So you're not exactly enamored with this market? The green shoots don't look that strong to you, and with U.S. unemployment approaching 10%, that's hardly fodder for an 'everyone in to the pool' dive into stocks. As a financial publishing colleague frequently says, "I hear ya on that one." With the above in mind, why not consider a defensive play or two? Here are three plays that will enable you to sleep well at night, and also position you for some upside.
Three for the long-term
The Procter & Gamble Company (NYSE: PG). Recent Price: $54. A quintessential defensive play, look for PG to continue to deliver comparatively predictable operating results. A company with, arguably, the most-diverse global footprint, PG has the consumer brands that will endure, and has done a good job containing costs. The Gillette acquisition has succeeded, and growth prospects in emerging markets remain promising. Another PG safeguard: the company offers products at different price points. In other words, PG has the price diversification to endure in the 'frugal consumer' era, during which Americans have gone from treating their home like an ATM machine, to, basically, watching every nickel and dime.
The Clorox Company (NYSE: CLX). Recent Price: $58.60. Bleach doesn't go out of style. Decidedly un-sexy Clorox was one of those well-established, demonstrated business model giants that was rudely treated by Wall Street, with the Street taking shares down to about $45 from $62 in 2009. Institutional investors punished Clorox for its erratic performance, but investors were too harsh. CLX's businesses remain solid, but were affected by both the housing downturn (fewer households) and seasonal factors. The recession is in the rear-view mirror now, and with a P/E of about 15, Clorox looks mighty attractive on a risk/return basis. Place an 18 multiple on next year's $4.62 First Call earnings estimate, and CLX trades above $80.
The Coca-Cola Company (NYSE: KO). Recent Price: $50.50. KO is part metrics-play/part intuitive-play. An iconic brand, Coke's success walks hand-in-hand with the development and success of the United States during the American century. Coca-Cola has successfully re-positioned itself amid the consumer trend toward sports/health drinks (POWERade, Glaceau) and away from carbonated drinks. That said, the 'big 4 carbs' - Coca-Cola, Diet Coke, Fanta, and Sprite -- are doing nicely internationally, which will more than offset volume declines in the signature cola brand in the U.S. What should one not expect from KO? Outsized revenue gains, radical departures from a demonstrated business model. What should investors expect? The ability to sleep well at night because, as the Wall Street adage has demonstrated for decades, 'No one ever went broke holding Coke.'
My Safest Pick: Cola-Cola.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
The Procter & Gamble Company (NYSE: PG). Recent Price: $54. A quintessential defensive play, look for PG to continue to deliver comparatively predictable operating results. A company with, arguably, the most-diverse global footprint, PG has the consumer brands that will endure, and has done a good job containing costs. The Gillette acquisition has succeeded, and growth prospects in emerging markets remain promising. Another PG safeguard: the company offers products at different price points. In other words, PG has the price diversification to endure in the 'frugal consumer' era, during which Americans have gone from treating their home like an ATM machine, to, basically, watching every nickel and dime.
The Clorox Company (NYSE: CLX). Recent Price: $58.60. Bleach doesn't go out of style. Decidedly un-sexy Clorox was one of those well-established, demonstrated business model giants that was rudely treated by Wall Street, with the Street taking shares down to about $45 from $62 in 2009. Institutional investors punished Clorox for its erratic performance, but investors were too harsh. CLX's businesses remain solid, but were affected by both the housing downturn (fewer households) and seasonal factors. The recession is in the rear-view mirror now, and with a P/E of about 15, Clorox looks mighty attractive on a risk/return basis. Place an 18 multiple on next year's $4.62 First Call earnings estimate, and CLX trades above $80.
The Coca-Cola Company (NYSE: KO). Recent Price: $50.50. KO is part metrics-play/part intuitive-play. An iconic brand, Coke's success walks hand-in-hand with the development and success of the United States during the American century. Coca-Cola has successfully re-positioned itself amid the consumer trend toward sports/health drinks (POWERade, Glaceau) and away from carbonated drinks. That said, the 'big 4 carbs' - Coca-Cola, Diet Coke, Fanta, and Sprite -- are doing nicely internationally, which will more than offset volume declines in the signature cola brand in the U.S. What should one not expect from KO? Outsized revenue gains, radical departures from a demonstrated business model. What should investors expect? The ability to sleep well at night because, as the Wall Street adage has demonstrated for decades, 'No one ever went broke holding Coke.'
My Safest Pick: Cola-Cola.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
9-10-2009 @ 6:53PM
RKMartyn said...
Why are you picking out stocks when you only own a few of them? etc., etc.
9-11-2009 @ 7:41AM
kevin said...
If you're such a scaredy-cat, why don't you just leave your money in the bank.