Last week, I presented the first six of a dozen promising companies. As I've explained, a reader who wrote me a few months ago noticed that a set of companies I'd mentioned two years earlier had appreciated some 38%. That encouraged me to make a new set of ideas as I patted myself on the back heartily -- at least until some readers pointed out that investing in a simple index fund over the same period would have yielded similar results. But still, for those looking for some promising companies, I offer the last six firms in my list of 12.
First, though, please note the following things about my list:
- It's no longer exactly a wish list of companies I admire and would love to own for the long term, although some of the firms do fall into that category. Instead, it's a list of companies that seem like they may be good buys at recent levels or are worth watching for a buying opportunity. (Some companies from the last list remain on this one.)
- The ideas are based not on my brilliant and deep stock analysis, but on my reading of company information, articles in the general financial press, and the thoughts of analysts I respect.
- I can offer, of course, no guarantee that these companies will do well in the future. I'm smart, but I'm not one of the world's best stock analysts. I'm someone who writes about gnomes and underpants and the poetry of investing.
- If you're interested in getting recommendations on stocks (and mutual funds) from smart people who actually do spend a big chunk of their time dissecting financial statements and searching relentlessly for undervalued, promising investments, then grab a free sample or two of our investing newsletters -- there's no cost to try them out.
Without further ado, here is my latest list.
This firm isn't exactly in the center of my circle of competence. I'm no expert in medical devices, but I do see what a large, important, and growing industry Medtronic is in. The firm describes itself as "the world's leading medical technology company, providing lifelong solutions for people with chronic disease." This is a profitable business: Medtronic is enjoying 20%-plus net profit margins, double-digit growth rates, and return on assets usually north of 12%.
See what other Fool writers have to say about the company:
Paychex provides outsourced personnel-administration services for companies. Its shares have been somewhat depressed over the past few years, and that has resulted in a rather attractive price. It's in a high-margin business, and growth has been steady. (Net margins, topping 20%, are lower than they were a few years ago, though.) The company cuts paychecks for millions of Americans and also provides other services, such as tax, insurance, and retirement-plan administration. Its main competitor, Automated Data Processing
Check out what other Fools are saying about Paychex:
What's not to love about this company? OK, maybe its price shouldn't cause us to back up the truck -- but even if you'd bought shares at the recent price levels, you'd probably find them performing well over the long haul. You already know that PepsiCo is a top-notch global beverage company that makes lots of brands -- Pepsi, Tropicana fruit juices, Gatorade, Aquafina bottled water, Diet Pepsi, Pepsi One, Mountain Dew, Slice, Sierra Mist, and Mug. But the beauty of PepsiCo is that it's also the biggest salty-snack company -- surely you've heard of brands like Frito-Lay, Ruffles, Lay's, Doritos, Cheetos, Tostitos, Santitas, Rold Gold, and SunChips? Yes, this is an international powerhouse, with net margins topping 10% and return on equity near 20%. I was happy to pick up some shares of PepsiCo earlier this year. It's not a company whose performance I'm worrying much about.
What do other Fool writers think?
Procter & Gamble
Procter & Gamble has been in the news lately, with its pending purchase of Gillette
Here's what other Fools are writing about P&G:
Sysco is the big cheese in America's food-distribution department, though its market share is still below 15%, and that suggests much room for improvement. You've probably seen its trucks on highways near you, as they head off to stock restaurants, hotels, schools, cruise ships, nursing homes, and more. And the company does more than just deliver -- it provides many of the supplies, too. Its net margins are in the 3% range, but its return on equity tops 30%. Its recent P/E of 24 falls within Sysco's average historical range.
Other Fools have written about the company:
Here's a firm that most of us can readily understand. Its many brands include Juicy Fruit, Doublemint, Big Red, Eclipse, Extra, Freedent, and Orbit, among others. People are talking about this company on many of our discussion boards -- not just the Wrigley board. With its recent P/E near 30, the stock price doesn't seem to be a huge bargain right now. But I'll keep an eye on it, as its net margins above 12%, return on equity above 20%, and return on assets above 15% are tempting.
Fool writers are talking about Wrigley, too:
So there you have it. A dozen companies that may deserve a berth on your personal watch list -- and perhaps a few you may want to consider buying into right now. (Read about the other six here.) There are many other fine firms out there, of course, and surely many that are even more compelling than these. Share your favorite firms by chatting it up on our discussion board -- or pop in to see what stocks others are recommending.
If you're in the market for stock and fund recommendations with a lot more research and analysis behind them, do yourself a favor and take a free trial of one or more of our investing newsletters. Their performance has really been pretty impressive so far.
Selena Maranjian's favorite discussion boards include Book Club , The Eclectic Library , and Card & Board Games . She owns shares of PepsiCo. For more about Selena, view her bio and her profile . You might also be interested in these books she has written or co-written: The Motley Fool Money Guide and The Motley Fool Investment Guide for Teens . The Motley Fool is Fools writing for Fools .
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