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Dec. 17, 2013, 12:02 p.m. EST

Stock-ing stuffers: 3 sectors and 10 stocks for 2014

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About Oliver Pursche

Oliver Pursche is the Chief Executive Officer of New York-based Bruderman Brothers, LLC a registered broker/dealer and Bruderman Asset Management, LLC, a registered Investment Advisor overseeing over $1 billion in client assets.He is a member of the Harvard Business Review Advisory Council and a monthly participant in the New York Federal Reserve Bank Business Leaders Survey. As a frequent contributor to CNBC and Fox Business and a regular columnist for Forbes and The Wall Street Journal’s MarketWatch, he is a recognized authority on global affairs and investment policy. He is the author of “Immigrants: The economic force at our door.” 

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By Oliver Pursche

Markets are getting more expensive, and investors are becoming increasingly concerned that eventual changes in Fed policy and rising interest rates will cause market volatility to rise and stocks to fall. While a rise in market volatility is almost assured for 2014 (after all, 2013 was one of the least-volatile years on record), I still expect low double-digit returns for U.S. stocks next year. Below are three sectors and 10 stocks I think will shine in 2014.

1. High-quality, dividend-paying stocks should continue to perform well, especially if volatility picks up sharply. Within that group, our analysts have identified a group of 15 stocks in our Dividend Buster Portfolio that were are excited about for next year. They include:

  • BCE /zigman2/quotes/207623025/composite BCE +0.51% : Canada's largest telecom company, providing services to 70% of Canada. Along with growth in its wireless business, highlighted by an increasing subscriber base and continued investment in their network coverage, BCE is also expanding in its media segment, leading to greater video usage. Shares have a dividend yield just over 5%.

  • Verizon /zigman2/quotes/204980236/composite VZ +0.47% : 2013 marked the seventh consecutive year that Verizon has increased its quarterly dividend, which now stand at almost 4.5%. Rising dividends are a wonderful thing and tend to reward shareholders with rising stock prices as well.

2. In addition to high-quality, dividend-paying stocks, I also expect investors to seek out companies whose revenues are growing at a double-digit rate and have a strong balance sheet that could help them with acquisitions and higher cap-ex spending. Large-cap technology shares look attractive and are a significant component of our Revenue Buster Program. Here are some highlights:

  • Apple /zigman2/quotes/202934861/composite AAPL +0.46% : It might no-longer be a highflier, but the valuation is very attractive. Revenue growth is stronger than most perceive and margins are among the best in the category.

  • Cisco Systems /zigman2/quotes/209509471/composite CSCO +0.55% : While the company has gone through a rough patch, several major business lines, including networking, data centers, and cloud computing remain positive for Cisco, a leader in the industry.

  • Qualcomm /zigman2/quotes/206679220/composite QCOM +6.00% : Mobility (use of mobile phones) is on the rise, and Qualcomm is leading the charge as a key provider. Rapid smartphone growth in Emerging markets such as China should prove to be a boon for Qualcomm, whose Snapdragon chips power top devices like the iPhone 5s and Samsung Galaxy S4.

3. Don't confuse small with new or risky. The small-cap sector has some uncovered gems (OK, so our analysts have uncovered them), especially in the health-care sector. Our Small-Cap Buster program focuses on lower-volatility, small-cap companies, many of which pay a dividend, have strong positive cash flow and are expected to grow revenue by double digits annually over the next five years. Here are five of our favorites:

  • Computer Programs and Systems /zigman2/quotes/209303693/composite CPSI +0.92% : Creates health-care information-technology solutions for small and mid-size hospitals. The company has solid balance sheet and an attractive dividend yield of about 3.4%.

  • Charles River Laboratories /zigman2/quotes/203944031/composite CRL +1.48% : Provides animal-research models needed for drug R&D along with preclinical testing services. A strong strategic partnership with AstraZeneca /zigman2/quotes/200304487/composite AZN +1.46%  has allowed the company to experience strong growth.

  • Haemonetics Corp /zigman2/quotes/205816408/composite HAE +0.29% : This health-care company provides blood-management solutions along the blood-supply chain. I expect gains in 2014 from increasing margins and a decreasing cost structure.

  • Masimo Corp /zigman2/quotes/207992094/composite MASI +3.08% : Designs and creates non-invasive patient-monitoring products used in emergency rooms, operating rooms, and ICUs. The company has sizable cash on hand coupled with no long-term debt.

  • Owens and Minor /zigman2/quotes/204317691/composite OMI +1.03% : Supplies medical and surgical supplies to hospitals nationwide. The company should benefit from the passage of the Affordable Care Act. The stocks yields more than 2.5%.

Of course, trends and company fundamentals change, so we'll be paying close attention to these stocks, which are just a small sample of companies included in our high-dividend-paying, growth-stock and small-cap, low-volatility strategies.

Stocks mentioned in this story are holdings in the GMG Defensive Beta Fund and in separate accounts at Gary Goldberg Financial Services.

/zigman2/quotes/207623025/composite
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/zigman2/quotes/202934861/composite
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28.52
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0.60%
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1.80%
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/zigman2/quotes/209303693/composite
US : U.S.: Nasdaq
$ 31.78
+0.29 +0.92%
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32.29
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0.00%
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/zigman2/quotes/203944031/composite
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$ 405.52
+5.90 +1.48%
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54.93
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N/A
Market Cap
$20.08 billion
Rev. per Employee
$158,909
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/zigman2/quotes/200304487/composite
US : U.S.: Nasdaq
$ 57.64
+0.83 +1.46%
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37.87
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2.38%
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$177.59 billion
Rev. per Employee
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/zigman2/quotes/205816408/composite
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$ 59.76
+0.17 +0.29%
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38.54
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N/A
Market Cap
$3.04 billion
Rev. per Employee
$321,441
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/zigman2/quotes/207992094/composite
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$ 272.80
+8.14 +3.08%
Volume: 370,549
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P/E Ratio
70.70
Dividend Yield
N/A
Market Cap
$14.57 billion
Rev. per Employee
$184,475
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/zigman2/quotes/204317691/composite
US : U.S.: NYSE
$ 45.90
+0.47 +1.03%
Volume: 602,020
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P/E Ratio
29.59
Dividend Yield
0.02%
Market Cap
$3.41 billion
Rev. per Employee
$451,073
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