On this week's Rule Breaker Investing podcast, Motley Fool co-founder David Gardner rolls out a new set of recommendations of stocks you can feel safe buying even when the bear is roaring. Last time he did that, he focused on low-risk smaller companies. This time around, he sticks with the low-risk criterion but picks from among the biggest of the big businesses -- with market caps $150 billion or higher. Which ones? We won't spoil it for you. Listen in, or read on.
A full transcript follows the video.
This video was recorded on Feb. 7, 2018.
David Gardner: And now, five more stocks to feed the "new" bear market. I'm so glad that I'm able to recommend companies right in the teeth of what's happened over the last week or so, and as always, the stocks that I'm picking, I'm doing for the next three-plus years at a minimum. So, whether we've had a good one- or even two-year run, as we talked about earlier on the show, doesn't matter that much to me. We're playing the long game here at The Motley Fool and as Rule Breakers.
I'm going to switch up, though, the traits that I'm using for this set of stocks. I'm still going to stay with low risk. That feels good to me in down markets. But I'm going to go to the biggest of the big low-risk companies in our portfolio. It very likely means you will not see anything like the returns that patient, faithful, longtime listeners have enjoyed in "stocks that feed the bear market" of past podcasts. There's no way that the five companies I'm about to share with you could multiply in the same way that a company like IPG Photonics, or even better, MercadoLibre has done.
In fact, I was looking at a list of smaller companies, using the same traits that I picked two years ago, and the short list of companies had several of the ones that we've already covered, so if I used the exact same attributes, I would repick Carter's. I would repick Ellie Mae and Planet Fitness. One of the reasons I wouldn't be repicking MercadoLibre is when a stock almost quadruples, it's no longer going to have the market cap to stay as a small-cap company. But anyway, so a lot of the companies would just be repicked.
That's why I thought it would be more fun to have a fresh list of five new stocks for you. These are all companies with market caps of $150 billion or more, so the smallest of these is at least 30 times larger as a company, with its market cap, than any of the companies I picked two years ago.
And I'm not going to spend a lot of time explaining or previewing these companies for you. I'm going to give you the short list pretty quickly, because most of us already know these companies and what they do. Alphabetically then:
Stock No. 1 : Stock No. 1 to feed the bear market is Apple (NASDAQ:AAPL). I bet you've heard of it. I just spent a happy hour and a half or so in the Apple store last week getting my iPhone replaced. My iPhone X had developed a scary, strong pink line right down the center from top to bottom, and I was happy to say that Apple said it's still under warranty, and here you go, Mr. Gardner.
You do have to wait an hour, though, which was kind of a bummer, but in the Apple store, if you do what I do, you just start walking around and you just buy stuff. So I started buying more stuff in the Apple store. It was a brilliant strategy. It may work on other customers besides just me. Anyway, Apple.
Stock No. 2 : Stock No. 2 -- Amazon (NASDAQ:AMZN). Again, I bet you've heard of it. This is a great company to own through all markets. And as wonderful as Amazon has been, looking backward, all that really matters is what happens going forward from here, and I like Amazon to beat the market the next three-plus years.
Stock No. 3 : This one is third, alphabetically, with its ticker symbol GOOG, but it is first alphabetically with its name, because GOOG these days is rocking the corporate name of Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG). And so yes, Alphabet is another one of those massive companies that has done so well.
And yet, ask yourself who's going to win over the next five, 10, 15 years? Do you think the company that has spread itself out into lots of different businesses probably spends more R&D -- research and development -- and takes more risk than any other company at that scale that I can think of? Do you think they're going to beat the market as the world increasingly adds AI -- artificial intelligence -- to all kinds of products and services, and surrounds us with better intelligence? Pretty sure Google's going to do well, and since that's the crown gem of Alphabet, I feel really good about Alphabet stock the next three-plus years, bear market or not.
Stock No. 4 : This company is the worldwide leader treating diabetes. It is not an American company. In fact, it is based... I am going to butcher this word. Anytime you spell a word B-A-G-S-V-AE-R-D, you're going to put me in a bad place, but let's go with Bagsvaerd, Denmark. The company is Novo Nordisk (NYSE:NVO). The ticker symbol is NVO. As I share it with you, I see the stock trading just above $48 a share. That tips the market cap scales at $122 billion.
Novo Nordisk I first picked for Motley Fool Stock Advisor in September of 2015. It's up 6%. Bad news, though. The market's up about 50%, so this stock pick of mine is already 44% behind the market. But here we are. It's a new day. It's the next five stocks to feed the bear market, and I'm putting Novo Nordisk on that list, expecting better things in the three-plus years ahead.
Stock No. 5 : And finally, stock No. 5. We're staying outside U.S. borders for this one, as well. The ticker symbol is TCEHY. It is one of our more recent picks. We picked this in Motley Fool Rule Breakers in September of last year. The stock's up 24% so far against the market's about 5% return, so Tencent Holdings has been a solid pick for Rule Breakers.
The company is one of the largest internet companies in the world. The WeChat mobile chat service dominates China. If you're a Chinese Rule Breakers listener, you already know WeChat. Even if you're not a Chinese Rule Breakers listener, you may well have heard of WeChat for a country that uses its mobile phones to do way more things than we in the U.S. have so far used our mobile phones to do. To pay for almost everything. To add new forms of convenience to our lives. Chinese consumers and Chinese investors are pretty happy with Tencent Holdings and WeChat, among other things.
There you have it, the Next Five Stocks to Feed the Bear Market. Closing it out, it was Apple, Amazon, Alphabet, Novo Nordisk and Tencent Holdings.
And that's what I have for you this week. I hope you enjoyed the show as much as I enjoyed bringing it to you, in a good market or a bad market. That's what we do here at Rule Breakers. We just keep investing. Finding great companies and trying to buy as much of them as we can and hold them over time.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. David Gardner owns shares of Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Ellie Mae, IPG Photonics, and MercadoLibre. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Carter's, Ellie Mae, IPG Photonics, and MercadoLibre. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Novo Nordisk and Planet Fitness. The Motley Fool has a disclosure policy.