Global Capital Markets Group and Corporate Treasury. Prior to working at Merrill Lynch, within the financial services industry, he worked for County Nat West Securities and Morgan Stanley, where he had international assignments in Tokyo, Hong Kong and London. He began his career working at Price Waterhouse from 1982 to 1984.

Mr. Rothbort received an M.B.A., majoring in Finance and International Business from the Stern School of Business, New York University, in 1992, and a B.Sc. in Economics, majoring in Accounting, from the Wharton School of Business, University of Pennsylvania, in 1982. He is also a graduate of the prestigious Stuyvesant High School in New York City. Mr. Rothbort is married to Layni Horowitz Rothbort, a real estate attorney, and together they have five children.

More from Investing

GE Headed to $9.99 a Share?

GE Headed to $9.99 a Share?

3 Ways to Fix Starbucks Biggest Challenges

3 Ways to Fix Starbucks Biggest Challenges

Oracle's Soft Guidance and Move to Not Break Out Cloud Revenues Are Worrying

Oracle's Soft Guidance and Move to Not Break Out Cloud Revenues Are Worrying

General Electric's Boot From the Dow: Is This as Bad as It Can Get?

General Electric's Boot From the Dow: Is This as Bad as It Can Get?

News From Starbucks and General Electric Leaves Their Investors Up in Arms

News From Starbucks and General Electric Leaves Their Investors Up in Arms