10 Stocks to Buy in February


We asked 10 of our top analysts for one stock that they think is particularly attractive right now. Here's what they said.

: February looks like a great month to pick up some shares of Raytheon . The stock's been hit hard on continued fears it will suffer from defense spending cuts, and yes, revenues and profits are both down significantly. Still, this "bad" news is good news for investors, because it's giving us a chance to own a great company at a really good price. Raytheon today costs just 9.5 times earnings, and those earnings should hold steady into next year, because the forward P/E ratio on the stock is also about 9.5.

What does 9.5 times earnings buy you? Well, Raytheon pays a generous 3.8% dividend yield. It's projected to grow earnings at 5.7% annually over the next five years -- a number that could be conservative, as foreign governments continue to pick up the slack on slowing U.S. defense spending. Together, that makes for a 9.5% "total return" ratio, and makes Raytheon plenty cheap to own, in my book.

: It's been two months since I figured that Intel was too cheap to be ignored at $20 per share. That's when I built a position in my real-money portfolio.

Fast forward to February, and not much has changed. I still don't see a stronger choice for new money out there than the chip giant.

Intel spiked to nearly $23 in January, but missed analyst targets in its fourth-quarter report. The stock plunged again, and now trades at $21 per share, or less than 10 times trailing earnings. Low prices lead to high dividend yields, and new money will lock in a fantastic 4.2% yield right now.

You might argue that Intel deserved this cheap valuation, seeing the massive yield as more of a red flag than an income-generating opportunity. But to do that, you have to assume that the company will fail to stay relevant in both the mobile computing world and in the data centers that keep our tablets and smartphones fed with back-end information.

That just won't happen. Intel will make inroads in mobility as that market matures, and remains the undisputed king of server-class processors. If you're interested, I'd recommend taking advantage of this unique discount on a world-class company and stock right now, because it won't last long.

Kevin Chen: Slowing revenues and troubles monetizing mobile shot Baidu's stock down 10% just days ago. But don't worry child; these fears are overhyped. Because of Wall Street's short-sightedness, Baidu now trades at a P/E of 21 -- meaning its cheaper than Google, at 24 times earnings.

While slowing revenues are concerning, think about this: 160 cities of 1 million people or more are "third-tier." That's 300 million people! The size of the U.S. market! Currently, Baidu's customers are big advertisers from China's 12 first-tier cities. But, as brands look to market to these developing cities, you can be sure that Baidu will be there to profit. Just this year, Baidu has added 100,000 more customers, bringing the total to 600,000. More importantly, Baidu's active advertisers increased by 31%, each paying Baidu 8% more.

And then there's mobile -- something every tech company seems to have trouble monetizing. But if that's the case, Baidu is best positioned to "crack" the market. Forget about competitor Qihoo. Baidu is the only one with a vast library of quality mobile products out-maps, mobile operating system, and smartphones. And, as the dominant search engine, Baidu is fine-tuned to the Chinese user, and gets smarter with each query. While it's still testing strategies with China's 1.1 billion mobile users, you can bet that Baidu's decade-long wisdom of the 564 million desktop users gives Baidu the best chance to profit from the mobile search market.

: Fresh off its first Super Bowl commercial earlier this month, SodaStream will close out February with fresh quarterly financials on Feb. 27. It should be another strong report for the company behind the popular portable appliance that turns still water into sparkling soda. Sales of starter systems, fizz-generating carbonators, and flavor bottles all hit records during the third quarter, and the holiday quarter should be even stronger.

There's no shortage of SodaStream skeptics. There are more than 8.2 million shares sold short, and that's more than half of SodaStream's float. (Speaking of floats, you can make an awesome one with SodaStream.)

The naysayers feel that SodaStream is a fad, though it's been a Western European staple for years. SodaStream has penetrated more than 25% of the homes in Sweden. It's just starting to scratch the carbonated surface here. This is all setting things up for a potentially juicy short squeeze by the time SodaStream does report its fourth-quarter results. Drink up!

: For years, Infinera investors have been waiting for the powers-that-be to admit that the backbone of the Internet needs an upgrade. That day may have arrived when Oracle acquired Acme Packet for $2.1 billion in cash.

Acme, like Infinera, has technology for connecting networks to dramatically enhance the speed and security of data flow across the entire Internet. Infinera's shares rose more than 3% on news of the deal, but I see the stock going much higher.

Why? The rise of a rich, mobile Web promises to geometrically increase the amount of information processed and shared online. Slow connections between the major carriers networks -- the "inter" part of "Internet" -- would create bottlenecks, and threaten the commerce we've come to depend on as consumers, as well as investors. The Internet will get its upgrade sooner rather than later, and Infinera will profit from the process.

Keith Speights: One stock I really like right now in the health-care sector is Celgene . Shares soared more than 20% in the first few weeks of 2013, after the biotech announced positive late-stage results for apremilast in treating psoriatic arthritis. However, the stock has remained in a holding pattern for the past couple of weeks. This breather presents a good opportunity for new investors to jump on board.

Celgene has several catalysts that should drive shares higher. The FDA is scheduled to make a decision on multiple myeloma drug Pomalyst next week. The biotech plans to file for regulatory approval of apremilast in the U.S. this quarter and in Europe later this year. It also will submit for approval of Abraxane as a treatment for pancreatic cancer soon. That's big news, because there are few good alternatives for this form of cancer.

The company's other products are also doing quite well. Revlimid, which is used for treating multiple myeloma and myelodisplastic syndrome, brought in $3.8 billion last year, and is still growing strongly. Celgene lost patent protection for Vidaza, yet still saw 2012 sales jump 17% for the drug.

With a forward P/E of less than 15, and projected sales growth of 19% annually over the next five years, Celgene's valuation also looks attractive. For investors willing to take on the inherent risks associated with biotech stocks, Celgene is one to consider.

: The U.S. organic industry clocked in $31.5 billion in sales in 2011, representing 9.5% growth. The overwhelming majority of this ($29 billion) was food and beverage. Furthermore, organic food sales now represent 4.2% of all U.S. food sales, up from 4% in 2010. And United Natural Foods is a great way to tap into this fast-growing market.

There's no denying the growing trend toward organic and natural food offerings. One need look no further than Whole Foods Market's sales over the past decade, which have grown from about $2.5 billion in 2002 to more than $11. 5 billion today, to see the writing on the wall. Interestingly enough, Whole Foods is also UNFI's largest customer, representing approximately 36% net sales. Granted, that's heavy dependence on one customer, but the good news is twofold. First, UNFI has been Whole Foods' primary distributor for more than 14 years. And second, the two companies just renewed an agreement for UNFI to continue to be its primary supplier through September 2020.

The company is facing some near-term headwinds. Gross margin pressure due to shortages from suppliers that result in price-cutting, costs involved with the rollout of a national supply chain platform warehouse system, and plans to increase capacity via new warehouses, are all threats to near-term profitability. But I do believe that management is working through the headwinds today to set this business up for long-term success.

: With the markets nearing an all-time high, I'm hunting for deep value in February, and seeing it in tech bellwether Cisco Systems. The way I see it, Cisco, which makes various networking and communications products, has three catalysts simultaneously working in its favor.

First, infrastructure spending is picking up domestically, with AT&T announcing a $14 billion, three-year wireless and wireline upgrade, and Sprint Nextel expecting to build-out its 4G LTE network following the SoftBank investment. This spending is already causing a trickle-down effect that's visible in the bottom-line results of fiber-optic players like JDS Uniphase,and is shortly going to make its way to network equipment suppliers like Cisco.

Second, Cisco is constantly innovating! Cisco has been marching out new products on a regular basis with a focus on enterprise cloud computing. Cisco's Unified Data Center strategy, for instance, is focused on bringing multiple networking functions together to handle even multi-cloud-based enterprises.

Finally, Cisco has the free cash flow and prudent fiscal management to fund additional R&D without the need to take on additional debt. Cisco has beaten Wall Street's quarterly EPS estimates in all 15 quarters since the market bottomed, boasts $28.7 billion in net cash, generated $10.4 billion in free cash flow last year, and pays out a handsome 2.7% yield. It's the perfect blend of income and growth and is the company I'd buy in February.

: As a special-situations investor, I'm focused on superficially complex transactions that create value, and that's why I like Harvard Bioscience . Its core business is developing, manufacturing, and marketing tools for the life sciences. This $146 million market cap is IPOing, and then spinning off a high-reward, but money-losing, business, Harvard Apparatus Regenerative Technology (HART), to shareholders. HART uses stem cells to grow organs outside the body, such as its trachea product currently in clinical trials, which can then be transplanted. The company envisions expanding into hearts, livers, and kidneys. But HART isn't what I find exciting; rather, it's the boring core business.

Net out the value of HART, about $100 million according to its IPO filings, and you're left with a profitable core business that trades cheap. How cheap? With a stand-alone value of about $45 million ($145 million-$100 million IPO), the parent is now trading at about 4 times trailing adjusted earnings. And it's targeting 15-20% earnings growth - a very high rate that should attract Wall Street's attention. If this stock attracts your attention, you can find more on this small cap here.

: What happens in Vegas stays in Vegas. That's the only explanation I have for Las Vegas Sands stock being so undervalued. Sands has a history of winning big on the strip, owning and operating the Venetian Casino Resort, Sands Expo and Convention Center, and the Palazzo Resort Hotel. Its three-year average revenue growth is an impressive 28.9%, nearly quadrupling the industry average of 7.9%. However, that rapid growth is useless unless it translates into bottom line profits. Sands is taking its luxury market and competitive advantage to the bank, with its trailing-12-month net margin a healthy 13.3%.

When looking for stocks that will return market beating gains, the only things we can do is research previous financial performance and hypothesize future trends that would allow the company to flourish. One key component of an economic moat, or sustainable competitive advantage, is a difficult barrier of entry for competitors. Sands has its future growth protected and on lock down.

Much of its future growth will bank on projects in Asia, including six resort developments, and the Venetian Macau. Potential competitors will have a difficult time entering the Asian markets. Sands is one of only two casino licenses in Singapore, and one of six in China. For a company with an economic moat, a history of printing out cash on lofty margins, I love the stock at February's price.

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The article 10 Stocks to Buy in February originally appeared on Fool.com.

This roundtable was organized by Anand Chokkavelu, CFA, who owns shares of Raytheon and Whole Foods. The Motley Fool recommends Acme Packet, Baidu, Cisco Systems, Google, Infinera , Intel, SodaStream, and Whole Foods Market. The Motley Fool owns shares of Baidu, Google, Harvard Bioscience, Infinera , Intel, Oracle., Raytheon Company, SodaStream, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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