As we have a couple times before (here and here), some of my fellow analysts and I have chosen five popular stocks to rank for you.
Our hope is that the forced rankings bring out some insights that a stand-alone analysis wouldn't. You be the judge.
Today's contenders: Pepsi
I'll start us off:
- Intel
- Pepsi
- Verizon
- Toyota
- First Solar
The first four are veritable blue chips. In blue chip stocks, you're looking for a solid franchise at a cheap-to-reasonable price. Intel and Pepsi are Nos. 1 and 2 because they're both solid; Intel beats Pepsi because it's a little cheaper.
Verizon and Toyota are behind the first two because they both face issues -- for Verizon, it's diminishing growth prospects, and for Toyota, it's the piercing of its veil of manufacturing perfection.
First Solar brings up the rear because its prospects are less predictable. At least for me.
Rick Munarriz, Fool contributor and Rule Breakers analyst
- Intel
- Toyota
- Pepsi
- Verizon
- First Solar
Why do I have Toyota ranked so high? The Japanese automaker has overcome its faulty brake and accelerator pedal scandals -- which were always far more limited in scope than the headlines played them out to be -- yet the stock hasn't bounced back dramatically like Ford
Why do I have First Solar dead last? Well, I'm a firm believer in renewable energy sources, but I fear that the solar power industry will be commoditized. A future of thinning margins in a cutthroat space isn't exactly where I want to park my money.
Alex Dumortier, CFA, Fool contributor
- Pepsi
- Intel
- Toyota Motor
- Verizon
- First Solar
Corporate earnings growth over the last several quarters -- which has been robust -- isn't a good indicator of the strength of the economic recovery. As we head into a second half that looks likely to be more challenging than the first -- federal stimulus is petering out, and job creation remains anemic -- investors should be paying close attention to their downside risk.
In that context, I'm putting Pepsi at the top: The branded foods group operates in a defensive sector, is very profitable, and still has growth opportunities ahead of it. Indeed, North America and the U.K. represented more than two-thirds of the company's revenues in 2009 -- that leaves plenty of room for expansion in other regions. A 3.1% dividend yield doesn't hurt, either. At 13.2 times next year's estimated earnings, it's an attractive package.
Intel, on the other hand, is cyclical and requires significant recurring capital investments. Nonetheless, it dominates its industry and reaps handsome profits as a result. Other tech behemoths like Apple and Cisco Systems do too, but Intel returns a healthy share of those profits to shareholders through dividends (yield: 3.1%).
Toyota Motor is a contrarian play. A best-in-class company that lost its way somewhat, I think it has the kind of culture that will enable it climb back to the top.
Finally, I classify First Solar as a New Era stock -- a category that is unfit as a source of common stock investments, as far as I'm concerned.
Tim Beyers, Fool contributor and Rule Breakers analyst
- Pepsi
- Intel
- Verizon
- First Solar
- Toyota
This time, let's start with the worst first. At 13 times expected earnings, the top Japanese automaker is trading as if growth is back. I'm unconvinced. Quality issues could reoccur, and a newly vibrant Ford is poised to challenge Toyota around the world.
First Solar is a leader in a great industry and one of our Motley Fool Rule Breakers recommendations, but I prefer component suppliers such as ReneSola
At the top, Intel rates second because I see a future where it does less iBusiness with Apple.
Pepsi, my top pick, has no such issues. It's second in the global soda market with an awesome arsenal of big-name brands, including Mountain Dew and Mug Root Beer. Mixing in a 3.1% dividend yield should make for a tasty elixir for today's investors.
Share your rankings in the comments box below. Or go check out our favorite tech stocks.
