In a historically expensive market, with top stocks across a range of sectors competing for your attention, sometimes it's difficult to figure out which are the best companies for your investment portfolio. But when you drown out the noise and focus on stocks with a buy-and-hold mentality, it's easier to separate high-quality stocks from less-than-ideal investments.
However, if you're short on time and have several thousand dollars to invest in the stock market this month, I'd like to present three very different companies for you to consider right now. We're going to take a quick rundown of each company and exactly why these three value stocks are exceptional choices for long-term investors looking to build sustainable wealth through the stock market.
Johnson & Johnson
The first pick on today's list is Johnson & Johnson (NYSE:JNJ). The 135-year-old pharmaceutical company has survived many an economic crisis in its time, all while continuing to build upon its household-name status and expand its market share.
According to data from CSIMarket, Johnson & Johnson controls a roughly 8% share of the entire global pharmaceutical market. This is no small accomplishment, especially when you consider that the global pharmaceutical market was worth $1.3 trillion as of 2020, and is on track to reach a valuation of more than $1.7 trillion by the year 2025.
Johnson & Johnson isn't the kind of company that's going to lead to ultra-high portfolio returns, but what it does offer investors is enviable stability and the promise of long-term gains through gradual share price increases and its dividend. The stock is up about 40% over the past five years. For context, the S&P 500 has gained more than 100% during that time.
Even so, the stock is up 13% from one year ago, while trading at an attractive price-to-sales multiple of about 4.8. And Johnson & Johnson's dividend, yielding about 2.7% at the time of this writing, is considerably higher than the S&P 500 average of 1.3%. There's also the fact that it has raised its dividend every year for almost 60 years in a row, which makes it a Dividend King.
Johnson & Johnson reported 27% sales growth and 73% net earnings growth in its most recent quarter compared to the year-ago period. It also generated sales increases in the mid to high double digits across each of its business segments.
If you're looking to invest in a stalwart value stock that you can hold throughout the highs and lows of your investing journey, Johnson & Johnson is one to consider buying now.
Procter & Gamble
The appeal of investing in value stocks is the prospect of buying a company that trades at an affordable valuation compared to its overall growth story. Consumer goods giant Procter & Gamble (NYSE:PG) is certainly such a stock.
The company was founded in 1837. Since then, its family of brands -- including Bounty, Charmin, Gillette, Tide, and Pantene -- has become staples in households across the world.
The company isn't generally known for super-high annual revenue jumps, but it does have a consistent record of growing its balance sheet, which has translated to consistent share price increases over time. In the past five years, the stock has gained about 64%. Procter & Gamble also trades at a super-low P/S ratio of 4.6.
It reported its financial results for fiscal 2021 at the end of July. During the period, concluding on June 30, net sales grew 7% year over year to $76.1 billion. And its net earnings in fiscal 2021 represented a 10% increase from fiscal 2020.
Like Johnson & Johnson, Procter & Gamble is a Dividend King. But it has an even lengthier track record of increasing its dividend each year: 64 years in a row and counting. Its dividend yields 2.4% based on current share prices.
A final contender in the value-stock crowd to add to your portfolio this month is another familiar name. Spice and condiment maker McCormick (NYSE:MKC) has been in business for more than 130 years and offers investors the appeal of being a solid dividend stock that can lend steady, moderate portfolio returns.
The stock pays a dividend that's higher than the S&P 500's average but lower than our previous two picks at 1.6%. And as a Dividend Aristocrat, the company also has a pretty impressive track record of raising its dividend annually, having done so for 35 years in a row.
McCormick has the lowest P/S ratio of the three stocks on today's list, at a mouth-watering 3.8. Over the trailing five years, the stock has gained just shy of 80%.
With more people preparing meals at home in the pandemic era, McCormick has seen a healthy uptick on its top and bottom lines. In the first half of 2021, the company generated 14% sales growth, and net income increased by a little over 1% year over year. Meanwhile, its operating income rose about 5% during the six-month period compared to the same window last year.
if you're looking for a tried-and-true value stock that you can depend on for stable growth and garner some healthy dividend income in the process, McCormick certainly fits the bill.