Best Stocks for 2009

I always enjoy this time of year. The Christmas music, decorations, family gatherings, holiday plays and stock picks. Stock picks? Yes, 'tis the season for stock predictions! Virtually every financial writer will pen an article selecting his or her top picks for the upcoming year. I enjoy reading them and the logic behind them. As a long-term buy and hold investor, generally most aren't useful for me; nevertheless, I enjoy reading them. Here are some excerpts and picks from several of the experts:

In Jubak's Journal, Jim Jubak believes the markets will recover before the larger economy does. He provides 5 picks for the beginning of the year and 5 for later, with lots of caveats. His 5 best stocks for the first half of 2009:

• Deere (DE) - a farm machine producer that tracks the price of agricultural commodities.
• Enbridge (ENB) - a natural-gas and oil pipeline company that has a 3.8% yield.
• ExxonMobil (XOM) - the world's best integrated oil company for the current environment. [reviewed July 7, 2008]
• Flowserve (FLS) - It makes pumps and valves for moving everything from water to oil and has a yield of 2%.
• Rayonier (RYN) - a producer of wood products and an owner of timberland. Yield: 7.2%.

His 5 best stocks for the second half of 2009:

• Goldcorp (GG) - the world's low-cost producer of gold.
• Google (GOOG) - the dominant Internet search company just gets more dominant.
• HSBC (HBC) - the best banking franchise left standing in Asia.
• Petrobras (PBR) - The Brazilian national oil company has dozens of new fields under development. It was added to Jubak's Picks on Aug. 26, 2008.
• Thompson Creek Metals (TC) - the second-largest private producer of molybdenum in the world.

In their normal fun and frivolous way the Motley Fool picks The Best Stocks for the Year Ahead. Here are six of them:

• Yum! Brands (YUM) - a quick service restaurant with over 35,000 units in more than 100 countries and territories.
• PepsiCo (PEP) - a global snack and beverage company. [reviewed May 26, 2008]
• Coca-Cola (KO) - a manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups. [reviewed October 22, 2008]
• Philip Morris International (PM) - an international tobacco company.
• Kinder Morgan Energy Partners (KMP) - a pipeline transportation and energy storage company in North America.
• Enterprise Products Partners (EPD) - a North American midstream energy company.

Fortune magazine in their The best stocks for 2009 article points out the silver lining of the market meltdown: Equities are cheaper than they've been in years. They predict that these ten prospects will flourish during 2009:

• Altria (MO) - is the holding company of Philip Morris USA Inc. (PM USA) and John Middleton, Inc., which are engaged in the manufacture and sale of cigarettes and other tobacco products.
• Annaly (NLY) - a real estate investment trust (REIT) that owns and manages a portfolio of mortgage-backed securities.
• Dell (DELL) - a technology company, which offers a range of product categories, including desktop personal computer.
• Devon Energy (DVN) - an independent energy company engaged primarily in oil and gas exploration, development and production.
• Diamond Offshore (DO) - provides contract drilling services to the energy industry worldwide.
• Fluor (FLR) - a holding company that, through its subsidiaries, provides engineering, procurement and construction management.
• Johnson & Johnson (JNJ) - is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. [reviewed October 29, 2008]
• Medco Health Solutions (MHS) - a pharmacy benefit manager.
• Pfizer (PFE) - a research-based, global pharmaceutical company. [reviewed March 17, 2008]
• Potash Corp. (POT) - an integrated fertilizer and related industrial and feed products company.

Finally, Selena Maranjian at the Motley Fool picks a single best stock in the article Best Stock for 2009: Johnson & Johnson. The article points out several important facts about JNJ:

• 75 consecutive years of sales increases.
• 24 consecutive years of adjusted earnings increases.
• 46 consecutive years of dividend increases.

In addition, the stock had a 10-year 140% total return for investors, compared to a 51% total return for the S&P 500.

We are all looking for the perfect stock. Over the years I have evaluated several of the above stocks as potential dividend investments, most did not pan out. Dividend investors are looking for stocks that will perform well over the long run, not just 2009. Of the stocks mentioned above, I am actively buying JNJ, KO and PEP.

Disclosure: Author is long JNJ, KO, PEP and PFE.

Comments

[Emerald:]

Generally speaking, most of the stocks listed above make a lot of financial sense, although Fluor and Flowserve are making bets on government spending. Dell is in a very competitive business and is trying to regain market share lost to HP. However, the consumer is tapped out and small business is reducing tech spending in 2009.

2008 Dec 24 11:13 AM

[jepittman:]

I wish I had a dollar for every time I've read the phrase 'the consumer is tapped out'. SOME consumers are tapped out. To imply ALL are tapped out is a stretch. There are a lot of people still in pretty good financial shape who have good jobs with rising wages who have the capacity to spend. They, like everyone else, have been bombarded with negative news to the point that they are reacting in the expected way by cutting back on their purchases. A lot of the cutback is optional due to the deluge of pessimism. I understand that in the aggregate consumer spending will decline for awhile as the labor market adjusts to the new market realities. But keep in mind the financial markets have already discounted an awful lot of this pessimism and as people settle down and realize the world isn't coming to an end, they will gradually resume their spending patterns. There is still a lot of consumer buying power out there that can bounce back pretty quickly.


On Dec 24 11:13 AM Emerald wrote:

> Generally speaking, most of the stocks listed above make a lot of
> financial sense, although Fluor and Flowserve are making bets on
> government spending. Dell is in a very competitive business and is
> trying to regain market share lost to HP. However, the consumer is
> tapped out and small business is reducing tech spending in 2009.

2008 Dec 24 01:54 PM

[Ricard:]

Financial markets have discounted what Wall Street analysts have discounted in future earnings. My fear is that they have not even begun to accurately predict earnings outside of the financial sector, as most estimates have simply not fallen enough, at least in the stocks I am watching. I am not one to follow the herd, but I do not want to be running the wrong way in front of a stampede.


On Dec 24 01:54 PM jepittman wrote:

> I wish I had a dollar for every time I've read the phrase 'the consumer
> is tapped out'. SOME consumers are tapped out. To imply ALL are tapped
> out is a stretch. There are a lot of people still in pretty good
> financial shape who have good jobs with rising wages who have the
> capacity to spend. They, like everyone else, have been bombarded
> with negative news to the point that they are reacting in the expected
> way by cutting back on their purchases. A lot of the cutback is optional
> due to the deluge of pessimism. I understand that in the aggregate
> consumer spending will decline for awhile as the labor market adjusts
> to the new market realities. But keep in mind the financial markets
> have already discounted an awful lot of this pessimism and as people
> settle down and realize the world isn't coming to an end, they will
> gradually resume their spending patterns. There is still a lot of
> consumer buying power out there that can bounce back pretty quickly.
>

2008 Dec 24 02:42 PM

[nyka:]

Much ado about nothing. Far too many wasted words; bloated with excessive puff. Blessed is he who has nothing to say and cannot be persuaded to say it.

2008 Dec 24 03:03 PM

[Kunst:]

Perhaps you should take your own advice.


On Dec 24 03:03 PM nyka wrote:

> Much ado about nothing. Far too many wasted words; bloated with
> excessive puff. Blessed is he who has nothing to say and cannot
> be persuaded to say it.

2008 Dec 24 05:23 PM

[investor222:]

Keep and eye on Cogent Systems. No debt & $500M in cash. Large government contracts will be awarded in the next 6 months and COGT is a leadiing contender for those.

2008 Dec 24 09:29 PM

[macsmart:]

Useful information. Good starting place for due diligence. While consumer buying has decreased, the fall in oil prices will eventually act as a stimulus package for items the consumer must own.

2008 Dec 25 09:53 AM

[EzF-T:]

Still use best strategy on it, good analyze, will earn you more equity..

EzForex-Trading.com

2008 Dec 26 02:09 AM

[Dave Wrixon:]

The best investments at times like these tend to be alternative investments, like Art, Gold or Forestry.

To make money in a downturn you need to be in something that at least is not severely impaired by it, or is even powered by it.

The main development in the economy which will provide an opportunity is the switch to online commerce. Traditional advertising outlets have largely ignored these opportunities as they protected their existing fiefdoms. There are one or two companies out there on Wall Street that specialize in this area. There is also the possibility of investing directly in online real-estate by acquiring sold generic domain names such at Hotel.com, phone.com or car.com. The value of these name is almost incalculable, and whilst over a $1M dollars might sound a lot for a domain name, the potential ROIs exceed even the wildest dreams of most stockmarket investors.

2008 Dec 26 08:22 AM

[bobbobwhite:]

Note that none of the above comments ,or the article, said a word about short or ultrashort ETFs being the best buys for 2009. Is it possible that we all do not think the world will end soon?

It seems to me that most "investors" are still economic Pollyannas, all thinking positively about the market in 2009 and its return to normal. Sorry, but I think all of you are wrong and that you will be painfully punished for your excessive optimism. Wait and see.

2008 Dec 26 02:02 PM

[pitaking:]

On Dec 26 02:02 PM bobbobwhite wrote:

> Note that none of the above comments ,or the article, said a word
> about short or ultrashort ETFs being the best buys for 2009. Is it
> possible that we all do not think the world will end soon?

The best pick for 2009 will be the SRS and SDS after we see a 15% rally in the S&P. The housing collapse is still in the middle innings in the US and early stages around the world, credit is still frozen and we are staring down the barrel of 2 options with the US dollar, deflation or hyper inflation, neither will be very helpful to the average citizen. Obama rally until the spring, short everything the rest of the way. S&P 400-600 a year from now.
>
> It seems to me that most "investors" are still economic Pollyannas,
> all thinking positively about the market in 2009 and its return to
> normal. Sorry, but I think all of you are wrong and that you will
> be painfully punished for your excessive optimism. Wait and see.

2008 Dec 26 03:00 PM

[silver-bullet:]

The new bull market will not be in [financials] or consumer discretionary. So get rid of these stocks when they bounce bace: Apple, GM, Sony, Macy, Sharper Image, AIG, C, BAC, JPM etc...

It will be in precious metals, energy, agriculture, technology, rail, consumer staples, and water treatment/infrastructu...

2008 Dec 26 06:03 PM

[silver-bullet:]

Also, physical precious Metals, and mining stocks. Have you seen the movement of gold mining stocks this month? They are ballistic!

Just check out GDX and its composits!!!!

2008 Dec 26 06:08 PM

[decoflair:]

How easily that we accept the recommendations in regard to which stocks to buy from Forbes, Motley Fool, Jubak, and others. Why not have a SEC regulation that forces financial advisers to show past performance records on prior stock recommendations? After what happened in 2008 it is obvious that it is time to "tighten up" the financial services industry. The best way to do this is to have these folks show their past records of performance on all stock picks (not just the chosen few winners that beat the market). Otherwise, my life experience of exposure to these folks tell me that they are overpaid fortune tellers.

2008 Dec 27 06:07 AM

[ozcutty:]

a lot of these picks are backwards looking and would have served you well in 2008, its a bit late to sell your financial stocks and pile into JNJ. I would do the opposite right now. Companies like LM, DFS, MCO, AXP will outperform JNJ next year.

2008 Dec 27 06:56 AM

[ozcutty:]

Love PM but US Dollar strength is gonna hurt earnings in 2009

2008 Dec 27 06:58 AM

[mwswi:]

Thanks, Dividends4Life, for publishing an entertaining article. I enjoyed reading the fearless predictions of your various, "investment experts". Do I take any of those predictions seriously? I don't think so.

Still, it's always interesting to read the differing perspectives of readers in the commentary section. It simply proves that investing is a very inexact science and nobody can truly predict the market's future. This implies to both the "investment experts" as well as those SeekingAlpha readers who offer their own unique opinions.

2008 Dec 28 02:14 PM

[Greener Pas...:]

I'm hoping it's turn around time - I started my own personal portfolio this last year. It's up to 3k. I have 2 stocks, GOOG and NLY, One growth stock and one dividend stock. from all I'm reading, and by doing the math, I think I'll be ok. Some of the stock experts' picks give me a queasy feeling. Sometimes I think they're just trying to grab attention

Feb 06 07:20 PM