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Top 4 Stock Picks for 2010

With the 2009 stock picking competition over and done with, the same group of bloggers wanted try it  again in 2010.  As my last years result was mediocre relative to the market, I’ll still take the 20% that I gained.  This years picks will be along the same lines, but perhaps a little more aggressive.

What do I expect from the market in 2010?  I’m still waiting for that pullback, but I’m not so sure that we’ll see a test of the March 2009 lows.   Having said that, we may see some gain in the TSX in 2010, but I doubt that it will be anywhere close to the 30% returns of 2009.

My Top 4 Stock Picks for 2010

  1. Hanwei Energy (HE.TO) – This Chinese company provides products and services for the oil pipeline transportation, wind and coal energy industries.  Even though they have been oversold, they maintain a strong balance sheet.  They currently trade at less than half their book value, carry no long term debt, and have $0.28/share cash on their balance sheets.  Trading price as of Dec 31, 2009: $0.82.
  2. Manulife Financial (MFC.TO) – Most of you have probably heard of Manulife Financial as they are the largest insurance company in Canada (in terms of market cap).  I believe that Manulife has been oversold but hopefully return to strength in 2010. Trading price as of Dec 31, 2009: $19.33.
  3. Cenovus Energy (CVE.TO) – I picked Cenovus as my oil play.  Never heard of them?  Neither did I until I looked up the constituents of the energy index.  Encana recently split into two companies; ECA is now a natural gas company while all the oil and gas assets have gone to CVE. Trading price as of Dec 31, 2009: $26.50.
  4. QLT Inc (QLT.TO) – This is a riskier play of the batch as I picked them solely on their financial statements.  QLT is a pharmaceutical company that creates and commercializes eye treatments.  They trade below their book value, have no long term debt, and carry $3.81/share in cash on their balance sheet.  Trading price as of Dec 31, 2009: $5.23

Note that I own some of the stocks listed above and they are not recommendations to buy.

Here are some stock picks from other bloggers:

What are your favorite stocks for 2010?

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FrugalTrader About the author: FrugalTrader is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 23 comments… add one }

  • The Financial blogger January 2, 2010, 12:15 pm

    Manulife is certainly a good pick…I have picked it too ;-)

    good luck this year!

  • jacqjolie January 2, 2010, 4:38 pm

    I had bought Encana about a month ago, not knowing that the split was going to occur (clearly I don’t do enough research!) Here’s hoping you’ll drive the price up. :-)

  • LoquaciousOne January 2, 2010, 5:12 pm

    Hi … I’ve been reading your blog for a while and this is my first comment….I’m a new investor and am getting a lot out of the updates, so thank you!

    My question is… do you set a price or ratio (P/E) which you will sell these stocks at when you purchase them or are these to just ‘buy and hold’. How do you determine this? The past issue of moneysense magazine had a top 200 stock list and I had the same question about those. Any help from yourself or the others who comment would be appreciated.

  • FrugalTrader FrugalTrader January 2, 2010, 6:54 pm

    LoquaciousOne – The time to sell stocks is a personal choice and should be in alignment with your investment plan. For me, if it’s a strong dividend stock, then I will most likely hold forever providing that the fundamentals stay the same. If i’m buying for capital appreciation, I tend to sell portions into a bull run or when it appears over valued.

  • Nolan Matthias January 2, 2010, 8:33 pm

    FT – I like the China play. Part of the reason I picked Starbucks in my selections for 2010 was because of their entry into the Chinese market. I think it could be huge!

  • LoquaciousOne January 3, 2010, 1:44 am

    FT- Thanks for your reply!

    Is there some equation that is generally used, or a site you can suggest (to point me in the right direction for reading) to ascertain an ‘overvalued’ stock or when during a bull run one should sell? I understand for each person the sell point would be dependent on their risk tolerance level and overall portfolio.

    For me I would just like to get my feet wet by doing some ‘educated gambling’ until I learn more…. but after I have purchased, I don’t know what to look at next and can’t seem to find the right place for guidance. I purchased 15 canadian stocks to DRIP a few years ago, but I had always planned to just hold onto them so aside from the occasional OCP it’s a little dull :)

  • used tires January 3, 2010, 7:34 am

    Is it bad that I didn’t know any of these 4 stocks until you revealed them here? Anyways I think I am still a newbie to make my own predictions, I still have 2 more years left in my studies at the university, so hopefully by then… they will have taught me enough so I can make my own stock predictions.

    Till then,

    Jean

  • cannon_fodder January 4, 2010, 12:29 am

    FT,

    Do you think Cenovus might be a takeover candidate? I know that some analysts think the split company is more attractive in that perspective, but I thought they were leaning towards Encana more than Cenovus.

  • Squawkfox January 4, 2010, 1:33 am

    Just wanted to wish you a Happy New Year!

  • Link Wheels January 4, 2010, 8:10 am

    Thanks for the picks FT,
    If you do not mind answering, which stocks from the above list do you currently hold?
    Regards, Dave

  • FrugalTrader FrugalTrader January 4, 2010, 10:26 am

    Kerry, Happy New Year to you as well!

    Link Wheels, I hold small positions in HE and MFC.

  • mr.archanfel January 4, 2010, 10:46 am

    For me, it would be XIC.TO, VWO, VTI and VEA. Yeah, I know they are lame, but I think only talented people can beat the market. I am certainly not talented. Plus, it would be nice to have a benchmark in the mix. :)

    Note that VWO, VTI and VEA need to be converted to Canadian dollar. In 2009, VTI did great in $US (22.46%), but pretty poorly in $CAD (5.84%).

  • Dipak January 4, 2010, 7:21 pm

    I bought Russel Metal. I think it is good buy and good dividend stock. I normally try to buy stock with market cap above 1 B.
    I take this opportunity to thank you for such a wonderful site

  • cashback cards January 5, 2010, 3:43 pm

    Wow any stock under a $1 seems to scare me, but I do believe that the energy/oil will be a great play for 2010. Great information! Maybe you could expand and really take a blog post for each company giving them a solid full review needed to explain your picks.

    Got any others to check out or keep our eyes on?

  • Jason January 11, 2010, 8:21 pm

    Hi all:

    Just signed up for Questrade (MDJ referred) and I’m using the webtrader platform. Simple and effective for my needs. In my twenties, new to investing.

    I’m wondering does anyone know how to list ALL companies on the TSX or other exchanges. I would like to buy a few penny stocks but how do I find them?

    -J

  • Tasamy January 13, 2010, 7:16 am

    ATK, HLO, HGO, IFR

  • omomo February 10, 2010, 1:05 am

    Hi all,

    Frugal, thanks for the post. I just brought some stocks to DRIP via Questrade and requested that they get certificated…was told the fee for that is $300. Is this correct? With that type of fee it will end up costing $3600 for 12 stocks I bought.

  • Financial Cents February 10, 2010, 10:24 am

    omomo,

    Seems very high, as TD Waterhouse charges $50+GST for each stock certificate, but I know other discount brokerages can be high…so maybe $300 is accurate for Questrade (sadly). I wouldn’t pay it. Run your synthetic DRIP instead.

  • 1stmilliondollar.net February 11, 2010, 11:25 pm

    FrugalTrader, I just setup a web page containing live result of this contest. The address is http://1stmilliondollar.net/contest/

    The page is linked to Google Finance; so it shows “almost real-time” result of who’s leading year-to-date. Hope this is useful. :)

  • omomo February 13, 2010, 11:32 am

    Hi Financial cent,

    I am new to DRIP. What does it mean to run synthetic DRIP? I decided to just leave my stocks and not get certificate for them. I’m not sure if this will have an adverse effect for me to DRIP those stocks.

    -O

  • Harvey February 18, 2010, 8:53 am

    Are you sticking with Hanwei? It is down to .43 since you picked at .84

  • FrugalTrader FrugalTrader February 18, 2010, 12:17 pm

    Harvey, they had a terrible recent earnings report. Hard to say where they are going in the future, they have some cash to hold them through tough times like these. I still have my position in them (albeit small), and my decision to buy/sell will be determined when I sit down and do more digging on their situation.

  • Lee February 28, 2010, 1:56 am

    Frugal,

    I had no idea Hanwei’s management could let down shareholders as much as they did. I have sold half my position, and have lost almost all faith in management.

    I am curious to hear your take on the situation?

    Lee

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