Tis the season for picks and predictions…

• Admin
• December 18th, 2009

In the holiday spirit, where it is better to give than receive, I figure I would combine two of my favorite columns into one with some stock picks and market predictions for 2010.

2009 has been a fairly decent year for most of us and for that we should be thankful. Our economy is on the rebound, albeit slightly. The indexes are solidly positive in all cases and there are plenty of individual names which have made investors and traders over 100% returns. Let's take a look at 5 picks which I think will continue to add to 2009's gains.

1. BHP The world's largest miner continues to benefit from increased demands for its base metals (iron ore, copper) and their oil & gas division continues to win contracts in the Middle East. It trades at 14.8 forward earnings and yields 2.2%. Approval of the joint venture with RTP for their seaborne iron ore operations gives a huge boost to share prices, moving them around $100/share at years end. (Disclosure, I own it.)

2. CSX With an expected increase in oil prices and pickup in the economy, CSX and the rails will recover very strong. Michael Ward is one of the best, if not the best CEO in the industry and they should benefit off increased demand for coal and agricultural products. The stock trades at a 15x foward P/E and is yielding 1.8% (Disclosure, I own it.)

3. NKE The worlds largest athletic apparel maker sees huge demand for their soccer gear with the World Cup coming up in June. Margin expansion as well as a share buyback and increased dividend do well for investors. Tiger Woods return in April in time for the Masters also benefits their golf equipment division much more than anticipated.

4. ICE Derivative contracts continue to be a huge boost for this exchange. There is speculation that ICE will take over CBOE as it nears to go public, but it ultimately proven fruitless. CDS clearinghouse volumes greatly add to revenue, as there is plenty of room for expansion in the $450 trillion market for derivatives. Revenue for CDS clearing triples.

5. TOL The market for luxury homes continues to rebound and the housing market in general rebounds. TOL greatly benefits from a much stronger economy than initially thought, and reinstates a small dividend, boosting investor confidence.

Here are a few market predictions and general observations for 2010.

1. Zynga, the maker of popular Facebook games such as Farmville and Mafia Wars, goes public with little fanfare, but proves to be an outstanding investment over the course of the year.

2. The Chicago Board of Options Exchange (CBOE) IPO ultimately leads to another round of exchange M&A, with the market share for options and derivatives becoming ever increasing important. This IPO is also wildly oversubscribed.

3. One of the video game makers, (ATVI, ERTS, THQI) is acquired by a media conglomerate. I predict it will be TWX.

4. Verizon does not get the Iphone as many expect and instead they continue their exclusivity with AT&T. T throws everything they have behind their offer to AAPL, including an unprecedented sum of money to stay. VZ counters this by adding the new Google (GOOG) phone to their lineup.

5. Last but certainly not least, Oil after experiencing a bit of a hit in the beginning year due a rising dollar, skyrockets on increased tensions with Iran. The price of a barrel for the year averages $85/bbl.

That's it for picks and predictons for 2010. Let me know what you think. As always, the most important pick and prediction is for everyone to have a safe, healthy and prosperous 2010.

Tickers:$CSX, $THQI, AAPL, ATVI, BHP, ERTS, GOOG, ICE, NKE, T, TOL, VZ

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