3 Stocks That Just Make Sense

"I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out."
-- Warren Buffett

History seems to show that good investing doesn't necessarily mean picking out complex situations and basing your investment thesis on Nobel-level math. In fact, as the recent financial crisis has shown us -- not to mention Long-Term Capital Management and many other examples -- too much complexity can often end in calamity.

In an effort to track down some of the companies that may fall into that "fish in a barrel" category, I've turned to The Motley Fool's CAPS community. To put together a candidate list, I looked for companies with a conservative balance sheet, a dividend, annualized earnings growth of 5% or better over the past five years, a price-to-earnings ratio below 15, and a high rating from the CAPS community.

Source: CAPS and Capital IQ, a division of Standard & Poor's.

While the three companies above aren't meant to be formal recommendations, they are good starting points to start some further research. And on that note, let's take a closer look why these potential investments might make a whole lot of sense.

Suburban Propane Partners
While most households in the U.S. meet their heating needs through natural gas pumped directly to them by utilities like National Fuel Gas, those who live beyond the reaches of the natural gas distribution systems need another solution. And that's where Suburban Propane comes in.

Distributing propane and fuel oil isn't exactly an exciting business, and I don't think we need to frame it as such to reveal why Suburban Propane is an exciting investment. Over the past 10 years, the company has increased its revenue 74%, while boosting earnings per share nearly 400%. At the same time, it's increased the cash on its balance sheet, reduced its debt load, and doubled its dividend payout.

Boring? Maybe. But with a reliable business delivering numbers like that, I can't help but think Suburban Propane makes a lot of sense.

Merck
Well, health-care reform may not be perfect, but it's here.

While not everyone may agree with all of the reforms (or lack of reforms), investors may be well advised to put aside personal views of the bill and figure out where health care companies might benefit. Luckily, my fellow Fool Brian Orelli has already tackled that question and come up with a few different rocks to look under for stocks that could get a boost from the reforms.

One of these groups is the big pharma crew that includes the likes of Pfizer (NYSE: PFE), Abbott Laboratories (NYSE: ABT), and, of course, Merck. As Brian pointed out, the reform bill will create tens of millions of newly insured people. All of these folks will suddenly be better able to afford a wide variety of drugs to treat all their ails, which means that it's likely that they'll be new customers for the drug companies.

The company isn't without its challenges, though. It's no secret that patent expirations are a key pain point for big pharma right now, and Merck is certainly part of that party. Among Merck's upcoming expirations are Cozaar and Hyzaar in 2010 and Singulair in 2012. And while the company works to offset those losses, it also has to effectively integrate the massive acquisition of Schering-Plough.

But it seems that Mr. Market has already baked a lot of this pessimism into the stock price. With a current dividend yield of 4% and a 2010 price-to-earnings ratio of just a bit over 11, it would seem that investors can bet on the continuation of the success that Merck has seen for more than 100 years, while getting some cushion against the current headwinds.

Turkcell
Recently I took a look at the telecom slice of the S&P 500 and determined that because of their juicy dividend yields, investors would be well advised to jump on big U.S. telecom players like AT&T (NYSE: T) and Verizon (NYSE: VZ). However, I also pointed out that due to the importance of telecommunications in a growing economy and the high-growth potential of many of the developing countries, telecoms outside of the U.S. could be an even better bet.

Does Turkcell's home country of Turkey fit the bill? You bet. It hasn't always been smooth sailing for Turkey politically, and the country's economy got slugged by the global recession. However, Turkey appears to still be on the rise, with a continued privatization of state-owned companies and a shift in the country's exports from textiles to areas like electronics.

CAPS member kipwrite is one of the 800-plus fans of Turkcell on CAPS and weighed in after seeing the dominance of the Turkcell brand first-hand in Istanbul: "Emerging market, strong brand name, excellent service. Just returned from Istanbul and they appear to have a dominant position. I suspect strong growth on the data side."

Getting down to business
Now the CAPS community wants you. That's right, do you think these stocks make sense? Or is the community off base in its faith in these companies? Head over to CAPS and join the 160,000-plus members already sharing their thoughts on thousands of stocks.

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