When I talk to Motley Fool readers, it's pretty clear what they want first and foremost -- stock ideas.
I do my best to oblige, so today I'll give you the rundown on three stocks I've got in my sights. Our co-founders, David and Tom Gardner, did the same exercise, so I'll give you a link to their stocks at the end (if I gave them to you now, who'd keep reading mine?).
Stock No. 1: VF Corp.
If you haven't heard of it, you've likely heard of its brands. They include The North Face, Vans, Lee, Wrangler, 7 For All Mankind, JanSport, Eastpak, and Nautica. The list goes on. VF's strategy is to decentralize its brand management but to gain operational and logistical efficiencies. Its $10 billion size is an advantage here.
What troubles me is its reliance on acquisitions for growth. Its past returns on capital have been consistent, but not especially impressive.
Despite its recent run-up, its stock is still selling at 14 times management's estimates for 2011's earnings with a 2.6% dividend.
It's dangerous to pay up for most retail. I'd pay an above-market multiple for Amazon.com
Stock No. 2: Diageo
Alcoholic beverage maker Diageo was already on my watchlist before I visited its London offices in November. But the visit gave me more respect still.
Like VF, Diageo isn't a household name, but its brands are: Smirnoff, Captain Morgan, Jose Cuervo, Johnnie Walker, and Baileys head the list. On the beer front, it owns Guinness.
What impressed me most about Diageo was that management seems to get it. They leverage their premium brands and don't chase growth for growth's sake. They keep it consistent and return a decent 2.6% dividend to shareholders.
Buying dominant companies at good prices is the way to great retirement. It's interesting that Captain and Coke
Stock No. 3: GM
We're moving from boring stability in Diageo to a large-cap turnaround situation in GM. Fortunately for investors, GM had some back-up in emerging from bankruptcy. As I wrote earlier:
[T]he investment thesis for GM is all about government help. Thanks to the government, GM has emerged with a relatively clean balance sheet, a better cost structure, and serious tax breaks. Given those advantages, GM can focus on its streamlined offerings and even competing with Tesla with its just-launched Chevy Volt.
As I write now, GM shares are trading for less than their $33 November IPO price at least partially due to rising oil prices.
GM isn't as far along in its turnaround as its counterpart Ford
Takeaway: There's certainly a lot of uncertainty in a previously bankrupt, capital-intensive business that is highly affected by rising oil prices. But I believe enough in GM's risk-reward opportunity that I've personally bought shares at higher prices than today's. If GM's stock dips enough from here, I'll consider doubling down.
The promised stocks
If you like any of the stock ideas above, you can monitor them along with me with our free watchlist feature. The watchlist allows you to easily track all our analysis on all your favorite stocks. You'll also get instant access to our new special report, "Six Stocks to Watch from David and Tom Gardner." Click here to get started.
Anand Chokkavelu owns shares of General Motors. General Motors and Coca-Cola are Motley Fool Inside Value recommendations. Amazon.com and Ford Motor are Motley Fool Stock Advisor selections. Diageo and Coca-Cola are Motley Fool Income Investor picks. The Fool owns shares of Coca-Cola, Diageo, and Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.