The stock market remains unstable for now so I am sticking with the theme of focusing on relatively safe companies that are worth considering as long term holds. There is some fear and uncertainty in the market and any experienced investor knows this also brings opportunity.
United Parcel Service (UPS) is a rock-solid company that has increased shareholder equity continuously over the last five years. It has a clean balance sheet with long term debt-to-equity ratio of 0.2 and pays a 1.9% dividend yield. Like Berkshire Hathaway (BRK.B / BRK.A) it is one of only seven or eight companies (out of thousands) that have an AAA financial rating -- extremely strong! I bought some last year as oil prices were rising and the stock had dropped, the market fearing the company's earnings would be hurt since it maintains the largest private fleet of planes and trucks in the world. Well it, like other carriers, just added a surcharge and kept on doing business as usual. Now oil prices are moving up again and the same thing is happening -- and again it has got my attention. This is a company you can leave to you kids, grandchildren and great grandchildren. If you can buy something of this high quality on sale, why not?
Anheuser-Busch (BUD) "this Bud's for you." It has only gone up for over 100 years, now that's a track record! BUD IS A SAFE HAVEN 4SURE. The company has a beta of 0.25 which means it does not move in lock-step with the market. Can you beat a return-on-equity (ROE / TTM) of 70.53; three and a half times its 19.64 P/E ratio -- That is incredible! It also has a 2.3% yield. The stock has been trading in the higher end of its 52-week range (40....45....47) but offers tremendous stability and should be watched closely if it starts moving toward the lower end of the range. I have owned it in the past and hope to again.
Proctor & Gamble (PG) has been brought to my attention by astute investors that have read some of my posts about strong companies with dividends, hard assets and diversification. It has strong cash-flow, a 2.2% yield (higher than the S&P average) consistent profit margins and growth. This strength has a cost because you are paying a trailing twelve month (TTM) P/E of 21.24 which is a premium over the S&P average, however, with a return-on-equity (ROE) of 34.34% and an return-on-invested-capital (ROIC) 20.48% you are getting something for your money. This is reflected in its significant increases in shareholder equity every year.
Already known for solid management, with the addition of Gillette to the family the company can now add Warren Buffett to their list of major shareholders which is just about the only way that the leadership could have been improved. This company has a great history and will be around long into the future and offers as much predictability as one could hope for in their performance. I do not own it but I cant help but watch it!
Petro-China (PTR) has been mentioned many times in my posts. I own it, Warren Buffett owns a major position and I wish I bought more. It has very solid fundamentals. Is there anybody on planet Earth (or in the universe for that matter) that thinks China will use less oil tomorrow than they did yesterday, less next year than last, less in twenty years -- No Chance! This level of predictability is very unusual and PTR is the biggest player. Now consider that the company pays a 3.7% yield, (great in a Roth IRA), has a trailing (TTM) P/E ratio of 11.55, almost no debt, and its ROE is three times their P/E at 31.38% and all I can say is WOW! You also get diversification and put some money over seas. This is a company to buy on dips every chance you get.
There are eight companies in our Blogging Stocks list: AAPL, EBAY, GE, GOOG, MSFT, TWX, YHOO, and WMT. These are good companies but in general not safe havens. Most have too much volatility and unpredictability.
In my Safe Haven blogs I have also assembled eight recommendations; BRK.B, BUD, PG, PTR, SO, UPS, WM, and WMT. The only overlap is WMT. These companies are core holdings for people that believe in such things. Given their financial strength and dividends they are also solid inclusions in retirement accounts, in particular ROTH IRA's.
If there continues to be reader interest I will continue to expand on my list of rock solid Safe Haven companies. The next eight will be mid-caps. Most of my data comes from AOL Money & Finance. However I read just about everything I can get my hands on. The Wall Street Journal, Barron's, Fortune, Forbes, Motley Fool, The Street.com, Money, Smart Money, and many more. All of these are recommended reading.
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Reader Comments (Page 1 of 1)
7-17-2006 @ 9:38PM
Mr. noitall said...
I know I'll never convince you that the stock market in general is headed down, and could stay down for 15 to 20 years, but people have to realize that the forces that sent the U.S. markets to all time highs are reversing themselves. Noboby claimed that the market was a great place to be during the early 80's.
And very few individuals invested in the markets until the early 80's. The creation of ira's, 401k's, affordable mutual funds,changes in tax laws, the fall of the Soviet union, all these things plus other factors created a "perfect storm" for the U.S. markets, and great demand for U.S. stocks. Now everybody's in , ( mostly in S&P index funds, or managed funds that mimic the S&P), they are all part of the "buy & hold" crowd who think they are safe & diversified because they own mutual funds. DEMAND is what sent the markets up, and demand is fading. The stock market has returned to being a risky place ( like it should be). There is no such thing as a "safe haven" anymore in the stock market.
7-18-2006 @ 11:25AM
Sheldon said...
RESONSE: Retirement accounts like 401K's, IRA's & Roth IRA's are not fading away, they are growing. Markets continue to be more transparent and there are more of them. The end of the cold war created another billion capitalists in rapidly growing economies. China, India, Russia, Poland, Hungary and more are expanding and Japan is getting healthier too. There are more mutual funds than ever. Exchange Traded Funds (ETF)are more numerous every day and their size is growing rapidly. You can invest in more vehicles, markets, & countries than ever before. Even billions in oil money from the middle east is being plowed back into the stock market. The things that you state contirbuted to the stock market growth are not going away they are being reinforced. Your comment is bewildering -- back it up with some facts.
7-22-2006 @ 1:15PM
Mr. noitall said...
I knew I would never convince you Sheldon. I don't really want to give you too much information on why I believe the U.S. stock market will drop, but some of you own comments help me make my point. You said that we can now invest in more vehicles, markets, & countries than ever before. Well, does that help the S&P average? or hurt it?
10-16-2006 @ 12:58PM
sharetipsinfo said...
Indian stock market
is full of hefty money , Its of no use investing or trading in Stock market without proper Indian stock market recommendation
. Just get it and start booking profit.
Regards
sharetipsinfo