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8 Stocks That Have It All

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With the stock market having turned back down after a stellar performance in October, many investors don't have any idea what to expect next. But instead of running for the hills and abandoning stocks entirely, you deserve stocks that will give you everything you want from an investment.

Below, I'll give you the names of eight stocks that do just that. First, though, let's look more closely at the dilemma you and millions of investors are facing right now.

Investing in a tornado
Nothing's harder than trying to figure out how to invest in a topsy-turvy market. Much of the time, the stock market enjoys long, slow bull moves, suffering bumps in the road from time to time but generally sticking to a gently sloping upward path. In those situations, it's easy to invest -- just keep putting money into the market regularly and watch as your account values go up.

Moreover, as painful as bear markets can be, at least you know what to expect from them. When the bear dominates, you can expect broad moves downward in response to bad news, with bounce-back rallies generally proving to be short-lived. For the most part, investing during a bear involves a combination of trying to find stocks with big margins of safety and simply maintaining the discipline not to sell everything at what would inevitably prove to be a market bottom.

By contrast, markets like the ones we've suffered through lately just make you seasick. Just when you think you've resigned yourself to the next bear move, some piece of good news pushes stocks explosively higher. And just when you think you're out of the woods, the next piece of bad news tosses you back in your seat and whipsaws your investments downward once more.

What you need
The biggest danger from markets like these is that they take your eye off the ball. What you have to remember is that when you're picking good stocks, you ideally want three things:

  1. A reasonable valuation. Overpaying for stocks is a no-no, especially when you expect a good chance of a downturn for the overall market.
  2. A healthy expected growth rate. Stocks that have growth potential can take advantage of their weaker peers during bad economic periods, essentially kicking their competitors while they're down.
  3. A nice dividend yield. Nothing's more comforting when stocks are falling than collecting some cash in your brokerage account.

Think that's too tall an order to expect right now? I went searching for solid S&P 500 companies with P/E ratios between 5 and 10, dividend yields of 2% or greater, and expected long-term earnings growth of at least 10%. These are the stocks I found:

Stock

P/E

Dividend Yield

Expected Long-Term Earnings Growth Rate

Marathon Petroleum (NYSE: MPC  ) 7.0 2.8% 22.7%
Diamond Offshore (NYSE: DO  ) 9.0 5.3% 18.0%
Freeport-McMoRan Copper & Gold (NYSE: FCX  ) 7.0 2.5% 15.7%
Prudential Financial (NYSE: PRU  ) 9.4 2.1% 14.8%
Applied Materials (Nasdaq: AMAT  ) 8.5 2.6% 13.0%
Hartford Financial (NYSE: HIG  ) 6.1 2.1% 13.0%
Bank of New York Mellon (NYSE: BK  ) 9.8 2.4% 11.5%
Microsoft (Nasdaq: MSFT  ) 9.7 3% 11.4%

Source: S&P Capital IQ, as of Nov. 1.

I was surprised to find a reasonable variety of different kinds of stocks meeting these tests. Despite the fact that cheap oil almost certainly isn't coming back, the recent swoon in energy prices pushed Marathon and Diamond Offshore down into bargain territory. Similarly, fears of a Chinese slowdown sent the copper market plunging, leading Freeport shares lower.

On the contrary, it's not surprising to see financials on the low P/E list, but the fact that Prudential and Hartford passed the high-growth test is an encouraging vote of confidence for the sector. Moreover, BNY Mellon is actually profiting from some of the challenges other financial stocks are facing.

Lastly, tech stocks long failed to pay any meaningful dividends, but that trend is changing. Both Applied Materials and Microsoft pay healthy dividends but aren't seeing the valuations that they commanded during better times.

Get it all
Don't let a crazy market lower your expectations for finding stocks that meet all your needs. With a little digging, stocks like these can give you everything you want.

Looking for more ideas? The Fool has found five stocks that it bought for its own account -- and we think you should own them too. Check them out here in our free special report.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance. You can follow him on Twitter here.

Fool contributor Dan Caplinger wants it all. He doesn't own shares of the companies mentioned in this article. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold and Microsoft. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position on Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy has it all for you.


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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Related Tickers

9/30/2014 4:00 PM
AMAT $21.61 Down -0.14 -0.64%
Applied Materials,… CAPS Rating: ****
BK $38.73 Up +0.12 +0.31%
The Bank of New Yo… CAPS Rating: ****
DO $34.27 Down -0.90 -2.56%
Diamond Offshore D… CAPS Rating: ***
FCX $32.65 Up +0.25 +0.77%
Freeport-McMoRan C… CAPS Rating: ****
HIG $37.25 Down -0.23 -0.61%
Hartford Financial… CAPS Rating: ****
MPC $84.67 Up +0.28 +0.33%
Marathon Petroleum CAPS Rating: *****
MSFT $46.36 Down -0.08 -0.17%
Microsoft CAPS Rating: ***

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