YOUR FRIENDS' ACTIVITY

    3 Stock Picks for the New Year

    Click! Follow Us on Facebook!

    Whether it's a rare antique that gets discovered in your grandmother's attic or a valuable heirloom you buy for a buck at a flea market, some of the best deals seem to be found right beneath our noses. Of course when it comes to stock picking, the ability (or luck) to separate the wheat from the chaff is a rare and valuable skill.

    Take Salix Pharmaceutical (SLXP) for example, a hot stock hiding out in a stodgy, defensive sector. This $2 billion, North Carolina based maker of drugs for gastrointestinal disease has earned recent notoriety by gaining over 80% in four months while the Nasdaq Biotech Index (^NBI) has been an in-line performer.

    For Mark Lehmann, the president and director of equity at JMP Securities, this midcap "innovator" is destined to grow and he expects it will follow in the footsteps of many of its former peers and be bought.

    "Playing on whether Pfizer (PFE) or Merck (MRK) is going up or down 5% is not the game we play at JMP," Lehmann proclaims. "When there are winners, big pharma dives in and pays big money for these companies and we feel Salix is one of them."

    At the same, Lehmann's preference for the Tech Sector (XLK) has not been dampened by cautious comments and disappointing results, as much as it has been re-focused, and again scaled down to find the biggest opportunities.

    Here, he mentions small-cap software service provider RealPage (RP) as a top pick. He cites its large inside ownership, good management, fast growth, and focus on the rental real estate market - the only piece of the housing pie experiencing any degree of growth right now.

    And finally, Lehmann makes a contrarian case for buying Morgan Stanley (MS). This battered investment bank has been cut in half again in the past year and now has a $31 billion market value that's equal to DirecTV (DTV).

    "I would not expect the Financials to lead the markets higher," he warns but feels Morgan Stanley's "problems are well enumerated" or already in the stock. Add in his expected improvement in Europe in the next few months plus an uptick in M&A, and you have what could be more upside than downside, not to mention a single-digit PE ratio and a median analyst price target of $22 (about 40% above current level).

    What do you think? Would you bottom-fish a bank, bid up a biotech, or bet on the boom on rentals?

    Let us know below or reach out to me on Twitter @MattNesto or on our Breakout Facebook page.

    About Breakout

    Breakout is Yahoo! Finance’s daily all-out, roll-up-your-sleeves, dive-in, interactive investing show, offering fresh segments throughout the trading day. If you love making money, if you want to protect what you have, if you’re passionate about understanding these crazy markets, you’re in the right place.

    Investing 101

    Breakout Profiles

    DON'T MISS

    Subscribe and RSS

    [X]

    How to subscribe

    Roll over each section to subscribe using Add to My Yahoo! or RSS Feed feeds.

    Yahoo! News offers dozens of RSS feeds you can read in My Yahoo! or using third-party RSS news reader software. Click here to find out more about RSS and how you can use it with Yahoo! News.

    DISCLAIMER

    Merrill Lynch is not responsible for any content on this site.
     
    Recent Quotes
    Symbol Price Change % Chg 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
     
    Sign-in to view quotes in your portfolios.