With the turbulent 2008 year drawing to a close, the focus is turning to 2009 which offers a 'once in a lifetime' opportunity to buy up quality stocks as market conditions improve.  Despite the fact that global markets are unlikely to recover to their pre-credit crunch position in the near future, we expect the market to rally in 2009 as the stock market presents a 'once in a lifetime' opportunity for the long-term investor.

While there are fundamental reasons for the share price declines of many companies, there are others which only have fallen in sympathy. Therefore, the issue at hand is to identify the stocks that are best positioned to both survive through our current crisis and recover when market conditions improve.

In our opinion, the market recovery will be lead by the large-capitalisation companies, due to increased investor confidence and perceived safety in these stocks.  Many of these companies often exhibit softer landings and quicker rebounds given their diversified exposures. Stable dividend payouts and low market prices also make many of these companies attractive for income investors, particularly in an environment of falling interest rates.

We also expect infrastructure stocks to benefit from increased government spending, aimed at boosting economic growth. Given our belief that increased government fiscal spending will be a contributing factor to a recovery in 2009, a sector we expect to recover is the infrastructure sector. The Federal Government's stimulus plan will inject cash into the economy and includes implementing new infrastructure projects. This will have a positive impact on engineering and construction companies.

However, the first quarter of 2009 will exhibit volatility as investor confidence recedes in the face of weaker forecasted earnings from companies. We predict an improvement in coming years as companies start deleveraging their balance sheet and returning to more sustainable practices with regards to financing their operations.

Lincoln has ranked possible outperformers in 2009 in several categories:

In making our assessment on the most fundamentally healthy of stocks on the ASX with solid outlooks, we look beyond simple share price movements to find companies expected to excel across a number of areas to deliver superior fundamental performance. Our selection criteria identify companies that have achieved the strongest growth in earnings, maintained strong financial health, expected to grow their business, and of course reward shareholders with share price performance and/or generous dividend payments.

Lincoln's best possible performers for 2009

Best Small Cap Stock

IMF (Australia) Limited (IMF)
IMF is a specialist provider of funding for legal claims where claim size exceeds $2 million. The company has performed strongly over the last two years, turning around losses in the first year and achieving phenomenal growth in earnings in the second year. When IMF last reported its annual results in for June 2008, it achieved 188 per cent growth in pre-tax profits to $24.847m. The outlook for IMF is positive. The company is well-positioned to take advantage of high-profile company cases that will arise during the current economic downturn.

Best Income Stock

Westpac Banking Corporation (WBC), 8.86 per cent dividend yield
WBC is Australia's largest bank by market capitalisation, courtesy of its takeover of St George's Bank (SGB). When the company last reported its results, WBC's pre-tax profit increased by 2 per cent to $5.251 billion despite the global financial meltdown. Although the takeover of SGB has increased the risk profile of its balance sheet, WBC's recent capital raising will offset this and improve its Tier 1 capital ratio from 7.6 per cent to 8.5 per cent.

Although the future looks uncertain for WBC as the credit crunch lingers over the next 12 months, its share price has already fallen significantly. The company's promise to maintain its dividend payout levels means it is trading at a high yield and it therefore may prove an opportunity for both value and income seeking investors with long term horizons.

Best Infrastructure Stock

Leighton Holdings Limited (LEI)
LEI is the parent company of Australia's largest construction and contract mining group. LEI achieved a remarkable profit growth of 31.5 % in the last half year, which was driven by large construction projects and contract mining of bulk commodities. The company's balance sheet remains strong, courtesy of its $700 million capital raising in August.

Our outlook for LEI is positive but mildly cautious. The weaker resource market will impact profit growth and there is some spare capacity on its order book in 2010. However, the Government is increasing infrastructure spending as part of its expansive fiscal policy and LEI will benefit from this. LEI has also been successful in securing numerous contracts in this difficult environment which will ensure earnings stability in coming periods.

Best Mining Stock

BHP Billiton Limited (BHP)
BHP is the world's largest diversified miner possessing a global portfolio of high quality assets. BHP's performance over the last year has been strong due to record mineral and energy prices. BHP reported a 3.76 per cent increase in earnings to $24.538 billion for FY08. However, resource prices have weakened significantly due to weaker economic conditions. The retraction of its bid for Rio Tinto ensured that BHP's balance sheet remains strong with minimal debt.

We expect BHP to continue to perform well despite the slump in both the energy and minerals sector. BHP possesses a diversified earnings base due. Coupled with low debt on its balance sheet, BHP is well placed to weather the downturn and position itself to benefit from a recovery.

Best Financial Stock

QBE Insurance Group Limited (QBE)
QBE is one of the world's leading insurance groups. It is well managed and highly diversified both by product and geographically, operating in 45 countries. QBE's performance in the last year has been strong and it maintained a robust insurance margin of 21.8% and achieved EPS growth of 16.77%. This is supported by the weaker Australian dollar which has magnified cash flows from its overseas operations. QBE maintains its strong cash position in spite of numerous recent acquisitions.

The outlook for QBE is positive and management expect further growth in 2009. Its strong balance sheet places it in prime position to benefit from additional asset acquisitions from some of its embattled competitors. The demise of these competitors will also benefit QBE in the form of increased market share.

Best Growth Stock

CSL Limited (CSL)
CSL specialises in biologically based health-care products and the supply of blood products and vaccines. CSL has performed strongly over the last four years, achieving phenomenal growth during this period. This is largely driven by the performance of its blood plasma products. Notably growth in its other divisions has also been strong with Gardasil being a stand out.

CSL has been perhaps one of the best performers on the ASX, largely retaining its share price value and growth premium despite the fallout across the market over the last year. Its outlook looks promising, with synergistic integration if recent acquisitions and the defensive nature of its products. The weak Australian dollar will also work to its benefit by magnifying its increasing earnings from overseas operations.