This Is Your Dare-to-Be-Great Moment

A pessimist would say that my portfolio is half empty.

And even though I tend to be an optimist, I remember where my discount brokerage account stood a year ago... so I see my portfolio as half empty.  

What does make me feel better is that any new money we put into the market will be buying stocks at these half-empty prices. Not everything is priced as a bargain, but the market panic is certainly presenting us individual opportunities that could once again have our portfolios overflowing.

In short, this is that dare-to-be-great moment we investors dream of.

How so?
Greatness is born out of despair:

  • When you look at lists of the top-ranked American presidents, three consistently rise to the top: George Washington, Abraham Lincoln, and Franklin Roosevelt. Why? Because they successfully faced major challenges. The first birthed a fledgling country, the second ensured that the country wasn't torn in half, and the third presided over our biggest financial crisis ever.
  • Think of the person you admire the most. Dollars to donuts, you admire this person because of how he or she overcomes adversity.
  • The adage says that the best time to buy is when there's "blood in the streets" -- not when there's "sunshine on your shoulders."

I could go on, but you get the idea. Tough times are the breeding ground of opportunity.

And tough times are what we have. The pop of the housing bubble has caused a credit crunch that the government is flailing to fix. The stock market has been chopped in half. Companies that were perceived as rock-solid are threatening bankruptcy if they don't get a bailout. Of course, the economists and experts who once regaled us with nuggets like "housing prices never fall" are envisioning calamity for the foreseeable future. All of these developments have caused consumer confidence to plummet to historically low levels.

I don't know when we'll get out of this financial crisis. I don't pretend to be able to call the market bottom. But I do know this: The investing legends of this generation will be made now. And they'll have some things in common:

  • They won't listen to the pundits.
  • They will buy when others sell (and vice versa).
  • They will be mocked until they are revered.
  • They won't be reactionary -- they'll have a plan and principles.

A place to start
As a starting point, let's focus on the first two bullet points. What are the Wall Street pundits shunning right now? As you are probably aware, it's rare for the Streeters to make sell recommendations. "Hold" is Wall Street's polite way of saying "Sell," so I went trolling for companies that have consensus hold ratings but strong fundamentals -- reasonable profit margins, positive expected growth, and good interest coverage.

Here are 10 such names.

Company

Net Income Margin

1-Year EPS Growth Estimate

Interest Coverage

Hershey

6%

4%

8 times

AstraZeneca

19%

14%

14 times

Procter & Gamble (NYSE: PG  )

17%

15%

12 times

Netflix (Nasdaq: NFLX  )

6%

21%

49 times

Public Storage (NYSE: PSA  )

54%

21%

16 times

Biogen Idec (Nasdaq: BIIB  )

19%

11%

24 times

AutoZone (NYSE: AZO  )

10%

13%

9 times

Chipotle (NYSE: CMG  )

6%

9%

N/A

Automatic Data Processing (Nasdaq: ADP  )

14%

9%

38 times

Clorox

9%

15%

5 times

Source: Capital IQ, a division of Standard & Poor's.

Whether your goal is as simple as retiring a few years earlier or as far-reaching as becoming an investing legend, this is the time to be carefully daring. Wall Street dislikes these companies, but it takes more than just being contrarian to make an investing legend. You also have to be right, so remember those final two bullet points I mentioned earlier -- planning and principles. In short, it'll take time and research to separate the legend-makers from the retirement-takers.

The Fool's co-founders, Tom and David Gardner, already have their plan and principles in place. They look for companies with strong fundamentals that are poised to manage this economy and continue growing for years to come. In fact, their research has led them to recommend two of the 10 companies above in their Stock Advisor newsletter. You can see their views on these two, as well as all of their other recommendations, for free with a 30-day trial. There's no obligation to subscribe. 

Anand Chokkavelu inspires the uninspired (and wonders whether anyone will get the reference he just made). He owns shares of Chipotle. Procter & Gamble is a Motley Fool Income Investor recommendation. Chipotle is a Motley Fool Hidden Gems and Motley Fool Rule Breakers pick. Biogen Idec and Netflix are Motley Fool Stock Advisor recommendations. The Fool owns shares of Procter & Gamble and Chipotle and has a disclosure policy.


Read/Post Comments (14) | Recommend This Article (83)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 16, 2009, at 8:02 PM, shibari wrote:

    So,

    Still in denial eh?

  • Report this Comment On April 16, 2009, at 9:15 PM, Chuck2323 wrote:

    In the past few years the stock market was driven by the dot com bubble followed by the housing bubble and excessive consumer spending. With the manufacturing base gone in the United States what do you think will drive profits in the future? The market will recover somewhat, but until an engine to drive growth re-appears it will be slow and probably not get to the old highs. Perhaps green technology will do it. Perhaps another bubble of some kind. But until then it's probably slow sledding.

  • Report this Comment On April 17, 2009, at 2:26 AM, ronpaulite wrote:

    This will be your Waterloo

  • Report this Comment On April 17, 2009, at 5:34 AM, summertimeVA wrote:

    i must say this article repeats the obvious but your title is eye catching!

  • Report this Comment On April 17, 2009, at 10:41 AM, AWF wrote:

    You can BUY P&G and Clorox anytime --these are defensive stocks--went you what to Hide or Park your money. You are not buying these stocks on the cheap.

  • Report this Comment On April 17, 2009, at 11:18 AM, paultaut wrote:

    Infrastructure plays popped then dropped. Whats going to rise, whats going to be the stock market's next engine?

    Gee, Maybe Infrastructure, Logistical, basic materials, ashpalt, cement,....

    How far into the future do you have to look, and it Will Not Matter what the rate of Unemployment is or how dire Economic straits are. The Money has been allocated and will be spent. The Economy Will be stronger in 2010, 2011, who knows what happens in 2012 but over the next 30 months, you will look back and kick yourselves.

  • Report this Comment On April 17, 2009, at 2:50 PM, TMFBomb wrote:

    AWF,

    The screen in the article is agnostic of price paid...the screen identifies opportunities, but the next step is doing your due diligence including seeing whether they're priced in value territory.

    ronpaulite,

    As Bono says: "Josephine, be careful of small men with big ideas."

    summertimeVA,

    Thanks for not judging the cover by the book!

    -Anand

  • Report this Comment On April 17, 2009, at 3:01 PM, paultaut wrote:

    Infrastructure plays should include one for the logistics of the Stim plan, Truckers. An unloved dog stock in the sector is YRCW.

  • Report this Comment On April 18, 2009, at 10:09 AM, jozie28 wrote:

    Go for an index fund instead--bargains do exist there, carefully daring doesn't mean you'll pick out "gem" stocks from this group.

  • Report this Comment On April 18, 2009, at 11:03 AM, WishToRetire wrote:

    What jozie said!

    Just because it is possible to identify darers who become great with the benefit of hindsight does not guarentee that daring always causes that result.

  • Report this Comment On April 18, 2009, at 11:08 AM, TMFBomb wrote:

    jozie28,

    It's my belief that most people are best served with a majority of their stock portfolio in indexes (I personally prefer ETF's to mutual funds). Vanguard ETF's are my favorite. These should be held on a long-term buy and hold basis.

    The stock screen in this article is for those who want to pick individual stocks -- even as just the non-index portion of their stock allocation.

    Thanks for the comment!

    -Anand

  • Report this Comment On April 25, 2009, at 6:58 AM, DaedalusAdvising wrote:

    "When you look at lists of the top-ranked American presidents, three consistently rise to the top: George Washington, Abraham Lincoln, and Franklin Roosevelt."

    And "Ronald Reagan" who brought down the Berlin Wall and saw the crushing defeat of the Soviet Union is not in this list? Hmmm....sounds like someone's been sipping the lefty tea again.

  • Report this Comment On April 25, 2009, at 7:02 AM, DaedalusAdvising wrote:

    Index funds in a down market? You're better off parking your cash in a HYMM account. At least you"won't " lose your money. Every index fund on the planet is too far down to see and when the market kicks back into gear you'll be left in the dirt, (holding a slow index funds and crying out how you missed your opportunity). Baaaad advice.

  • Report this Comment On May 13, 2010, at 3:11 AM, ObamaMonster wrote:

    I second the comment about Reagan. FDR is in my list of WORST presidents. What did he give us?

    Let's see: out of control federal spending, a bankrupt social security program, welfare, and militant labor unions. And of course his foreign policy - of non-involvement and pacification -which almost made the US lose WW2 and certainly caused the deaths of millions of innocent people under the Nazis and Japanese.

    Gee, come to think of it, he reminds me a lot of Obama.

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