I have a watchlist of 24 stocks and mutual funds. They are all companies that I either own, have thought about owning at some point, or an MLM company that I keep track of (for when the FTC inevitably acts on Herbalife).
Just recently, I’ve noticed a few of the stocks have “gone on sale.” That is to say that they’ve gone pretty low in pricing. However, they are big companies and brands that you know… at P/E ratios that a bargain hunter can love. This isn’t a deep dive… I’m using no stock screener. It’s just an observation. I’m thinking about investing in them (except for the one I already own) for the long term and I want to share that.
The three on my watch list that stand out are:
You might have noticed that Wal-Mart dropped 10% yesterday. When one of your 24 stocks has a double digit move, it is hard not to notice it. I was extremely busy, but I did some quick research. It’s not enough to make a stock buying decision on, but this is my take from what I’ve read.
Wal-Mart is expecting lower profits for perhaps the next couple of years. It’s heavily investing in infrastructure to help speed future growth. It is expanding its stock buy-back program to $20 billion and it pays a decent dividend. It’s easy to see the bad news and I don’t want to overlook that. However, a historically rock-solid company is trading at a P/E of around 12.5 and seems to be doing the right things for the long-term.
If you are a buy-and-hold investor, I think you could do a lot worse than picking up Wal-Mart at 30% off year to date.
This is a stock I’ve held for probably more than a year now. It’s another company with some bad news. They’ve had declining revenue for what seems to be 6 trillion straight quarters. The huge company had a lot of momentum into technology that isn’t very profitable. They’ve been steadily moving away from those from those business and towards more profitable businesses, but it is a slow process.
I do like what IBM has done while they restructure. They’ve been buying back tons of shares. That has steadily grown their earnings per share and lowered their P/E to under 10. It pays a healthy dividend. There’s some huge growth potential with their Watson technology.
I read that IBM is Warren Buffett’s biggest holding. Overall, it feels like when I had Apple at $70 and it jumped up to more than $125.
For years I’ve watched this stock trade in the 50s. The other day I saw it around $23. I was apparently away from my computer the day that Paypal spun off and took that value out of Ebay.
Ebay has a $30 billion market-cap, which is much smaller than the previous two Goliaths. I view that as having more room to grow. It has a monopoly in the online auction business. Truth be told, I simply use Buy It Now, so it is more like a store to me, but the lack of competition is notable.
Finally, it too has a P/E under 10, so there’s value there. It’s also on a 15% off sale after the Paypal divestiture. Unfortunately, it doesn’t pay a dividend.
Consider a pick for a little variety compared to the previous two.
Summing It Up
If you are interested in holding stocks for the long haul, I think you could do lot worse than these three stocks. There’s a saying that you make money on the buy and not the sell. I believe that’s the case here. It feels like the right time to buy.
That said, I also thought it was the right time to buy SodaStream at various points as the company has crashed from $50 to $15. Something would have to go terribly wrong, like losing 2/3rd of their earnings, for any of these companies to do something like that. I don’t see it happening.
If you are going to buying stocks, you are going to need a brokerage. It’s been a long time since I looked at the best ones, but I do like the idea of Motif Investing. You can create a basket of all these stocks in just one trade. They’ll even give you up to $150 to get started.