As the Fool's newly minted Chief Investment Officer, Andy Cross needs to be familiar with stocks across the range of market caps, industries, and investing styles. So it's no wonder that the stocks that reside on his watchlist range from a relatively obscure small cap to one of the world's most recognized brands.
One to watch
First up is the universally renowned Neogen (Nasdaq: NEOG ) , which of course focuses on food safety and animal health products. Oh, wait -- this company's actually an obscure small cap. Based in Michigan, Neogen markets an extensive range of diagnostic test kits to detect things such as salmonella. "From inside the farm gate to the table," says Andy, "they have a continuum of products that will serve the farmers, the food processors, and then the retailers."
The company states on its website that it's working aggressively to become the dominant provider of products dedicated to food and animal safety by focusing on four areas: higher sales from existing products, introduction of new products, expansion of international markets, and acquisitions and strategic alliances. Andy thinks it's succeeding on all of these fronts, even if he was initially put off by its serial acquisitions.
After a somewhat heated run-up, the share price has taken a breather of late, pulling back nearly 20% since early January before bouncing back in the past week. That's almost made it a buying opportunity, but Andy wants to get more of a feel for the company's new CFO before committing -- although the fact that they're both University of Michigan alumni gives Andy a good feeling.
Two to watch
Second on Andy's watchlist is lululemon athletica (Nasdaq: LULU ) , the up-and-coming maker of gear for health, fitness, and yoga. Andy started watching this company long ago, when he first became a customer. (He really can pull off the stretch-yoga-pants look.) But he failed to pull the trigger, then watched as the share price climbed from less than $10 a share to its current perch around $80.
"This one hit me hard in two ways: I missed a multibagger, and I've spent hundreds of dollars on their clothes," he says. "But I learned a valuable lesson in the process. You shouldn't underestimate the resiliency of the American consumer, especially when a company is making great equipment and, more importantly, can successfully sell not just goods, but also a lifestyle. You compare lulu to a company like Under Armour (NYSE: UA ) , which I also like, and I think that lulu has higher-quality gear and a more compelling story. The concept has legs."
Those legs have run up quite a bit. Andy's generally OK with buying a company even after the share price has climbed, but he's hoping for a bit better of a buying opportunity before jumping in.
Three to watch
Finally, Andy's got his eye on global powerhouse McDonald's (NYSE: MCD ) . "It's great to have big growth opportunities in your portfolio, but you need to balance that with some stability from companies like McDonald's and Wal-Mart (NYSE: WMT ) ," he says. "I like both of those companies a lot for the conservative portion of your portfolio. They're going to continue to expand internationally, and that's going to give us steady if not stunning growth. But these companies are more than your grandma's glacial blue chips."
Specifically, Andy's impressed with McDonald's menu evolution, from the era of supersizing to healthy alternatives that actually taste good. That's also more appealing to an international audience. Foreign business usually takes time to warm up, so those stores start off less profitable than their U.S. counterparts. But once their sales accelerate, they will provide a significant boost to the company, because two-thirds of McDonald's business is outside the United States.
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