Safe Bets for Grandpa
Morningstar reviewed its favorite "Ultimate Stock Pickers" in the mutual fund industry and came out with a list of common holdings. Check out this article http://www.cnbc.com/id/45510883 … and then forget about it. Most of these stocks won’t give you any significant returns until you have 4 kids with a 5th on the way, which is very not bro. A mutual fund is too busy recruiting funds than managing your money. Don’t forget, 80% of mutual funds underperform the S&P 500. (read: These Sperry’s Are Retail)
1. Microsoft (MSFT): Just like a bro never puts fruit in his beer, a bro never owns MSFT. Put down your man purse (it’s not a satchel, D-bag) and grow a pair. Sure, it is actually a really great company but the stock has gone NOWHERE. Follow this: it is down 20% the last 10 years despite EPS growth of 240%. Its 2-year trading range has flat lined, never getting above 30. You won’t lose any money with this stock, but you won’t gain any either.
2. Wal-Mart (WMT): There is one reason why you should walk away from Wal-Mart: there is no growth left. There’s already a Wal-Mart at every corner and communities are resisting any new stores. Look at the 10-year chart and you’ll see it’s been capped at $60. I see restricted upside with downside risk in the event of better competition. Large, nationwide stores should always be avoided. If you’re looking for a retail stock, pick a regional one that could breakout and spread across the country. That is where growth, and stock profits, can be found in this sector.
3. Exxon Mobile (XOM): Oil stocks are a good play right now. Oil is sitting around $100 and it looks like it wants to go higher, which is great for the largest company in the sector. XOM is a cash machine and is only sitting at 9x earnings. Look for this one to test the century mark in the next 12 months.
4. Wells Fargo (WFC): Wells Fargo and JP Morgan are clearly the crème de la crème of the big US banks. The financial stocks have been hammered over the last year, and a savy bro knows that beaten down stocks can be great buys. After the recent rally, I’d wait for the next pullback before entering. Looking at the numbers, JPM is a better bet. Both banks have similar PEG ratios, but JPM has a PE 30% lower and offers a better dividend. Go with JPM.
5. Procter & Gamble (PG) + Johnson and Johnson (JNJ): For now, the economic uncertainty benefits the non-cyclical stalwarts like P&G and J&J. But this won’t last forever. If the Fed stays true to its word, interest rates will be kept crazy low for the foreseeable future. Lower rates will stimulate the cyclical stocks to take advantage of the lower borrowing costs and invest in real growth. The economy eventually gets back on its feet, with the tiniest exception of a European Armageddon, and growth stocks grow, grow, grow. You need to be one step ahead of this game and anticipate the shift of money away from the stronghold of safeties and into cyclical’s (GM anyone???). That time might not be here just yet, so I can’t tell you to ignore P&G and J&J.
No one can tell you you’re wrong to hold onto P&G and J&J and collect a rock solid dividend (it won’t suddenly disappear…ever). It’s just not the only investing strategy that a bro should embody during an economic turnaround.
Disclosure: The author is long PG and has added to it every Christmas since he was 10 years old.
***Information on this site is for informational and entertainment purposes only and is not to be considered as a solicitation or recommendation. The authors do not guarantee the accuracy of any of the information presented on this site. Investing can be extremely risky.The authors of this site are not connected with the financial industry and nothing here should be construed as giving financial advice. The authors may and often will own the stocks they pick. The authors give no guarantee of the accuracy, truthfulness, candor, precision, sureness, strictness, definitude, legitimacy, verity, reliability, completeness, veracity or preciseness of any information presented and in no way are the authors responsible for any damages or loses incurred by using information contained in the site.*****
1. Microsoft (MSFT): Just like a bro never puts fruit in his beer, a bro never owns MSFT. Put down your man purse (it’s not a satchel, D-bag) and grow a pair. Sure, it is actually a really great company but the stock has gone NOWHERE. Follow this: it is down 20% the last 10 years despite EPS growth of 240%. Its 2-year trading range has flat lined, never getting above 30. You won’t lose any money with this stock, but you won’t gain any either.
2. Wal-Mart (WMT): There is one reason why you should walk away from Wal-Mart: there is no growth left. There’s already a Wal-Mart at every corner and communities are resisting any new stores. Look at the 10-year chart and you’ll see it’s been capped at $60. I see restricted upside with downside risk in the event of better competition. Large, nationwide stores should always be avoided. If you’re looking for a retail stock, pick a regional one that could breakout and spread across the country. That is where growth, and stock profits, can be found in this sector.
3. Exxon Mobile (XOM): Oil stocks are a good play right now. Oil is sitting around $100 and it looks like it wants to go higher, which is great for the largest company in the sector. XOM is a cash machine and is only sitting at 9x earnings. Look for this one to test the century mark in the next 12 months.
4. Wells Fargo (WFC): Wells Fargo and JP Morgan are clearly the crème de la crème of the big US banks. The financial stocks have been hammered over the last year, and a savy bro knows that beaten down stocks can be great buys. After the recent rally, I’d wait for the next pullback before entering. Looking at the numbers, JPM is a better bet. Both banks have similar PEG ratios, but JPM has a PE 30% lower and offers a better dividend. Go with JPM.
5. Procter & Gamble (PG) + Johnson and Johnson (JNJ): For now, the economic uncertainty benefits the non-cyclical stalwarts like P&G and J&J. But this won’t last forever. If the Fed stays true to its word, interest rates will be kept crazy low for the foreseeable future. Lower rates will stimulate the cyclical stocks to take advantage of the lower borrowing costs and invest in real growth. The economy eventually gets back on its feet, with the tiniest exception of a European Armageddon, and growth stocks grow, grow, grow. You need to be one step ahead of this game and anticipate the shift of money away from the stronghold of safeties and into cyclical’s (GM anyone???). That time might not be here just yet, so I can’t tell you to ignore P&G and J&J.
No one can tell you you’re wrong to hold onto P&G and J&J and collect a rock solid dividend (it won’t suddenly disappear…ever). It’s just not the only investing strategy that a bro should embody during an economic turnaround.
Disclosure: The author is long PG and has added to it every Christmas since he was 10 years old.
***Information on this site is for informational and entertainment purposes only and is not to be considered as a solicitation or recommendation. The authors do not guarantee the accuracy of any of the information presented on this site. Investing can be extremely risky.The authors of this site are not connected with the financial industry and nothing here should be construed as giving financial advice. The authors may and often will own the stocks they pick. The authors give no guarantee of the accuracy, truthfulness, candor, precision, sureness, strictness, definitude, legitimacy, verity, reliability, completeness, veracity or preciseness of any information presented and in no way are the authors responsible for any damages or loses incurred by using information contained in the site.*****
