These stocks are poised for healthy gains in 2013

London, Jan 5 : "Our biggest liability in the stock market has been the total destruction to confidence," James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $325 billion, said in a 12/24/2012 telephone interview with Bloomberg. "There's just so much evidence of this recovery broadening."

The quote above came from a Bloomberg article a friend sent me. The article pointed out two specific examples of stocks that experienced huge gains in 2012. Many investors missed out on a positive year for stocks, yet it's not too late to aim for potential winners for 2013.

Remembering that fear, like its cousin greed, are unhealthy reasons to sit on the sidelines like "deer paralyzed in the headlights," awakened investors are preparing to buy stocks before they move higher.

You don't have to have "confidence" in the stock market to make serious profits. You do need to have insight, understanding, conviction and money invested in specific companies whose shares have exceptional upside potential.

My followers and readers know that I'm a huge proponent of having a "safety net" underneath each individual stock position that we own. It just makes good sense, like buying life insurance or homeowners insurance.

Usually I avoid "penny stocks" like the plague, but I'll start this article with a speculative stock that happens to be up sharply today (December 26). Rite Aid Corp. (RAD) is the nation's third largest drugstore chain behind CVS Caremark (CVS) and Walgreen (WAG).

On December 20th, RAD reported that its out-of-store prescription sales empowered it to earn $60.5 million, or 7 cents per share, in the three months ending December 1. This was a big improvement to the same quarter last year when they reported a loss of $54.5 million, or 6 cents per share.

Rite Aid's business model has improved and investors are starting to notice, said Will Frohnhoefer, an analyst who covers the company for the brokerage BTIG, according to an AP article.

He noted that "... The company, which has a lot of debt, has improved its balance sheet by refinancing and helped its stores with remodeling. The analyst, according to the article, also said Rite Aid has "...benefited from growth in Medicare coverage and the gradual closing of a coverage gap called the doughnut hole in Medicare prescription drug coverage.

"I think it's all dovetailing together in a fairly attractive way for them," Frohnhoefer said. Rite Aid, which has seen its performance improve over the past several quarters, said its revenue slipped in the latest quarter by about 1% to $6.24 billion largely due to increases in generic drugs.

Speculative stocks like RAD could bring speculators a big pay-day if the company were to have another surprisingly good quarter ahead, or if it were acquired by a larger company or an activist investor group. My caveat is to only invest in RAD what you can afford to lose, and consider putting a stealth trailing stop loss in place once you invest.

A safer investment with less speculative risk is MGM Resorts (MGM), a company that owns a list of resort properties that looks like a "who's-who" in the gaming entertainment industry. Names including Bellagio, MGM Grand, Mandalay Bay and The Mirage adorn that list.

In addition to its 51% interest in MGM China Holdings Limited, which owns the MGM Macau resort and casino, the company has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in three other properties in Nevada and Illinois.

One of those investments is CityCenter, an unprecedented urban resort destination on the Las Vegas Strip featuring its centerpiece, ARIA Resort & Casino. Through its hospitality management subsidiary, the company holds a growing number of development and management agreements for casino and non-casino resort projects around the world. Now, let's take a look at the four-year history price chart and RSI.

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