Some data center REITs offer the potential for above-average growth and reduced risk in the long term from a portfolio perspective relative to real estate due to less exposure to employment or GDP rates, says Dave Rodgers, CFA, a Director at RBC Capital Markets.

“There is a differentiating factor to some of these specialty REITs, including data centers, that really give them a unique aspect to investing,” he said. “You put it in your portfolio, that offers a differentiation and diversification, which should reduce risk over time. So we do like that, and again, it does offer above-average growth.”

Rodgers favors CoreSite Realty Corporation (COR), a small company with solid execution in its first year as a public company in 2011. He says COR remains active in the higher-growth aspects of data centers, which are the network and interconnection businesses, and he expects growth in those areas, where the company is having meaningful success and has been able to drive dividends.

“COR remains what I would call a little bit of a middle-of-the-road player dabbling in the wholesale, or power side, of the business, but aggressively pursuing the network side with fundamental characteristics suggesting a small company with the ability to grow,” Rodgers said.

Within the clean technology sector, increased activity from the capital markets and a movement toward commercialization for several companies are supporting a bullish outlook on the biofuel and biochemical space, and attracting attention from the investor community, says Ben J. Kallo, CFA, Senior Research Analyst at Robert W. Baird & Co.

“I think the investors that want to play in the space have taken the approach of buying a little bit of each of the public companies, and using kind of a basket approach, which you would sometimes see similar to a biotech investor, so rotating out of some of the companies that hit some roadblocks into some of the companies that seemed to be farther long in their growth roadmap,” he said.

Kallo has an “outperform” rating on Solazyme, Inc. (SZYM) and calls it one of his favorite names in the biofuel space. He says the company’s partnerships and investors are some of the best in the industry, as well as its technology that develops tailored oils using algae, which allows SZYM to capture higher ASPs for its products and attack different markets.

“They had a very successful IPO; they have a good cash position, which will allow them to execute on their plan. Again, like I said, they have good partnerships and some of their partners are actually contributing capital, a portion of capital for production facilities, if not all the capital in some cases,” Kallo said.

Enterprise demand for data storage remains growing as more data migrates from analog records into the digital data centers, and financial, entertainment, health care and social media companies are leading the content digitization demand surge, says Jim Yin, Equity Research Analyst at Standard & Poor’s Capital IQ.

“IDC projects that the amount of bits of data storage continues to grow at its historical growth rate, somewhere around 45% per year on a compound annual growth rate basis,” Yin said. “That’s partially offset by the lower cost of data storage – about 30% – so longer term the industry is expected to grow somewhere around the high-single-digits or low teens.

Yin points to VMWare (VMW) as one on the companies best positioned to take advantage of the virtualization software market. VMW currently has between 85% to 95% share, and it is a preferred platform in the industry given its compatibility and high-quality performance.

“The key advantage of VMware, in our view, is that you can think of the company as somewhat platform neutral or independent, so regardless of whether you’re running Linux, Unix or Microsoft operating systems, VMware will support them,” Yin said. “Also maybe has the highest performance.”

Utilities face headwinds in 2012 due to difficult comps after outperforming as a group in 2011 and as other sectors raise their dividend yields. But as the economy improves, Jonathan Arnold, Managing Director at Deutsche Bank, says he will focus on value opportunities and names with potential catalysts.

“As the macro environment has stabilized somewhat, investors are a bit more comfortable I think with taking risk generally in the market. We think that’s an opportunity for some of the more beaten-down utilities with maybe issues, challenges or catalysts that struggled in last year’s defensive market environment,” Arnold said.

Arnold’s top pick for 2012 is Edison International (EIX). Arnold says EIX is a sum-of-the-parts story where Edison Mission Energy, an entity with coal exposure and environmental challenges, is driving down the price of Southern California Edison. In the next 12 months, he expects management to restructure to salvage value.

“What appears to be a high-p/e, low-yield story at first glance at consolidated earnings is actually a lower-p/e with a potentially higher yield. On the latter, some time in the next probably a two-year period, we see a reasonably good chance that the dividend is raised more in line with peers on a payout basis,” Arnold said.

The nascent biofuel segment is circumventing the headwinds affecting the rest of the alternative energy industry, due to the lack of reliance on government subsidies, nonexistent competition from China and direct leverage to the price of oil, says Pavel Molchanov, Analyst at Raymond James & Associates, Inc.

“There are still very few publicly traded companies. I think that number will increase over time as more of these venture-backed startups go public. But to be sure, it’s still a relatively narrow space for public equity investors. There are nine public pure plays, and in total, their market cap is approximately $3 billion,” Molchanov said.

Molchanov points to KiOR (KIOR) as the largest publicly traded biofuel company. KiOR develops cellulosic biofuel in a catalytic process analogous to what refineries use for catalytic cracking. The resulting biocrude can be refined through normal refining infrastructure to produce virtually any fuel, including diesel and jet fuel.

“At [KiOR's] fully commercial-scale facility, the target cash production cost is $1.80 a gallon, which translates to roughly $75 oil. Right now, WTI crude oil is near 100 bucks, and Brent is $10 higher. So producing oil at $75 a barrel looks like a pretty good deal,” Molchanov said.

Data storage is becoming the top priority in IT budgets across the board. A recent survey of CIOs revealed 68% of them plan to increase storage spending in 2012, making the category the highest priority, followed by security at 65% and servers at 51%, said Andrew Nowinski, Research Analyst at Piper Jaffray & Co.

“If you look at IDC, they’ve forecasted total available storage capacity to increase by a factor of 12 times through 2020, up to about 15 zettabytes. But the digital universe is actually expected to grow by a factor of 29 times during that same period. So that disparity creates an obvious shortage of capacity,” Nowinski said.

NetApp (NTAP) is Nowinski’s favorite “buy”-rated stock in the data storage sector. He says the company has three new product cycles: the ONTAP 8.1 operating system, the FAS2240 low-end platform to address new markets and the Engenio product line, all of which are expected to result in better comps from low 2011 numbers.

“NetApp has had arguably lagging growth over the same four-quarter period. So in my opinion, they have very easy comps that should start to anniversary in the July quarter, which should enable them to deliver strong year-over-year core product growth in comparison to EMC’s more difficult comps and their lower growth levels,” Nowinski said.

The growth of the smartphone and tablet device market in the United States, at first powered by Apple’s (AAPL) iPhone, is now becoming more competitive and driving significant valuation changes in both wireless carrier and wireless device stocks.

James D. Breen, of William Blair & Company, sees the rise of the smartphone as a squeeze on wireless carrier profits. “With the advent of the iPhone and the Google (GOOG) Android platform, really the handset providers are the ones stirring the pot with consumers and saying, ‘OK, here’s this new device, we’re going to give you this; here’s what you could do with it if the carriers improve their network quality.’ It phases a portion of the carrier’s full capex into the network and to upgrade speeds at the same time that they are forced to subsidize more expensive smartphones. So from a cash flow perspective, it’s a little bit of a squeeze.”

This wireless carrier cash squeeze in the United States could lead to more rapid valuation changes as bandwidth-rich, cash-poor companies become targets for larger rivals that have additional spectrum requirements.

Jonathan Chaplin, of Credit Suisse, recently said Clearwire (CLWR) is going to become bandwidth bait as the spectrum squeeze plays out: “Clearwire is the one company out there with massive amounts of unused spectrum, and we think that their spectrum is going to increase in value significantly as data demand increases,” he said. “AT&T is going to need more spectrum. T-Mobile is going to need more spectrum. Leap (LEAP) and MetroPCS, (PCS), who had planned to buy spectrum, need more spectrum. So it creates a tremendous amount of demand for Clearwire’s very scarce asset.”

The European oilfield services sector anticipates potential long-term growth for investors in its offshore/subsea construction subsegment with valuations offering attractive entry points, says Bastien Dublanc, Analyst at RBC Capital Markets.

“This sector does not look cheap based on 2012 earnings as it trades at 15 to 16 times p/e. For 2013, based on the outlook we anticipate and the visibility, which is likely to build during the year, valuation drops to between 10 to 12 times earnings on 2013. At this point of time, investors will look at buying a strong earnings growth story between 2012-2013,” he said.

Dublanc says Technip (TEC.PA), which is listed in Paris, is the best stock to take advantage of the long-term growth potential of offshore and subsea capex. He says he forecasts growth over the next five years for subsea equipment to be slightly north of 20% and operators to grow their offshore spending excluding drilling about 10% to 15% over the next few years.

“Regarding 2013, yes, we see the sector being quite attractive. In that respect, the oilfield services sector in Europe is probably better suited for growth investors compared to value investors; 2012 will help to confirm that assumption,” Dublanc said.

Robert Watson Jr., Chief Executive Officer of EnerJex Resources, Inc. (ENRJ), talked to The Wall Street Transcript about his company.Click here to read the complete interview.

TWST: Please begin with a brief introduction to EnerJex, including a few highlights from its history and an overview of its primary operations.

Mr. Watson: EnerJex (ENRJ) is a domestic onshore oil company with producing assets located in eastern Kansas and south Texas. My partners and I became substantial shareholders at the beginning of 2011 through a comprehensive transformation of the company that I will walk you through. We completely reconstituted the management team and board of directors, and we completed a series of financial transactions that addressed some balance sheet issues the company was having. For example, we raised $5 million of common equity and we converted $2.7 million of debt into common equity at $0.80 per share. We also made some acquisitions through the issuance of equity. Following these transactions, we are intensely focused on creating per share value by developing our extensive asset base with minimal dilution to shareholders.

In early 2011, we launched an aggressive drilling campaign to develop some of our low-risk oil properties and increase our revenue and cash flow. In addition, we highgraded our asset portfolio by selling $5.5 million of noncore assets.

A year ago, I would characterize EnerJex as a turnaround situation. And today, after a tremendous amount of work, I think we’ve made the turn, and we’re positioned for another year of significant growth in 2012.

As far as EnerJex’s operations, we’ve got two shallow oil projects in eastern Kansas and one shallow oil project in south Texas, all of which are producing and have considerable room for expansion.

Click here to read the complete interview.

U.S. regional banks with a focus on the Asian-American demographic have been showing the ability to grow loans and generate top-line revenue growth in an environment where the mainstream banks have had more difficulty, says Gary P. Tenner, CFA, Vice President and Senior Research Analyst at D.A. Davidson & Co.

“A lot of the banks have been originating new credit lines, though we’ve not seen customers draw down and really start utilizing those credit lines. Until we start seeing greater utilization of credit lines, I expect revenue and margins are going to be under pressure,” he said.

Tenner recommends Cathay General Bancorp (CATY), a U.S. regional bank with a focus on ethnic Asian populations, because its stock is trading at about 140 of tangible book value. Cathay has shown consistent progress and presents an investment opportunity in its segment.

“It’s a bank that’s actually been growing loans, growing top-line revenue, credit still has some room for improvement, so there is still, I think, some credit leverage in the story, and the margins have been improving as they have gotten a little more disciplined on their deposit pricing and they’ve repaid some funding,” Tenner said.