Did you know there are literally thousands of stocks you can choose from at any given time to custom-build your perfect portfolio? For some people, that sounds like an exhausting proposition. For most of the market's more active investors, however, picking stocks can be a lot of fun. It's a chance to go on a treasure hunt of sorts.
Just as a thought experiment, though: What if you could make just three stock purchases in any year? Would it change anything for you? It certainly did for me. I had to limit myself to names I'd be comfortable holding on to for the long haul just in case things didn't pan out in the short run.
Here are the three picks I settled on for 2024. Note that this same exercise could lead to different choices in a different year.
Coca-Cola
Yes, The Coca-Cola Company (KO 0.91%) is such a predictable stock suggestion that it's almost cliché. I don't care. With only a limited number of buys within a calendar year, I'm opting for predictability -- and income -- rather than risky growth.
You know the company as the name behind its popular namesake cola. Sprite, Schweppes ginger ale, and Barq's root beer are also part of its soda family.
There are couple of important things you may not know about The Coca-Cola Company, however. First, it's not just carbonated beverages. Coca-Cola also owns Dasani water, Gold Peak tea, Minute Maid juices, Powerade sports drinks, and Fresca, just to name a few. This wide range of products means the company is able to meet consumers' ever-changing needs. Also being the biggest name in the beverage business, it enjoys leverage when it comes to selling and marketing its goods.
NYSE: KO
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The second noteworthy detail is that Coca-Cola isn't quite in the business you might think it's in. Contrary to a common assumption, Coca-Cola does very little of its own bottling these days. It offloads the bulk of this work to independently operated bottling partners so the company itself can focus on what it does best, which is marketing and branding. Its revenue comes from the sale of flavored syrups its bottling partners use when manufacturing these well-known drinks.
On the surface, the distinction doesn't seem like a big deal. But a huge chunk of the cost, headache, and risk of being in the drinks business is found at the bottling level. The royalty revenue the company collects, conversely, are not only high-margin, but also reliable.
This business model is the chief reason the beverage behemoth was recently able to raise its dividend payment for a 62nd consecutive year. It's currently yielding 3.3%.
JPMorgan Chase
You may already know megabank JPMorgan Chase (JPM 0.15%) didn't raise its revenue guidance for the remainder of 2024, contrary to expectations. While the company did top its first-quarter sales and earnings estimates, its outlook for the full-year's net interest income didn't budge from its previous expectation of around $90 billion. The stock is now down on the order of 10% from last month's peak, largely thanks to this disappointment.
NYSE: JPM
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What's being lost in the noise, however, is how well the company's still doing, and is likely to continue doing, on other key fronts. Take investment banking as an example. While total dealmaking revenue was down a bit year over year, that's a somewhat volatile profit center. In the meantime, investment banking fees were up 18% year over year and 20% higher than Q4's tally, in step with a slight worldwide rebound from last year's lull in M&A and IPO activity.
EY reports that while the total number of initial public offerings made in Q1 was down 7% year over year, the 7% growth in the total amount of funds hints that this business is on the mend. In fact, as PwC Capital Markets Advisory Leader Doug Chu said in his firm's analysis of the first quarter's activity, "Q1 2024 is off to a strong start -- could 2024 finally see the return of a more normalized IPO market? So far, so good."
It's not just a rekindling of the capital markets business that makes JPMorgan stock such an interesting prospect this year, though. As time marches on and the world backs away from the precipice of a recession and toward a so-called soft landing, demand for banking services in general, like lending, perks up. Despite persistently high interest rates, for instance, the Federal Reserve reports that most banks are anticipating growing demand for new loans this year compared with 2023 -- once rates finally start falling.
Simply put, investors are incorrectly reading the room right now, dragging JPMorgan Chase shares lower as a result. But that short-term swoon is actually a long-term opportunity.
Walt Disney
Last but not least, I'm adding The Walt Disney Company (DIS 0.62%) to a short list of stock's I'd buy in 2024. This hasn't been the case in a while.
Oh, the entertainment and media giant could seemingly do no wrong before the COVID-19 pandemic, riding high on the success of several box office blockbusters and before 2019's ballyhooed launch of its Disney+ streaming service. Investors were also quite confident Bob Iger was leaving the rock-solid company in good hands when Bob Chapek took the helm as CEO in early 2020.
By early 2021, though, it became clear that Disney wasn't the company most investors thought it was. Streaming was proving more expensive and more competitive than initially anticipated. The cable television industry was crumbling even more than feared.
Walt Disney's movie business has been struggling, too, never seemingly able to reproduce the success of its Avengers and Star Wars franchises that had done so well before COVID. These problems, and others, became so dire that the company only narrowly survived a recent proxy battle with activist investor Nelson Peltz, but it was a long and ugly battle all the same.
End result? Shares are down more 40% from their early 2021 peak, falling back to levels seen all the way back in 2015.
NYSE: DIS
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But nothing lasts forever, and most of the problems that have been ailing Disney of late are finally being addressed with Iger back in charge as CEO. For instance, he's conceded in several recent interviews that the quality of the storytelling in many of its newer films has been subpar -- something that's finally being addressed. Walt Disney is also still dialing back its overall costs, and streaming content costs in particular, looking for a sustainable balance between marketability and affordability.
It's still a work in progress, and it remains to be seen when the big ship will be able to turn itself around. Disney stock's lackluster performance, however, suggests investors think it could take a while longer.
However, as Warren Buffett's sage advice reminds us, "Be fearful when others are greedy, and be greedy when others are fearful." There's enough hope on the horizon to believe Walt Disney's turnaround will take shape sooner than later.
