7 All-Star Stocks to Make Your Portfolio Shine

Volatility is back with a vengeance, as uncertainty reigns in the markets. Tepid economic data is calling the recovery into question. New regulations and uncertain fiscal policies are also bringing twists and turns to the market. Put on top of that the European sovereign-debt situation, which appears to have calmed down for the time being, but is sure to flare up again in the near future. Then there's high frequency trading, which has ratcheted up volatility as well. Add it all up, and there's a strong likelihood of continued volatility for the foreseeable future.

But environments such as these present the greatest opportunities for investors with serious stock watch lists. Pullbacks create more attractive entry points. If you research and build a list of stocks you want to own, you need only wait to pounce until each stock reaches your preferred price. The stock market's current turbulence should provide you with opportunities to do exactly that.

To start assembling my very own stock wish list, I used the Fool's CAPS screener to find premium companies such as ExxonMobil (NYSE: XOM  ) , which has outperformed the S&P 500 by 9.4 percentage points per year on average for the past 10 years.

To help you find some of the market's best stocks for your watch list, I used the following criteria:

  • A market cap greater than $10 billion, which should provide stability.
  • A current ratio of at least 1, to ensure sufficient liquidity to meet current liabilities.
  • A return on equity north of 15%, to demonstrate efficiency and profitability.
  • Four- and five-star ratings (out of five) from our 165,000-plus-member CAPS community.

I particularly liked these seven companies that passed the screen. Consider looking into them further, to see whether they warrant your investment dollars:

Company

Return on Equity (TTM)

Market Cap
(in billions)

Current Ratio

CAPS Rating
(out of 5)

Caterpillar (NYSE: CAT  )

17.2%

$40.8

1.4

****

Colgate-Palmolive (NYSE: CL  )

88.3%

$36.6

1.3

*****

ExxonMobil

17.6%

$300.0

1.1

****

Intel (Nasdaq: INTC  )

20.7%

$102.9

3.3

****

McDonald's (NYSE: MCD  )

36.5%

$77.9

1.2

****

PepsiCo (NYSE: PEP  )

31.3%

$102.7

1.1

*****

Waste Management (NYSE: WM  )

16.7%

$15.8

1.1

*****

Source: Motley Fool CAPS as of Aug. 25. TTM=trailing 12 months.

The CAPS screener can suggest all kinds of promising companies, but running a screen should be only the first step in your stock research. Come and join our CAPS online investing community (it's totally free!) to delve further into these companies to see whether they're right for your portfolio.

Further Foolishness:

Fool contributor Jennifer Schonberger does not own shares of any of the companies mentioned in this article. Intel and Waste Management are Motley Fool Inside Value choices. Pepsi and Waste Management are Income Investor picks. The Fool has established a bear put spread position on Caterpillar. The Fool owns shares of and has written puts on Intel. Motley Fool Options has recommended buying calls on Intel and a diagonal call position on Pepsi. The Fool owns shares of ExxonMobil and has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (12)

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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 August 26, 2010, at 5:33 PM, scanlin wrote:

    Now that he DOW closed below 10K, if you have cash to deploy, try some in-the-money buy-writes (covered calls). From the list of 7 stocks mentioned, here are 4 ITM buy-writes yielding over 30% annualized return for the Sep cycle:

    (1) buy INTC, sell Sep 18 for net debit of 17.55. If flat return of 41.3% (annualized)

    (2) buy CTL, sell Sep 36 for net debit of 35.89. If flat return of 36.5% (annualized) includes 9/2 div

    (3) buy BMY, sell Sep 26 for net debit of 25.35. If flat return of 34.9%(annualized)

    (4) buy LLY, sell Sep 34 for net debit of 33.38. If flat return of 30.2% (annualized)

    No earnings release dates before expiration for any of the above.

    MikeS

    http://www.borntosell.com

    covered call investment tool

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