5 Large-Caps Flirting With 52-Week Highs

NEW YORK (TheStreet) - The S&P 500 is down more than 6% for the year but certain stocks are continuing to rally to fresh highs despite the selling pressure. Once a stock peaks to new 52-week highs, it comes under increased attention. This can be either positive or negative for the stock depending on the situation. The following stocks recently hit 52-week highs, showing strength in an overall weak market.

The majority of the stocks discussed here belong to the food and beverage sector, a classic defensive bet that does better in an economic downturn. In addition, three from this sector, Starbucks ( SBUX), McDonald's ( MCD) and Yum! Brands ( YUM) are expanding operations and gaining traction in the emerging markets.

The last stock to consider here is from the energy sector, Plains All American Pipeline ( PAA). With oil prices reaching close to $100 per barrel, PAA is worth a second look.

Based on average estimates of analysts polled by Bloomberg, these five stocks have potential upsides ranging from 5% to 12%. Of analysts covering the stock, an average of 69% recommend a buy.

The stocks are listed in ascending order of upside potential.

5. Plains All American Pipeline ( PAA) is engaged in the transport and marketing of crude oil and petroleum products. It is also develops and operates natural gas storage facilities.

For the third quarter of 2011, PAA reported net income of $281 million, compared to $81 million in the year-ago quarter. EBITDA stood at $421 million, up 205%. The Supply & Logistics division registered 235% increase in profits, year over year. PAA declared quarterly distribution of $0.995 per unit, about 4.7% higher than the year-ago payout and 1.3% from the second quarter.

The company has increased the mid-point of 2011 adjusted EBITDA guidance by 26% to $1.5 billion from the initial guidance of $1.2 billion, an increase of 40% from fiscal year 2010. PAA is increasing its 2012 distribution growth target 8% to 9% over the current annualized distribution of $3.98 per common unit.

The company plans to convert an existing Oklahoma liquefied petroleum gas pipeline into a crude oil service, which, in turn, would provide the desired capacity for growing crude oil production in the region. This new service will provide initial crude oil throughput capacity of 12,000 barrels per day by January 2012 and increase to 25,000 barrels per day by Jul. 2012.

Earlier this month, PAA announced that Plains Midstream Canada ULC, a wholly owned subsidiary, has entered into a definitive agreement with BP to acquire its Canadian natural gas liquids and liquefied petroleum gas business for $1.67 billion.

The company is a rare combination of both value and income. It is trading with a P/E of 13.9, yet has a dividend yielding 6.2%. It is currently trading at $68.24 and has a 52-week high of $68.73. Of the 15 analysts covering the stock, 80% recommend a buy and the rest suggest a hold. Analysts' average 12-month price target for the stock is $72.09, about 5.6% higher than the current price, according to Bloomberg.

4. McDonald's ( MCD) franchises and operates restaurants. It is the world's largest fast-food chain operating more than 33,000 restaurants and serving over 64 million people in 119 countries each day. More than 80% of McDonald's restaurants worldwide are owned and operated by locals.

For the third quarter of 2011, McDonalds reported revenue of $7.2 billion, up 14% from the same period in 2010. The company registered higher global comparable sales of 5.0%, with the U.S. up 4.4%, Europe up 4.9% and Asia-Pacific, Middle East and Africa growing 3.4%. Consolidated operating income increased 14%, while EPS stood at $1.45, up 12%.

In November 2011, McDonald's reported better-than-expected rise in monthly sales at established restaurants worldwide, led by huge gains in Japan, China and Europe. The sales were boosted on the seasonal addition of its Peppermint Mocha drink and the popular limited edition McRib.

The company plans to open 1,300 new restaurants and remodel 2,400 existing restaurants in fiscal 2012.

The stock is currently trading at $98 with a 52-week high of $98.95. EPS is anticipated to grow 10.5% over the next five years. The stock's price surged over 14% in the past 90 days and more than 30% a year ago. Of the 30 analysts covering the stock, 22 recommend a buy on it.

3. Diageo ( DEO) is the world's leading premium drinks business with an outstanding collection of beverage alcohol brands across spirits, beer and wine. These brands include Baileys, Buchanan's and Bushmills whiskies, Captain Morgan, Ciroc and Ketel One vodkas, Crown Royal, J&B, Johnnie Walker, Jose Cuervo, Smirnoff, Tanqueray, Windsor and Guinness.

For the quarter ending in September 2011, Diageo reported organic net sales growth of 9% against the comparable period with volume up 5%. The company registered sales growth across all geographies with North America up 5%, Europe up 6%, Latin America and Caribbean up 30%, Africa rising 9%, and Asia-Pacific registered sales growth of 14%.

Subsidiary East African Breweries commissioned its new brewery in Tanzania. The company is the official partner of 2014 Ryder Cup at Gleneagles. Diageo will use its alcohol brands to promote the 2014 Ryder Cup globally partnering Ryder Cup Europe.

In the past 52 weeks, the stock traded between a low of $71.25 and a high of $86.78. It is now trading at $85.42. We expect the stock to continue the uptrend, and any pullback could be a great opportunity to get onboard. Of the six analysts covering the stock, four recommend a buy and two rate a hold.

2. Yum! Brands ( YUM) is a restaurant company operating over 38,000 restaurants in 110 countries and territories and employs 1 million people. Its portfolio includes company-operated and franchised stores worldwide under the brands KFC, Pizza Hut, Taco Bell, Long John Silver's (LJS) and A&W All-American Food Restaurants.

For the third quarter 2011, operating profit increased 7% in China and 3% at Yum! Restaurants International. Worldwide sales grew 6%, including 29% in China and 8% at YRI. The company plans to open 600 new units in China this year and 900 new units in YRI. Same-store sales increased 19% in China and 3% at YRI.

During the quarter, the company announced a 14% increase in its quarterly dividend. Going forward, the company targets an annual dividend payout ratio of 35% to 40% of net income.

The company plans to buy Little Sheep restaurants in China after clearance from China's Ministry of Commerce. It currently holds 27.2% of the outstanding shares of Little Sheep.

In the past 52 weeks, shares of Yum! Brands traded between a low of $46.27 and a high of $59.17 and currently at $58.28. JPMorgan Chase and Bank of America have a buy rating on the stock with a price target of $67.

1. Starbucks ( SBUX) is the leading coffee shop chain with operations in more than 50 countries. The company sells roasted whole bean coffees along with beverages and fresh food items through company-operated retail stores. As of October, the company had 17,000 retail stores.

For fiscal year 2011, Starbucks reported revenue of $11.7 billion, up 9% over fiscal year 2010. The global comparable stores sales increased 8%. In its first year of launch, Starbucks Mobile transactions exceeded 26 million. Earnings per share for the year surged 31% to $1.62 as compared to the previous fiscal year. The company paid cash dividend of 17 cents per share, an increase of 31% from the previous payout.

In November, the company acquired Evolution Fresh. Earlier this month, the company entered five new Chinese cities: Langfang, Zhengzhou, Harbin, Xiangtan and Zhoushan. Starbucks plans to open over 1,500 stores in mainland China by 2015.

For fiscal 2012, Starbucks plans to open 800 net new stores globally. Meanwhile, it targets a 10% revenue growth led by mid-single-digit comparable store sales growth. Earnings per share are seen in the range of $1.75 to $1.82, indicating a 15% to 20% growth over the fiscal year 2011.

In the past 52 weeks, the stock traded between a low of $30.75 and a high of $45. Currently it is at 43.61. Of the 29 analysts covering the stock, 17 recommend a buy.

>>To see these stocks in action, visit the 5 Large-Caps Flirting With 52-Week Highs portfolio on Stockpickr.

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