Midway Report Card: The Best Stocks of 2010

As harmonious choruses of Auld Lang Syne marked the close of a choppy and challenging decade for equities, Fools turned their attention to 2010, to consider which stocks offered the best opportunities for gains in the New Year.

The Apple of your eye
Readers participated in two rounds of a stock-picking contest that ultimately yielded the iconic Apple (Nasdaq: AAPL  ) as our popular champion.

In true champion form, Apple has come out swinging in the first half of the year, with two wildly successful product launches. Overcoming substantial pre-launch skepticism, the iPad has traveled around the world in 80 days while selling 3 million units. Following Apple's most successful product launch in the company's history -- 1.7 million iPhone 4 units sold in just three days -- this company's track record of innovative dominance over key consumer-electronics markets is beginning to remind me of another always-reliable winner: the Harlem Globetrotters.

Reflecting these achievements, Apple's shares have appreciated more than 17% thus far in 2010. With the S&P 500 and the Nasdaq Composite both down 7% year to date, Apple's success marks a noteworthy outperformance of the relevant benchmarks. Here at the midpoint of 2010, preliminary kudos are in order both for Fool contributor Rick Munarriz, and for the Fool community's outstanding ability to spot a winner.

The Cinderella story
Of the 13 stocks that vied for selection as our best opportunities for 2010, the top performer of them all here at the midway point is a company that failed to make the top five and advance to round two of our contest. For long-standing Motley Fool Rule Breaker selection Akamai (Nasdaq: AKAM  ) , surpassing expectations is nothing new. Since the Rule Breakers team first championed Akamai back in 2005, in fact, these shares have outperformed the S&P 500 by more than 234%! Even following Tuesday's sharp sell-off in the equity markets, Akamai shares remain 59% ahead of their end-of-year close for 2009.

To the 598 Fools who selected Akamai as their pick of best stock for 2010, I have still more mid-year kudos to accompany the profits I hope you are enjoying. If you wish to share those kudos, fellow Fool contributor (and Akamai shareholder) Anders Bylund provided the voice behind the pick.

A precious groundswell
Marking a palpable cultural shift among investors toward a gradual acceptance of gold and silver as viable safe-haven assets, Fools came out in droves to support my own selection of Silver Wheaton (NYSE: SLW  ) . Here at the halfway mark, I would like to congratulate all 1,279 Fools (in 'round one' alone) who voted for this unique play on the ongoing secular bull markets for silver and gold. The 26% advance in these shares since 2010 began is enough to outshine even the performance of Apple so far.

On the heels of a nearly 500% recovery from Silver Wheaton's collapse to just $2.51 per share in November 2008, some may have considered my pick a rather bold one, given the stock's astonishing performance over the previous year. However, tracking the precious metals market as closely as I have over the past several years, I continued to spot a strong bargain in silver prices relative to gold. Well, guess what: The ratio of gold to silver prices has actually continued to increase, as gold's multiyear run marched onward toward my own conservative target of $2,000 per ounce.

At a historically elevated gold-to-silver price ratio of 67:1, silver remains -- in my estimation -- an unmistakable bargain in the precious metals patch. As silver eventually regains a more normalized price ratio of at least 40:1, I expect it to outpace gold on a percentage basis over the next several years. Legendary investor Jim Rogers, despite maintaining a positive outlook for gold, is a more vocal proponent of silver.

Because of this anticipated strength in silver prices, I have highlighted a range of quality silver producers and offered them collectively as compelling investment opportunities. Hecla Mining (NYSE: HL  ) and Silvercorp Metals (NYSE: SVM  ) both enjoy negative production costs for silver ... meaning the total value of byproduct metals is more than sufficient to cover mining costs. Coeur d'Alene Mines (NYSE: CDE  ) has rebounded from the brink of failure to commission two world-class silver mines, and the miner recently added the long-awaited Kensington gold mine to an impressive production profile. With so many quality producers to choose from, I have argued that essentially any silver stock will do. Indeed, those finding the choices daunting may wish to consider the relatively new Global X Silver Miners ETF (NYSE: SIL  ) .

The untouchable star of silver
With so many solid choices available among primary silver producers, why do I continue to recommend Silver Wheaton as the best of the group, even after the stock has multiplied more then eight-fold from that low? The company's extensive portfolio of existing silver stream arrangements, its peerless position as the go-to source for monetizing future silver production, and the market's persistent failure to price-in the kind of profitability that Silver Wheaton will sustain (even if silver were to freeze at present prices) combine to form my $100 long-term price target for Silver Wheaton shares.

With a number of high-quality contenders among the picks selected by the Fool community, I can't predict whether Silver Wheaton will outshine them all during 2010. But with a longer-term story under way, which I see resulting in a quintupling of Silver Wheaton's current share price, I look forward to seeing how the rest of the group stacks up over time.

Gold is a hot topic on the blogs at Motley Fool CAPS. Join the free service today and see just how many Fools are taking the long view when it comes to investing in gold. The "Gold" tag at CAPS lists 52 potential investments, and you'll find Christopher's comments on most of them.

Fool contributor Christopher Barker carries a silver coin that reads: "Honest value never fails." He can be found blogging actively and acting Foolishly in the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Coeur d'Alene Mines, Hecla Mining, Silvercorp Metals, and Silver Wheaton.

Akamai Technologies is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool's disclosure policy is 0.999 pure.


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