Over the past few years, a group of bloggers have enlisted in a friendly competition as to who can pick the best stocks for the year. In 2011, I was a little less aggressive and picked well known names that appeared to be relatively undervalued at the beginning of the year. My top stock picks for 2011 were: VISA, Royal Bank of Canada, Husky Energy, and Encana.

While Q3 results were in the negative (-5.65%), Q4 was much stronger which lead to a positive overall return for the year.  Here’s what happened:

My Top 4 Stock Picks for 2011

VISA (V) – Everyone knows VISA! The stock has recently sold off due to news that debit card transaction prices may be regulated in the US and VISA has a portion of their business in the debit market place. As one of the worlds most recognized names and the largest card issuer in the world, I’m betting that the stock price will bounce back. Trading price as of Jan 3, 2011: $70.38 (open).

This stock continued to be the star for the year, in fact, it was the biggest gainer of all stocks picked in the competition!  Trading price as of Dec 30, 2011 closing: $101.53.  Combined with a $0.67 dividend brings an annual return of 45.21%! Disclaimer: I own shares of V.

Royal Bank of Canada (RY.TO) – Although Royal Bank is the largest bank in Canada in terms of market cap, it has been severely under performing relative to the other big banks in Canada. As with all the big 5 banks, RY sports a healthy dividend and I’m hoping that RY bounces back this year! Trading price as of Jan 3, 2011: $52.32 (open).

Bouncing back from a very weak third quarter (-5.2%),  the rally and particularly the dividend helped push this one in the positive for the year.  Trading price as of Dec 30, 2011 closing: $51.98.  Combined with a $2.08 dividend brings an annual gain of 3.3% . Disclaimer: I own shares of RY.

Husky Energy (HSE.TO) – I picked this one a couple years ago and I’m picking it again for some oil exposure. They own oil producing assets in NL, new assets in China in addition to paying a healthy dividend. Trading price as of Jan 3, 2011: $26.55.

Despite a valiant effort, HSE was unable to climb out of the red by year end.  Trading price as of Dec 30, 2011 closing: $24.33.  Combined with a $1.20 dividend brings a loss of 3.8% for the year. Disclaimer: I own shares of HSE.

Encana (ECA.TO) – A little while back, Encana split into two companies to divide their natural gas and oil operations. CVE took over the oil side, and ECA took the natural gas. Last year, I picked CVE which was a winner, but this year, I’m going to try my luck with ECA. Even though I’m not bullish over natural gas prices, ECA appears cheap with low Price/Earnings, Price/Book ratios and the dividend does not hurt either. Trading price as of Jan 3, 2011: $29.09

While the other three picks held their own, ECA was the portfolio killer.   Trading price as of Dec 30, 2011 closing: $18.89.  Combined with a $0.783 dividend brings a loss of 32.4% for the year.

Overall the portfolio did relatively well resulting in a gain of  3.1%.  This was good enough for second place in the competition and outperforming the Canadian index (XIU) by approximately 13% and the S&P 500 (CAD hedged) by 4%.

Top 4 Stock Picks for 2012

With our 2011 picks outperforming the market and most of the other bloggers, we have a lot to live up to in 2012!  Economists are calling for another volatile year which may mean that dividend stocks may outperform again.  This year, I’m picking a financial stock, a big US consumer stock, a large Canadian minerals company, and a well known Canadian oil company.

  1. Bank of Nova Scotia (BNS.TO) – With Canadian banks retreating from their highs in late 2011, their dividend yields have reached an attractive range. Scotia Bank, with a current yield of approximately 4%,  is known for their international operations and I believe has some upside coming in 2012.  That is providing that we don’t have a global financial meltdown. :) Trading price as of closing Dec 30, 2011: $50.83. Disclaimer: I own shares of BNS.TO.
  2. 3M Co. (MMM) –  This company is a great example of a Dividend Achiever where it has increased their dividend for 53 consecutive years with a current yield of 2.69% and P/E ratio of 13.74.  Who is 3M?  They are a  large diversified technology company with seven large divisions.  However, they are likely most well known as the inventor of the Post-It note.  3M shares sold off in late 2011 but it looks like the stock has already started its recovery.  Trading price as of closing Dec 30, 2011: $81.73. Disclaimer: I own shares of MMM.
  3. Teck Resources (TCK.B.TO) –  Teck Resources is my mineral play where the company is engaged in the exploration, development and production of copper, coal, gold and zinc.  It faced a steep decline in 2011 and I believe will start climbing again once confidence in the economy thus commodities returns. Teck currently yields 2.23% with a P/E ratio of 8.92. Trading price as of closing Dec 30, 2011: $35.91. Disclaimer: I own shares of TCK.B.
  4. Suncor Energy (SU.TO) –  Suncor Energy is Canada’s largest integrated energy company.  It has a large stake in the oil sands and is involved in numerous other energy plays across the country. While this is not a huge dividend stock with a yield of 1.50%, I believe that the energy sector is oversold and has a large upside should the buyers return.    Trading price as of closing Dec 30, 2011: $29.38.Disclaimer: I own shares of SU.TO.

Here are the the picks for 2012 from other bloggers and results from 2011:

  1. Dividend Growth Investor: 15.36%
  2. Million Dollar Journey:  3.12%
  3. Intelligent Speculator: -4.90%
  4. Money Smarts Blog: -9.55%
  5. Where Does All My Money Go: -17.04%
  6. My Traders Journal: -19.00%
  7. The Financial Blogger: -21.73%
  8. Wild Investor: -33.34%
  9. Beating The Index: -44.08%
  10. The Passive Income Earner:  new blogger
  11. Dividend Mantra: new blogger

What are your top 4 picks for 2012?

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FT 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.
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9 years ago

Good call on VISA. Dont forget about Mastercard. I like both these stocks because of the economic moat that they have. Excellent businesses to be in for the long run.

Money In Training
9 years ago

I will be buying my first ever stocks through Questrade this coming Monday. Needless to say, there will be a lot of research done this weekend. I’m starting very small though ($1100), but you have to start somewhere, I guess. BNS is very appealing, and I think warrants some strong consideration.

My University Money
9 years ago

This post might be the best argument yet for me getting continuing to go full bore with ETF investing. I know you all are definitely smarter than me, so if you can’t “beat the street” I’m definitely not going to try. Instead, I’ll dedicate my efforts to expanding my income streams and keeping my expenses low.

Financial Advisor Sydney
9 years ago

MMM sounds a good buy. Joe S. posted a comment about a permanent portfolio and it should be noted it works when assets are bought roughly at their long-term averages, and buying gold at $1600 is far from that.

Joe S
9 years ago

The average of the 9 pickers was a -15.3%, which was way worse than just about any index within North America. But looks good compared to European indexes.

The permanent portfolio returned around 5 or 6% for the year depending on which vehicle you used. That’s the best benchmark in my opinion as I’ve seen few portfolios that are less volatile over the long term. I’m leaning more and more towards moving my RRSP to a pure permanent portfolio.

The Reverend
9 years ago

Teck Resources made a big move on day one of the year. Nice pick to start.

9 years ago

I believe CLC will show strong performance this year.

Steve @ Canadian Personal Finance
9 years ago

I still can’t believe that I finished third among the commentors (I had a 17.3% return).

Would you still pick Visa at those levels?

9 years ago

2011 Results:

BCE: 35.54 up to 42.47
ABV: 31.79 up to 36.12
CM: 78.33 down to 73.79
SU: 38.28 down to 29.38

Starting price: 183.74
Ending price: 181.76

Add $6.54 in dividends: 188.3

Return: 2.48% …. phew!

Since dividends helped me pull out positive in 2011, I’ll use them for my 2012 picks:

TSE:DFN @ 10.35
NYSE:HPI @ 21.48
NYSE:ZTR @ 3.04