Every year I find myself asking the same question: What to get dad for Father's Day. Well, Kiplinger's offers not to get our dads the same old presents -- another tie, another power tool -- but
stocks in companies he probably likes or uses their products. That's a great idea, I thought, and decided to counter with five of my own.
- Kiplinger's suggests: Diageo (NYSE: DEO), the seller of such brands as Johnnie Walker, Smirnoff, Guinness and José Cuervo. Diageo has held up better than most during the recession -- thanks to a balanced portfolio of products, with higher exposure to mid-price, mainstream brands and less exposure to ultra-premium brands. The shares look reasonably priced. At $56.01, Diageo trades at 15 times estimated June 2009 earnings of $3.82 a share. The stock yields 2.8%.
- Another to consider: Molson Coors (NYSE: TAP), the seller of such brands as Coors, Blue Moon, Pilsner and Rickard's. Beer, probably even more so than hard liquor is supposed to hold better during a recession given the cheaper price point. The company's recent quarterly profits more than doubled. The shares trade at 13 times forward earnings of $3.33 and yield 2.2%.
- Kiplinger's Suggests: Eli Lilly (NYSE: LLY) -- Kiplinger's suggests this one as men can appreciate Lilly for its erectile-dysfunction drug Cialis (which accounts for 7% of total sales). But Lilly also has a robust pipeline of new drugs in different areas as well a promising blood thinner waiting approval, Effient, that will compete directly with Plavix. The stock has fallen 15% in 2009. Still, analysts expect Lilly to earn $4.22 a share this year, up from $4.02 in 2008. LLY trades at 8.1 times forward earnings and yields 5.72%.
- The counter to that would naturally be Pfizer Inc. (NYSE: PFE), the originator of the erectile dysfunction drugs with its Viagra (which accounts for 4.2% of sales). Pfizer's own pipeline isn't all that impressive, but it is about to complete its acquisition of smaller rival Wyeth (NYSE: WYE), which would help boost its pipeline and cash flow. Shares trade at 6.7 times forward earnings and yields 4.34%.
- Kiplinger's Suggests: CarMax (NYSE: KMX) -- "No-Haggle Pricing" is the signature CarMax practice that endears customers. Despite the times, CarMax managed to surprise Friday when it reported earnings, proving the used car market is indeed more resilient than the new car market. The company managed only a 2.6% slide in earnings even whe sales were off 17% in the quarter. The stock is not cheap though and sells for a lofty forward price-earnings ratio of 54.
- It was hard to decide on a similar stock to counter with so I'll go with two: Ford (NYSE: F) is the only one of the Big Three Detroit car companies not in bankruptcy. Not only that, it hasn't even asked for government aid. Its CEO has so far managed to steer the company with forward thinking and focused planning. The problem -- it's unprofitable. Then there's Harley Davidson (NYSE: HOG), a Warren Buffett pick. HOG recently shuffled top management, but is definitely not immune to the slumping economy. It does, however, trades at 12 times forward earnings and offers a dividend yield of 2.4%.
- Kiplinger's suggests: JoS. A. Bank Clothiers (NASDAQ: JOSB) -- The purveyor of men's suit and dress accessories has reacted to the recession strategy by marking down its wares severely. To conserve cash, the clothier has trimmed the number of new-store openings to just ten to 15 this year. In the first fiscal quarter, the retailer posted an 11% gain in revenues and a 17% jump in earnings. Same-store sales (sales at stores open for at least one year) rose 4.3%.
- Instead of clothing, I'll go with electronics. Best Buy (NYSE: BBY) has definitely hurt during the downturn, but as we hopefully come out of the recession, it stands to profit more than most as its biggest rival, Circuit City, went bankrupt even if it didn't do as well as expected in its recent quarterly report. Shares trade at 12 times forward earnings and yield 1.37%
- Kiplinger's suggests: Home Depot (NYSE: HD) -- The biggest home-improvement retailer has also been struggling through the housing slump. Compared with the same period a year ago, sales fell 9.7% during the company's first quarter. But, looking ahead to next year, HD earnings could climb by 10%. Home Depot sells for 16 times estimated fiscal 2009 earnings. The stock is 67% below its record high of $70, reached in 1999.
- Since Home Depot is probably the better choice among home-improvement stocks, I won't suggest another for consideration.
TheStreet.com has their own stock ideas for Dad:
Give Dad Stocks, Not Socks. They including HOG,
Men's Waerhouse (NYSE:
MW) and
Dick's Sporting Goods (NYSE:
DKS).
Get the latest on
cars and
trucksfrom Ford and all brands at AOL Autos.
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Reader Comments (Page 1 of 1)
6-21-2009 @ 6:02PM
spike said...
I bought some shares of Home Depot around five or six years ago or longer ,for fifty or fifty five dollars a share.It dropped to the thirities within days and Last I looked it was in the twenties.I wouldn't give a nickle for Home depot
6-22-2009 @ 4:25AM
James said...
Ford? Just because they didn't ask for bailout money doesn't mean they're doing well. Haven't looked today but they are around $6.00 a share. Are people buying Ford cars and trucks? No, no more then people are buying from GM or Chrysler.
Kiplinger wants your money. They want the commision and fees they charge. They are full of b.s.