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Tuesday, December 23, 2008

* Best Stocks For 2009

I always enjoy this time of year. The Christmas music, decorations, family gatherings, holiday plays and stock picks. Stock picks? Yes, 'tis the season for stock predictions! Virtually every financial writer will pen an article selecting his or her top picks for the upcoming year. I enjoy reading them and the logic behind them. As a long-term buy and hold investor, generally most aren't useful for me; nevertheless, I enjoy reading them. Here are some excerpts and picks from several of the experts:


In Jubak's Journal, Jim Jubak believes the markets will recover before the larger economy does. He provides 5 picks for the beginning of the year and 5 for later, with lots of caveats. His 5 best stocks for the first half of 2009:
  • Deere (DE) - a farm machine producer that tracks the price of agricultural commodities.
  • Enbridge (ENB) - a natural-gas and oil pipeline company that has a 3.8% yield.
  • ExxonMobil (XOM) - the world's best integrated oil company for the current environment. [reviewed July 7, 2008]
  • Flowserve (FLS) - It makes pumps and valves for moving everything from water to oil and has a yield of 2%.
  • Rayonier (RYN) - a producer of wood products and an owner of timberland. Yield: 7.2%.
His 5 best stocks for the second half of 2009:
  • Goldcorp (GG) - the world's low-cost producer of gold.
  • Google (GOOG) - the dominant Internet search company just gets more dominant.
  • HSBC (HBC) - the best banking franchise left standing in Asia.
  • Petrobras (PBR) - The Brazilian national oil company has dozens of new fields under development. It was added to Jubak's Picks on Aug. 26, 2008.
  • Thompson Creek Metals (TC) - the second-largest private producer of molybdenum in the world.
In their normal fun and frivolous way the Motley Fool picks The Best Stocks for the Year Ahead. Here are six of them:
  • Yum! Brands (YUM) - a quick service restaurant with over 35,000 units in more than 100 countries and territories.
  • PepsiCo (PEP) - a global snack and beverage company. [reviewed May 26, 2008]
  • Coca-Cola (KO) - a manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups. [reviewed October 22, 2008]
  • Philip Morris International (PM) - an international tobacco company.
  • Kinder Morgan Energy Partners (KMP) - a pipeline transportation ad energy storage company in North America.
  • Enterprise Products Partners (EPD) - a North American midstream energy company.
Fortune magazine in their The best stocks for 2009 article points out the silver lining of the market meltdown: Equities are cheaper than they've been in years. They predict that these ten prospects will flourish during 2009:
  • Altria (MO) - is the holding company of Philip Morris USA Inc. (PM USA) and John Middleton, Inc., which are engaged in the manufacture and sale of cigarettes and other tobacco products.
  • Annaly (NLY) - a real estate investment trust (REIT) that owns and manages a portfolio of mortgage-backed securities.
  • Dell (DELL) - a technology company, which offers a range of product categories, including desktop personal computer.
  • Devon Energy (DVN) - an independent energy company engaged primarily in oil and gas exploration, development and production.
  • Diamond Offshore (DO) - provides contract drilling services to the energy industry worldwide.
  • Fluor (FLR) - a holding company that, through its subsidiaries, provides engineering, procurement and construction management.
  • Johnson & Johnson (JNJ) - is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. [reviewed October 29, 2008]
  • Medco Health Solutions (MHS) - a pharmacy benefit manager.
  • Pfizer (PFE) - a research-based, global pharmaceutical company. [reviewed March 17, 2008]
  • Potash Corp. (POT) - an integrated fertilizer and related industrial and feed products company.
Finally, Selena Maranjian at the Motley Fool picks a single best stock in the article Best Stock for 2009: Johnson & Johnson. The article points out several important facts about JNJ:
  • 75 consecutive years of sales increases.
  • 24 consecutive years of adjusted earnings increases.
  • 46 consecutive years of dividend increases.
In addition, the stock had a 10-year 140% total return for investors, compared to a 51% total return for the S&P 500.

We are all looking for the perfect stock. Over the years I have evaluated several of the above stocks as potential dividend investments, most did not pan out. Dividend investors are looking for stocks that will perform well over the long run, not just 2009. Of the stocks mentioned above, I am actively buying JNJ, KO and PEP.

Full Disclosure: Long JNJ, KO, PEP and PFE

Tags: [DE] [DELL] [DO] [DVN] [ENB] [EPD] [FLR] [FLS] [GG] [GOOG] [HBC] [JNJ] [KMP] [KO] [MHS] [MO] [NLY] [PBR] [PEP] [PFE] [PM] [POT] [RYN] [TC] [XOM] [YUM]

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