Broadly speaking, stocks were a fine investment in 2010. True, the market lagged the jaw-dropping returns to be found in, say, gold, which jumped about 25%, or silver, up 75%. But the S&P 500 ($INDU) is set to close 2010 with a 13% gain -- something that was almost unthinkable as recently as September -- and we'd gladly take returns like those again in 2011.

Wall Street's average price target on the S&P 500 has it tacking on another 11% over the next 12 months, according to Bloomberg data -- with plenty of ups and downs along the way, naturally. That has us inclined to play defense in our 2011 stocks picks, with an eye toward bargain stocks paying generous, sustainable dividends.

We screened the S&P 500 for stocks trading at deep discounts to the index by forward earnings, currently at 14.6, according to market research firm Birinyi Associates. We also looked for price/earnings-to-growth (PEG) ratios well below the S&P 500's figure of 1.6, according to data from Thomson Reuters. (PEG reveals how how a stock is valued relative to its growth prospects.)

Additionally, we looked for companies with dividend yields that are higher than that of the broader market (1.9%) and are stable or likely to rise. We then added those forward dividend yields to Wall Street's average price target to get the implied upside of the stock over the next 12 months or so.

Pharmaceutical giant Abbott Labs (ABT) came in at the top of our list for 2011, with an implied return of more than 30% by this time next year. Avon Products (AVP), benefiting from more representatives joining its ranks during the economic downturn, is forecast to gain 23%. Intel (INTC), a component of the Dow Jones Industrial Average ($INDU) that also affords U.S. investors exposure to global growth, is seen returning nearly 20%.

Consumer stocks are well represented, with food giant ConAgra (CAG), tobacco company Philip Morris International (PM), beverage maker Dr Pepper Snapple (DPS), apparel manufacturer VF Corp. (VFC) and Kimberly-Clark (KMB), best known for Kleenex tissues and Huggies diapers, all on the list. Rounding out the picks are Dow components DuPont (DD) and Chevron (CVX), and aerospace firm Lockheed Martin (LMT).




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Robert Davis

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September 20 2011 at 2:47 AM Report abuse rate up rate down Reply
James Balfour

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August 19 2011 at 1:03 AM Report abuse rate up rate down Reply
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August 18 2011 at 4:43 AM Report abuse rate up rate down Reply
MichaelFrayn

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August 12 2011 at 3:13 AM Report abuse rate up rate down Reply
James Balfour

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ENTB

August 12 2011 at 12:52 AM Report abuse rate up rate down Reply
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June 27 2011 at 1:47 AM Report abuse rate up rate down Reply
naveendude1

Is there an Enterprise Value EC atached to these pciks. then a EV/EBIDTA ratio will be very useful in determining the winners in 2011.

January 02 2011 at 4:20 AM Report abuse rate up rate down Reply
rwdvddndcrw

I only see 3 of these stocks actually trading at the low end (value) of the normal stock prices, most are in the later stages of an upswing, some at 5 yrs highs (don't see value in that). Of course factors such as dividend yield and company changes that might propel stock prices to higher levels, may help make a couple of these look better, I'd only invest in ABT, AVP, and LMT. There are alot better choices than the others out there.

December 31 2010 at 9:08 AM Report abuse rate up rate down Reply
Mike

As the economy picks up, raw materials, finished goods, and a lot of food commodities use trucking and trains for transportation. Campbell's soup gets to wholesale grocer's warehouses a lot of times by the trainload. Gennessee and Wyoming Railroad (NYSE: GWR), has had nine straight months of box czar growth, and their stock has gone from about $24 when GM filed for bankruptcy, to about $52 now. Kraft is also owned by Philip Morris, one of the top 10 picks above.

December 31 2010 at 12:44 AM Report abuse +1 rate up rate down Reply
cartra

LET'S INVEST WHAT'S LEFT OF OUR LIFE SAVINGS INTO THESE RECOMMENDED STOCKS THAT THE ANALYST'S HAVE ALREADY MADE THEIR POSITIONS IN. THEY KNOW THE COMMON INVESTOR FOLLOWS THEIR PROFESSIONAL ADVISE. NO THANKS I WILL MAKE MY OWN PATH!!! I WILL NEVER AGAIN FOLLOW THE CORRUPT LEADERS OF THE HERD!!

December 30 2010 at 11:58 AM Report abuse +11 rate up rate down Reply