3 Stocks Investors Must Watch in 2013

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 Amazon.com 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 (NASDAQ: GMCR  ) , 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
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