3 All-American stocks for your portfolio
Posted
Jun 30 2009, 03:20 PM
by
Louis Navellier
Rating:
July 4 is coming up this Saturday and the nation will celebrate its 233rd birthday. The past year has been pretty rough for the old Republic, with the economy going through its worst spat in 80 years.
Still, I'm an optimist and I think we'll come through this stronger than ever. To honor America's birthday, I want to highlight three great all-American brands that deserve a place in your portfolio. I always like companies with strong brand names because it helps them weather tough economic times better than unknown companies.
McDonald's — The Classic All-American Stock
Leading off is one of the very symbols of American capitalism, McDonald's (MCD). You can't get much more American than MickeyD's. The irony is that McDonald's strength recently has been due to its expansion in foreign markets.
There are currently over 30,000 restaurants in 120 countries. Less than half of the restaurants are located in the United States. McDonald's has been doing especially well lately, thanks to the recession.
Last quarter, McDonald's beat Wall Street's earnings estimate by a penny a share, 83 cents to 82 cents. That was their 10th straight quarterly earnings beat. The shares have been pulling back for the past few weeks. That gives investors a good opportunity to add MCD to their portfolio. The next earnings report is on July 23. I expect to see more good results. The weak dollar should especially help McDonald's bottom line. The stock is a very solid buy.
Amazon.com — Not Just a Bookstore
The next all-American brand is the world's largest bookstore, Amazon.com (AMZN). Actually, it's not quite correct to call Amazon just a bookstore anymore. Relentless expansion has propelled Amazon in countless directions in the quest of bigger sales and profits. The company's main Web site now offers anything from books to auto parts to groceries!
Shoppers can also download digital content such as games, MP3s and movies to their computers or handheld devices -- including Amazon's innovative portable reader, the Kindle.
While the recession has cut into some retailers, Amazon has weathered the storm just fine. In fact, the recent success of Amazon is partly due to the fact that it allows shoppers to avoid sales tax. And on pricey items like plasma-screen TVs, that's no small discount. AMZN has also captured a lot of market share from eBay, thanks to a suite of diverse and hard-to-find items, as well as the sale of cheaper used products alongside new items.
See My 5 Reasons to Own Amazon Now
The stock is clearly catering to more frugal consumers, making it a great buy right now, with tremendous growth potential as the recovery sweeps across the U.S. economy later this year. Earnings jumped 20% last quarter, and I'm looking forward to seeing another solid earnings report in late July. Amazon.com is an excellent buy right now.
Colgate-Palmolive — Household Products Powerhouse
My final all-American brand is Colgate-Palmolive (CL). The company is well-known for its toothpaste and toothbrushes. But Colgate-Palmolive also owns dozens of strong brand names including Irish Spring, Speed Stick, Ajax and many others.
Some investors may think of Colgate-Palmolive as a dull stock. That's fine by me. The shares are far less volatile than most stocks on Wall Street. Even though the market overall is well below the highs it reached in the third quarter of 2007, shares of Colgate-Palmolive were never punished nearly as hard.
During a recession, folks don't really cut back on their toothpaste and deodorant. The stock has a very good shot at making a new all-time high very soon. There aren't many stocks that can say that.
Not only did Colgate-Palmolive manage to grow its earnings last year, but I project that the company will grow its earnings again this year as well. Earlier this year, the company raised its dividend by 10%, and in April they said they were comfortable with Wall Street's second-quarter earnings forecast.
At the current price, the stock pays a dividend of 2.5%, which is about as much as a five-year Treasury bond. Ben Bernanke may be snapping up Treasurys left and right, but a stock like Colgate-Palmolive is a far better long-term investment.
At the time of publication, Louis Navellier held positions in McDonald's, Amazon and Colgate-Palmolive.
More from Louis Navellier:
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