Some Great Stocks to Buy Right Now
One upside to the financial downturn of the past couple of years is that it is providing a handy estimate of the floor-level of ‘support’ that a given stock’s price might have.
Back at the end of 2008, the Dow Jones in general and many individual stocks in particular briefly hit very low levels, as people were stocking up on gold and talking about the economy like we’d all soon been living in outtakes from The Road. That late 2008 / early 2009 bottom, I think, can be used as one estimate of an excellent price at which to buy those stocks.
Believe it or not, there are some great stocks which are right now trading near their late 2008 / early 2009 bottom, as if the market thinks their prospects look as dim as people thought they were back then.
StatOil: (NYSE: STO) Market Cap: $60 B. Many stock traders love oil companies, but in my opinion, most of them love the wrong ones. Oil is scattered all over the globe, but most of it is in places they don’t write travel guides about. Norway is one of the richest and best-run countries on planet Earth. Their national oil producer, StatOil, derives much of its supply from the North Sea, which is bordered by the UK, the Netherlands and Denmark (which are also among the best-run countries on Earth). I don’t have anything against the people of Nigeria, Saudi Arabia or Venezuela, but when it comes to oil supply, I like stability and the chances of the Anglo-Dutch War flaring up again are pretty slim. This stock’s price bottomed out around $14 and in much of early 2009, StatOil was trading in the $16-18 range. By the end of 2009 it had creeped back up to over $26. Today it’s back under $19 – for a stock that paid a 4.65% annual dividend. In my opinion, this stock is worth the current price and the closer it gets to $14 again, the juicier this stock becomes.
National Grid: (NYSE: NGG) Market Cap: $29 B. I’ve written before about this company. They have operations in the UK and the US distributing and selling electricity. Whether the power comes from oil or coal or windmills or unicorn farts, the last thing people are going to give up before wandering the landscape in search of canned goods and small-gauge ammunition is electricity. Warren Buffet likes wide moats. A government-granted monopoly is a wide moat. National Grid is now trading around $40 a share, which is just where it was at the 2008 bottom…for a company that has paid a 15.48% dividend so far in 2010 (Yes, 15.48%, and will probably pay another couple of percent in December [UPDATE: On December 1, National Grid paid out a quarterly dividend of 2.34%]). In my opinion, this stock is worth its current price and anything below $40 a share is a gift.
Sanofi-Aventis: (NYSE: SNY) Market Cap: $74 B. There are at least two stocks which I have never owned and kick myself for not owning: Millipore and Sanofi-Aventis. Millipore is no longer publicly traded, so in all likelihood I’ll never own a part of them. I hope to not make the same mistake with SA. A P/E of 9.67 and beta less than 1. A steadily rising operating cash flow (even during the downturn) and a debt-to-asset ratio of about 10%. A profit margin of 15+% and a 5+% dividend. There’s simply nothing to dislike about this company. In the spring of 2009 they were trading for $25-27 a share. Over the course of 2009 it inched up into the $40 range (which is about where it was for much of 2005, 2006 and 2007). Now they’re down to $28, just a couple of dollars a share above their 2009 minimum.
General Electric: (NYSE: GE) Market Cap: A Gagillion dollars. It’s cliche to call GE the bluest blue chip, but it’s a fitting description. In 2007, this stock was pushing $40 a share. In all of 2010, it hasn’t cracked $20. In early 2009, it was selling for less than $10. Today, it’s still under $15. Is the whole world insane? Like, certifiably insane? These people make jet engines, medical diagnostic equipment, light bulbs, and about 15,000 other products. And they pay about a 3% dividend. Their 2009 bottom was about $7 share, so perhaps they have a lot more room to drop, but in my opinion anyone paying less than $10 share for G-frickin-E should be arrested for robbery.
Gilead Sciences: (NASDAQ: GILD) Market Cap: $27 B and NuVasive: (NASDAQ: NUVA) Market Cap: $1.1 B. I wanted at least one very-high-growth company on my list, but couldn’t choose between these two. Gilead makes a range of drugs to treat things like cancer and NuVasive makes implants to treat spine problems, both of which are likely to grow in demand in the long term as the populations of the US and West Asia age and enlarge. Both Gilead and NuVasive grew revenue by 30-60% each year for the past few years. Even Google isn’t putting up numbers like those any more. NaVasive is now trading around its late 2008 low and Gilead is trading below the 2008 bottom. Neither has ever paid a dividend, as far as I’m aware.
Note: I am not a financial advisor and have no formal training nor professional experience with stock investing. It would be foolish for you to buy or sell any stocks based solely on what I have written here.