Investment Idea for 2012: Buy Fast Food Stocks, Avoid Banks

Jim Cramer of TheStreet.com and CNBC’s Mad Money points out that staying in cash in 2012 is not a great idea, because interest rates are very low.

Banks stocks are also an area to avoid, considering how heavily regulated the banks are now, and that they are tied to the unresolved economic mess in Europe.

McDonald's is one of Jim Cramer's stock investment picks for 2012.
McDonald's is one of Jim Cramer's stock investment picks for 2012.

Cramer also cautions that while cheap rental properties may represent a good value, in general one should approach real estate with caution, as it could easily lose more value.

What to buy then? Cramer points out that Americans are addicted to eating out, but economic times are still hard and people are less likely to choose expensive dining options. Instead, they gravitate to cheaper fast food outlets.

Cramer’s picks in this area are McDonald’s and Panera Bread Company.

Cramer also suggests diversifying in case any one economic sector does poorly. He points to Google as a safe technology investment. The company has high growth in several key areas, including social networking, mobile technology and cloud computing.

Investment Stock Picks for 2012: Roundup by Matt Schiffrin

Matt Schiffrin of Forbes.com has published four picks for best investment stocks of 2012. They are not his own picks, but have been selected by three major money managers, advisors and traders. I’ll summarize here and offer a little commentary:

Red Hat

The picks for best investment stocks of 2012 are as follows:

1. Red Hat

Nigam Arora, editor of the Arora Report, argues, “The premise behind this pick is that most money with the lowest risk is made by identifying a change before Wall Street.  In the world of information technology, two megatrends are in their infancy — migration to cloud computing and virtualization.”

Arora points out that Red Hat provides open source software that powers these two technological trends. “Red Hat is the equivalent of a seller of picks and pans to the miners during the California gold rush,” Arora says.

2. OfficeMax

George Putnam of The Turnaround Letter points out that OfficeMax’s stock declined steadily through 2011 and is now, he feels, significantly undervalued. The company is poised to expand overseas and to increase its online presence. “Even without renewed growth,” Putnam says, “a slight change in investor perceptions about OfficeMax could send the stock up sharply.”

Personally, I would be reluctant to invest in a stock that declined for most of 2011. I would wait until investor perception has indeed changed and the stock has reversed its downward momentum.

3. Foot Locker

This was picked out by Chuck Carlson of DRIP Investor. He points out that the last five quarters have shown stronger than expected profit growth, the stock has been on an upward trend, and the company has good cash reserves.

I kind of like this one, only because shoes are one of those things that people will always need. If the company is well managed, it would seem like a good buy.

4. Intel

Carlson’s other pick. The stock sold off in recent trading, and may represent a good buy at current levels.