3 Top Stocks for 2012 and Beyond

No one can say with certainty which stocks will best reward investors next year, but I will share some of the ones I'm most excited about as we move into 2012. In true Motley Fool fashion, I adopt an "anything goes" strategy, investing with the flexibility considering each company's unique position. With that said, here are the three companies whose future looks bright from where I'm sitting.

The long shot
Some people may be surprised by this pick, but SUPERVALU (NYS: SVU) is simply too cheap and has too much upside potential to ignore. Let's get the scary fact out front first: SUPERVALU has a lot of long-term debt, $6 billion worth, most of it from its 2006 Albertson's acquisition.

Fortunately, only about a billion of its debt is due in the next three years. Though the interest coverage ratio is a low 1.8 times, it's within my margin of comfort so I'm not worried about it meeting its interest payments. Management is also focused on paying debt down quickly, as demonstrated by reducing 24% of the company's debt since 2007. This percentage will accelerate each year it maintains a similar payment level and simultaneously raise book value.

The company is cheap, too. It's currently trading at a forward P/E of just 5.9, despite slightly lower revised guidance. While margins are slim, SUPERVALU's "Essential Everyday" private-label brand being rolled out nationwide should improve them, especially if management can achieve its higher penetration rate goals.

It's not all deleveraging and affordability though. It has growth, too. CEO Craig Herkert is funding its deep-discount Save-A-Lot brand by rolling out many new locations. Since most of these stores are licensed, they require little capital yet return quality high-margin revenue. This should effectively combat the budding grocery efforts of competitors such as Walgreen (NYS: WAG) .

The good news is SUPERVALU's eggs aren't all in one basket. The company still collects 22% of its revenue from grocery distribution. The 4.7% dividend yield is a nice cherry on top, too, providing income with short-term downside protection. I see huge upside potential as this company deleverages into 2012 and expands private labels and Save-A-Lot locations.

The gaming guru keeps growing
Despite the name, Las Vegas Sands (NYS: LVS) is hardly tethered to the dying city it shares a name with. In fact, this gaming company is becoming the go-to maestro of international gaming.

The same can't be said of its competitor MGM Resorts (NYS: MGM) , which is heavily invested -- and indebted -- to its CityCenter project in Las Vegas. Las Vegas Sands has the best track record of opening casinos in a variety of geographic regions, hands down. Las Vegas Sands is in the hottest Asian markets, with locations in Macau and Singapore. Its Singapore casino is the flagship of flagship casinos, makes money hand over fist, and has a virtually impenetrable moat since Singapore only issued two gaming licenses for the country.

True to its expansive nature, there is talk of adding operations in Florida, and the company is eyeing Japan as the country seeks to bring in revenue to recover from the quake. Given Las Vegas Sands' international track record, and CEO Sheldon Adelson's many talks with the Japanese government, the company's belief that "there is no doubt that we're the leading candidate" is probably well-founded. Of course there is some risk of cannibalizing its own operations in Macau, but with Asian gaming demand far outstripping supply right now, and Macau instituting a cap on tables, I think there is room to grow in other countries.

Trading at just 17 times forward earnings, LVS is cheap for a company that accelerated EBIT growth to 58% over last year, up from an impressive 37% average over the past five years. LVS' Asian casinos are churning out incredible EBITDA numbers, with its Marina Bay Sands operation putting up a 52.2% EBITDA margin in the third quarter.

With Sands Cotai Central in the pipeline, and a track record that positions them to win licenses in other countries, Las Vegas Sands is a great pick to 2012 and beyond.

The Visa of tomorrow
The online retail revolution isn't a new story, but that doesn't mean investors are late to the game. E-commerce is still in its infancy, meaning there is plenty of time to profit. As this season's record $1.25 billion in Cyber Monday sales show, consumers are increasingly more comfortable spending online.

While online retailer Amazon.com is grabbing all the headlines, I'm drawn to the middleman coordinating all these online payments, eBay (NAS: EBAY) . Far more than the online marketplace of the same name, eBay's greatest value lies in its PayPal acquisition. Much like how Redbox eclipsed Coinstar as the most valuable brand in the portfolio, I foresee PayPal overtaking eBay as the revenue driver of the future.

PayPal already comprises 37% of eBay's revenue, up from 28% in 2008. In the last year alone, revenue from the PayPal division grew 32%, compared to the market place revenue that climbed an impressive 17%. These guys are poised to become the Visa (NYS: V) of tomorrow, eclipsing credit cards as the faster way to shop online. Similar to how Akamai (NAS: AKAM) eases content delivery on the Internet by playing broker to content provider and seeker, PayPal makes buying online faster, easier, and safer by being the middleman between consumers and retailers.

PayPal is already accepted by 60 of the top 100 online retailers in the U.S. and processes more than 25% of domestic online retail transactions. That sort of entrenchment will only deepen going forward, creating a practically unbreachable moat.

eBay's PayPal division will grow in tangent with the online retail revolution and investors can profit without having to place bets on one company or another. A forward P/E of 13.1 is a cheap price for the credit card of tomorrow.

Foolish takeaway
These may not be the cheapest buys today, or even the biggest winners of tomorrow, but I am really excited about all of their future growth going forward and think they'll pay off in a big way. I'm just one guy though, and if you're looking for more options, I invite you to read The Motley Fool's special FREE report: The Motley Fool's Top Stock for 2012. In it you'll find the company we've dubbed the "Costco of Latin America". This retail opportunity will explode as consumption in Latin American ramps up. You can access the report by Clicking Here. It's 100% free. Fool on!

At the time thisarticle was published Austin Smith owns no shares of the companies mentioned here. The Motley Fool owns shares of SUPERVALU.Motley Fool newsletter serviceshave recommended buying shares of Coinstar, Visa, and eBay.Motley Fool newsletter serviceshave recommended writing puts in eBay.Motley Fool newsletter serviceshave recommended buying calls in SUPERVALU. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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