Just getting started?
Newbie investors shouldn’t shy away from individual stock ownership. There are a variety of advantages to holding individual stocks in your portfolio. These include the ability to tailor your portfolio to your values and beliefs — and avoid so-called “sin stocks.” Other advantages include more control over costs, tax and estate planning. Finally, an individual investor can be nimble, quick and decisive in their buys and sells, versus a mutual fund manager who often needs committee approval on portfolio shifts. Here are eight stocks to consider for a starter portfolio.
General Electric Co. (ticker: GE)
Smart investment choices are those with strong businesses — like GE — that attract the best talent and possess sustainable long-term earnings power, says Henry To, partner at Newport Beach, California-based CB Capital Partners. “With GE now getting rid of most of GE Capital, and other non-core assets such as NBC Studio, the firm’s returns on equity should rise comfortably above 15 percent in the next 18 months as the focus returns to its industrials segment: power and water, oil and gas, energy management, aviation and transportation.”
Monsanto Co. (MON)
Monsanto is an innovator and dominant player in the global agricultural biotechnology industry. “Monsanto’s long-term growth story is underpinned by the ongoing rise in aspirational spending and protein consumption in large-population countries such as China and India,” To says. “For Monsanto, this is vital as the demand for its products, such as genetically modified seeds and agricultural productivity products, such as Roundup, is determined by demand for crops such as corn and soybeans, which are vital to the growth of the global cattle industry.”
CVS Health Corp. (CVS)
CVS is an integrated health care provider with unique business structure in the industry. “CVS Health provides the cheapest price in generics in the industry, low-cost primary physicians with its Minute Clinics, retail presence and specialty drug distribution to long-term care facilities and nursing homes,” says David Yepez, portfolio manager at Exencial Wealth Advisors in Oklahoma City. “We believe the company will continue to benefit from the aging of the population in America.”
Walt Disney Co. (DIS)
Disney is a media conglomerate that monetizes its characters and franchises across multiple platforms including movies, home video, merchandising, parks and resorts and musicals. “The management team has shown great discipline and skill at allocating capital. Disneyland Shanghai and the Star Wars franchise should continue to provide growth for this company for the foreseeable future,” Yepez says.
Facebook (FB)
Mark Zuckerberg’s company is the leading social network company in the world. “By organizing information about users, their social connections, and their activities on the Internet, Facebook has a lucrative database that is highly valuable for advertisers,” Yepez says. “Facebook is also becoming better at monetizing mobile advertising and is entering new areas such as virtual reality and messaging. In summary, Facebook is building the foundation to transform online advertising.”
Fluor Corp. (FLR)
Fluor is a global engineering and construction firm in the industrial sector. Kelley Wright, managing editor at Investment Quality Trends newsletter, likes Fluor based on its current dividend yield level. Through decades of analysis of high quality dividend-paying stocks, Wright found that stocks move between high-yield and low-yield prices areas that signal buying and selling opportunities. “The historically repetitive area of undervalue yield for FLR is 1.6 percent. Based on the current dividend of 84 cents, the undervalued price for FLR is $53.”
American Express Co. (AXP)
American Express is a global charge and credit card payment company. Wright calls AXP stock undervalued at $64 per share, and its dividend yield of $1.16 and 1.80 percent makes this a top pick. “The dividend yield is at a historically repetitive high area and its internal economic value, meaning what the company is worth versus how Wall Street has it valued, is very attractive,” he says.
Wal-Mart Stores (WMT)
Wal-Mart operates retail and wholesale discount stores under the names Wal-Mart and Sam’s Club. Wright says this company is undervalued based on its current dividend yield versus historical levels. “Based on the current dividend of $2, the undervalued price is $80,” Wright says.
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8 Stocks to Buy For a Starter Portfolio originally appeared on usnews.com
