Mr. Brightside is back, folks. Sure, I may have taken a little pessimistic detour yesterday with four stocks that appear vulnerable as we head into the new year, but now I'm feeling like my old chipper self again.
Let's get right into a few stocks that I think will turn in strong performances in 2007.
Viacom (NYSE: VIA)
Back in January, the company was spun off its slower-growing sibling, CBS (NYSE: CBS). And boy, was Viacom surprised when Wall Street warmed up to its sleepy sister instead. In reality, Viacom is every inch a dynamic media empire. MTV? Nickelodeon? Check and mate (or sound check and playmate).
The market has taken Viacom to task for coming up short in the MySpace.com bidding war, but Viacom is no slouch in cyberspace. It has acquired dynamic properties and has been cashing in on its star properties to expand its mobile and global cyberspace presence. You won't find too many asset-rich media companies trading for less than 17 times forward earnings. It's time to rock the vote.
Six Flags (NYSE: SIX)
I'll admit it. I was premature in my faith that the company could be fixed in a single operating season. To my credit, many of my early March predictions proved true. Per capita spending soared. Attendance dipped. However, I was way off on how slow the turnstiles would ultimately click and the margin-crushing impact that the company's 2006 performance would have on the bottom line.
However, I see little wrong with the 2007 game plan. The company continues to hook up with quality brands and licenses, adding young family magnets like The Wiggles, Thomas the Tank Engine, and Stone Cold Creamery to many of its parks. Because of Six Flags' leveraged financial position, tremendous upside is possible if the stars align just right for the regional amusement park operator.
iRobot (Nasdaq: IRBT)
Can one of the coolest companies in the planet bounce back after a forgettable first year as a publicly traded company? I think so. This active Rule Breakers recommendation is to robotics what Hugh Hefner is to velvet smoking jackets. iRobot is the company behind the floor-sucking Roomba automatons and the newer mopping Scooba time savers. More than just consumer electronics, iRobot also sends out its PackBot robots on military contracts to help keep our troops safer in the Middle East by defusing roadside bombs and hauling over rugged terrain with heavy gear.
iRobot is cooler than most of us, so why is it trading for less than last year's $24 IPO? A few bumpy quarters, a lukewarm response to the Scooba, and thin margins may have scared away folks other than drooling engineers, yet iRobot is still profitable and growing. Whether we want cleaner homes or more robot-manned warfare, iRobot's presence is likely to grow in the coming years. Here's to the future of a company that is delivering the future today.
Garmin (Nasdaq: GRMN)
Maybe I'm just smitten after buying a Garming Nuvi GPS system, but at least I know I'm not lost. Yes, the "give a, give a Garmin" ads are all over these days and even though you're also seeing some heavy marketing muscle from rival TomTom, the reality is that this is a fast-growing market.
More importantly, Garmin selling for 23 times forward earnings wouldn't seem reasonable if the growth catalysts weren't on the map. They are. More than just a one-time purchase, enhanced services like premium traffic navigation and annual map software updates are driving a category that is still in its infancy when it comes to mainstream appeal.
TiVo (Nasdaq: TIVO)
This is the one stock out of the five that I own personally. So many investors have been burned before I finally bought in last month; am I being naive to assume that this serial disappointer will finally deliver the goods?
The pioneer in digital video recording is patent-rich and profit-poor. We all know that it spends too much money in subsidizing its hardware to cash in on recurring revenue streams. We all know that the company, a Stock Advisor selection, won't turn a profit until 2008 at the earliest. I'm willing to take a chance, all the same, because the product is too good and the licensable technology is too obvious. Sooner or later the company is going to come within earshot of the hype and investors who happen to own TiVo at the time will be rewarded.
A funny thing about 2007
In yesterday's bearish article, I closed by hoping that I was wrong. This time, I'm obviously hoping that I'm right. The seeds are in place for reasonable market gains in 2007, yet I think these five stocks will lap those returns.
Can a media giant regain the respect -- or at least the valuation -- of its pricier peers? Can a troubled regional amusement park operator finally earn its right to pick pockets? Can a cool company finally heat up your portfolio? Can a GPS leader lead the way to higher ground? Can a company known for going back in time finally cash in on the future?
I'm nodding along to all five questions. Let's see how the next 12 months play out.
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Longtime Fool contributor Rick Munarrizfeels that his son mocks him by calling him Mr. Brightside, but it is a pretty darn good song. He does own shares in TiVo. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.Garmin is a Stock Advisor pick.TheFool has a disclosure policy.
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