Of all the insight I've heard over these last few crazy months, the most telling came from an investor who appeared on CNBC last fall and, being entirely serious, advised, "There're only two positions to be in right now: cash, and fetal."
I get it. Even with the recent rally, it's ugly out there. Many companies that overleveraged their balance sheets are permanently impaired and will likely never fully rebound. Exploding financials like Citigroup
Even so, history tells us time and time again that market panics and forced selloffs indiscriminately throw the good out with the bad. Amid the frenzy over financial markets and the "sell-now-ask-questions-later" mood of global investors, opportunities are being created for bargain-hunting investors like we haven't seen in decades.
Using the wisdom of our 135,000-member-strong CAPS community, I've hunted down a few dirt-cheap, high-quality companies. Have a look:
|
Company |
Recent Share Price |
Forward P/E Ratio |
5-Year Expected Growth Rate |
TTM Return on Equity |
Dividend Yield |
CAPS Rating |
|---|---|---|---|---|---|---|
|
Cisco |
$19.26 |
15.41 |
9.5% |
20.08% |
N/A |
**** |
|
Campbell Soup |
$28.28 |
12.30 |
6.9% |
49.70% |
3.50% |
**** |
|
Bristol-Myers Squibb |
$19.92 |
9.23 |
7.52% |
26.33% |
6.40% |
**** |
Data from Yahoo! Finance and Motley Fool CAPS, as of June 17.
All three are well-established large-cap stocks. Let's break down the bullish argument for each one.
It's the internet, stupid
As a new member of the Dow Jones Industrial Average, tech champ Cisco reaffirmed what many have known for a while: It's an iconic American company that isn't going anywhere anytime soon. True, the Dow's selections often appear arbitrary and are, in general, rather meaningless, but it's a nice vote of confidence nonetheless.
And it's a vote of confidence Cisco probably deserves. After all, this is a company that's essentially responsible for connecting the world as we know it. As CAPS member bulltrapper put it:
Cisco Systems drives the entire computer networking industry. Many of the protocols and standards were invented by the company. Cisco is going to continue to be a profitable and stable company into the future. Anyone that has ever used their products know the quality that they offer opposed to any other networking vendor. The current stock prices are a steal.
And as my Foolish colleague Anders Bylund recently pointed out, network-delivered video is still looking at phenomenal growth prospects, which stands to boost not only Cisco, but giants like Google
Mmm-mmm good
Earlier this year, another colleague, Alyce Lomax, wrote about the four things you need to survive in the new economy. What was the top item on the list? Food. Canned food, specifically.
While this might seem dramatic to some, it emphasizes why companies like Campbell Soup could end up thriving in the years ahead. Sure, total, hysterical meltdown looks like it's been averted, but we're heading into an economy focused around frugality and necessity rather than luxury and entitlement. That's the kind of mentality under which Campbell thrives.
While you shouldn't hope for blockbuster returns, this company is probably better situated for stable, consistent, long-term profitability than it has ever been.
Of drugs and money
It's a scary time to invest in the health-care industry. Universal health care? Socialized medicine? These are becoming common phrases that scare the bejezus out of investors in companies like Bristol-Meyers Squibb.
But that fear is pushing shares down to stupidly low levels that translate into a huge dividend yield. Bristol-Meyers Squibb currently rocks a 6.4% dividend yield, which in itself is a pretty reasonable total return.
A similar story can be told about cigarette giant Altria Group
Your turn to chime in
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