3 Stocks Investors Must Watch in 2013

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Like a mountain lion hiding in a corn maze, 2013 is suddenly upon us. While consumers continued to be hesitant about the fiscal cliff, there are a handful of brands that are continuing to forge ahead. All the usual suspects are here, but there are three that you should keep an extra-close eye on. We've got a bookseller, but not because of the books; a coffee maker that we -- or at least I -- used to hate; and a handbag company that's set the bar too low. Welcome to 2013, coming at you with a roar.

Take a look, it's in a Nook
2013 is going to be a big year for Barnes & Noble (NYSE: BKS  ) . The company's retail business continues to suffer, with revenue falling 3% in the last quarter. It's no surprise that the retail segment is hurting, with Borders having gone under, big-box stores all over the country suffering, and print book sales dropping like a stone. The weak revenue stream resulted in an $11 million operating loss for the retail segment. With numbers like that, who wouldn't be excited about the stock?

Two words sum up why investors need to watch Barnes & Noble in 2013: Nook spinoff. While the company has been getting killed in the store, its digital realm is winning all of the sports. Sales increased 6% last quarter, and the Nook now holds on to 25% to 30% of the market. Barnes & Noble is fighting tooth and nail, but has yet to overcome the online giant's dominance.

But things should be changing next year. In 2012, Microsoft and Pearson both invested in the Nook business unit, and Barnes & Noble dropped hints that it was eventually going to spin off the division. That's great news for investors. Barnes & Noble currently has a market cap below $900 million, but the recent Pearson investment values the Nook business alone at $1.8 billion. Investors could reap huge rewards if that value were to be unlocked through a spinoff. I'll be looking for solid plans to be laid out over the first few months of 2013, and for the spinoff to happen by the end of the next fiscal year.

The trials and tribulations of Green Mountain Coffee Roasters
I've never been a huge proponent of Green Mountain (UNKNOWN: GMCR.DL  ) , worrying mainly about its competitive moat. In fact, earlier this year I was happy to announce that the company was going to get crushed at the end of the year when the new Starbucks (NASDAQ: SBUX  ) home brewing machine came on the market. But the fall didn't materialize, and so I went back to reexamine the company.

Green Mountain had a lock on the market until the end of the year, when its patents for the K-Cup design expired and opened up the market to competition. Shortly afterward, Starbucks released its brewer, which provides a wider range of drinks than the Green Mountain machines. But the increased competition didn't seem to damage Green Mountain. Instead, it looks like the move from Starbucks may have increased the visibility of the single-brew systems, and given more people a reason to hunt down the less expensive Green Mountain machines.

As a result, last quarter sales were up 33% at Green Mountain -- or 20% ignoring the extra week in this year's fourth quarter. Earnings per share grew 23% for the full year, and yet the company is still trading at a relatively low P/E of 17. 2013 is going to be a make-or-break year for Green Mountain. Either sales will continue their pace and the market will slowly realize that the company is undervalued, or everything will collapse under the weight of competition. While I'm still not ready to say that Green Mountain will definitely end up on top, I'm also less inclined to call it a sunk ship.

Coach's falling sky
At the end of July, Coach (NYSE: COH  ) announced that its 2013 fiscal year was going to be an investment year. That statement dropped the share price 19% in one day. As a result of all the pessimism, Coach is still trading at a modest P/E, even as it shows signs of strength. Last quarter, revenue grew 6%, with comparable-store sales rising 6% in North America and at an unspecified double-digit rate internationally.

In 2013, I'm going to be looking for that international strength to continue, while at home, Coach increases the value of its menswear line. That business is still growing, and the company has accurately highlighted the untapped potential in men's clothing and accessories. If there is money to be spent, it's going to be spent expanding the company's reach and building a more profitable company for the coming years.

Happy New Year's to everyone, and I hope 2013 brings you happiness, high returns, and more than a little learning.

More expert advice from The Motley Fool
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2173647, ~/Articles/ArticleHandler.aspx, 10/22/2016 9:40:49 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 12 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
BKS $10.75 Down +0.00 +0.00%
Barnes and Noble CAPS Rating: *
COH $35.55 Down -0.36 -1.00%
Coach CAPS Rating: ****
GMCR.DL $0.00 Down +0.00 +0.00%
Keurig Green Mount… CAPS Rating: **
SBUX $53.63 Up +0.04 +0.07%
Starbucks CAPS Rating: ****