Ten Stocks to Hold Long-Term - Barron's 39 comments
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With the Dow off more than 50% from its October 2007 peak, there's rarely been a better time for long-term investors to pick up stocks on the cheap. Barron's puts together a list of ten great stocks to hold for five years or longer.
1) Coca-Cola Femsa (KOF): The world's second-largest Coca-Cola bottler is down nearly 60% from its 52-week high, closing at $27.67 on Friday. But the company is well-run and continues to grow. It had a healthy $650M of cash as of late February, and bulls think double-digit growth could return by the end of 2010.
2) Microsoft (MSFT): At a recent $15.27, the company's P/E ratio is less than nine based on estimates for this year's earnings. Microsoft is 'a gigantic cash machine' and its dividend yield of 3% beats last week's quote for 10-year Treasury bonds.
3) ACE Limited (ACE): One of the largest global players in the property-casualty field, ACE "is very strong financially, and they have weathered the current environment quite well with a strong balance sheet," says Institutional Capital's Jerry Senser. ACE stands to gain AIG marketshare and talent, and Senser sees high-single-digit growth next year.
4) Wynn Resorts (WYNN): Despite a heavy debt load, the company carries $1.1B in cash, providing it some breathing room. Under the assumption that the world will go on and people will still want entertainment, there's plenty of upside potential for Wynn's casinos and resorts.
5) EMC Corp. (EMC): The company is well-positioned to take advantage of the growing corporate need to store and protect data. Although the recession will hurt, EMC's profit outlook seems reasonable; analysts expect EPS of $0.91, up from $0.77 in 2008.
6) Cerner (CERN): The firm builds and runs data systems, many used to store medical records - a field that could see tremendous growth. Jeff Coons, of Manning & Napier Advisors, thinks the stock is worth $50+ vs. its recent $36.72.
7) WellPoint (WLP): The managed-care company has roughly half its health-insurance business in administering plans for businesses, rather than taking underwriting risk. As a result, earnings are more predictable than some of its peers. Shares could produce annual returns in the mid-to-high teens for the next few years.
8) Google (GOOG): Investors who worry about advertising during a recession should accept that to the extent companies are advertising, they're doing so online. Google stands to benefit from the long-term trend of ads moving to the internet. Another plus: Google has zero debt.
9) eBay (EBAY): The firm has lots of cash and a strong brand name. The company is also doing everything it can to minimize counterfeit problems, and has strong competitive advantages.
10) CVS Caremark (CVS): The company expanded its retail pharmacy business with its acquisition of Longs Drug Stores for $2.9B. CVS's pharmacy-benefit management business should get a boost from companies' increased efforts to control health care costs.
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This article has 39 comments:
I am confident that eBay shares will never again rise much above their current level. On the contrary, they will likely continue to decline unless and until there is a complete change in eBay management and its anti-seller policies are retracted. And that includes getting rid of John Donahoe. Only then will confidence in eBay begin to rise, and start it on the road to recovery. But until then, eBay unfortunately in my opinion, holds little value for its sellers, its buyers or its shareholders.
And as for the claim that "The company is also doing everything it can to minimize counterfeit problems", clearly the writer has very little experience dealing on eBay, or she would know just how completely inaccurate that statement is.
eBay is doing next to nothing to curb the sale of counterfeit items on its site. As many know, eBay is awash with counterfeit items by some of eBay's largest sellers...and their businesses continue to flourish unchecked. The fact of the matter is that eBay only gives lip-service to counterfeiting, with the occasional take-down of a few items merely to appease complainers. But in reality, there is next to nothing eBay can do without slitting its own throat. In short, getting rid of the counterfeiters would result in eBay cutting a great deal of its own revenue, and I am not convinced that is something eBay is prepared to do...especially while fighting the occasional counterfeiting lawsuit costs them a lot less.
Your article might have been more beneficial to readers if contained current thoughts on ebay and the ebay "brand".
Go to your Post Office on a Saturday or any day there is a long line. Say the word "Ebay". See what happens.
Go to a crowded swap meet. Say the word "Ebay". See what happens.
Go to an antiques mall. Say the word "Ebay" to any dealers you meet. See what happens.
Go to a local auction house. Mix with the crowd. Say the word "Ebay". See what happens.
Go to a local auction house. Mix with the crowd. Say the word "Ebay". See what happens.
Go to a local unemployment line. Mix with the crowd. Say the word "Ebay". See what happens.
Go to a local social services office. Mix with the crowd. Say the word "Ebay". See what happens.
Go to the Motley Fool site. Put up a post asking for thoughts on the ebay "brand".. See what happens.
Go to the Jim Cramer's Mad Money site at CNBC. Put up a post asking for thoughts on the ebay "brand".. See what happens.
When GM goes bankrupt, you may miss the chance.
Go Blue, and Your Dow Will Never Jones!
On Mar 07 01:33 PM Black Is White wrote:
> Thanks for your list.
>
> Your article might have been more beneficial to readers if contained
> current thoughts on ebay and the ebay "brand".
>
> Go to your Post Office on a Saturday or any day there is a long line.
> Say the word "Ebay". See what happens.
>
> Go to a crowded swap meet. Say the word "Ebay". See what happens.
>
> Go to an antiques mall. Say the word "Ebay" to any dealers you meet.
> See what happens.
>
> Go to a local auction house. Mix with the crowd. Say the word "Ebay".
> See what happens.
>
> Go to a local auction house. Mix with the crowd. Say the word "Ebay".
> See what happens.
>
> Go to a local unemployment line. Mix with the crowd. Say the word
> "Ebay". See what happens.
>
> Go to a local social services office. Mix with the crowd. Say the
> word "Ebay". See what happens.
>
> Go to the Motley Fool site. Put up a post asking for thoughts on
> the ebay "brand".. See what happens.
>
> Go to the Jim Cramer's Mad Money site at CNBC. Put up a post asking
> for thoughts on the ebay "brand".. See what happens.
The stock is already down over 80% based on the problems mentioned. Few were bashing it so rabidly at 50/share. And yet now nothing but bashers which usually, historically speaking, is a great time to buy a stock that is suffering from many internal problems and being bashed by everyone....cuz if those problems get fixed, then zoom zoom zoom.
Just an observation...
I agree...at $50 per share, few were bashing eBay. But at $50 per share, JD was not at the helm. I will also agree that most of the complaints we now have are somewhat built into the decline of the stock and its current level, which I'll admit may be close to a bottom. But bottoming out is just one part of the equation. In order for it to rise again, maintaining the status quo will not do. Radical changes must be made. And those changes must include replacement of eBay's current management under Donahoe, and among other things, a change from feedback 2.0 back to the old system, along with a renewed emphasis on "true" auctions which were really what made eBay...eBay, setting it apart from just another online mall.
On Mar 07 02:35 PM Egg wrote:
> All you rabid Ebay bashers realize you are probably contrary indicators.
>
> The stock is already down over 80% based on the problems mentioned.
> Few were bashing it so rabidly at 50/share. And yet now nothing but
> bashers which usually, historically speaking, is a great time to
> buy a stock that is suffering from many internal problems and being
> bashed by everyone....cuz if those problems get fixed, then zoom
> zoom zoom.
>
> Just an observation...
>
Those "few bashers" at $50 had something didn't they?
"cuz if those problems get fixed, then zoom zoom zoom."
The operative word here is "IF", as in, "IF pigs could fly they'd be birds" or "IF I had balls I'd be King, said the Queen."
Ebay has come to suck, & there is NO indication that they have learned lesson 1.
Ayuh
Pretty much says it all.
Those who post the current state of affairs at ebay are not bashing, just being truthful.
This article seems to have been written without a critical look at ebay's CURRENT counterfeit problems after they opened the site to Asian sellers and without a critical ear to what is CURRENTLY being said about the ebay brand around the world.
Barron's can do better
Ebay's "strong competitive advantage" is faltering.
Follow ebay's Investor/Analyst day this Wed. March 11th to see if they have a clue as to what to do about it.
I'm willing to take a chance on it with such an extreme negativity expressed here.
We'll see if you are truely contrary indicators...
Be careful.
I can't see many prospects with a better chance of earning money through the cloud...but we'll see if eBay realizes what they have, or just sells the properties to someone else who can realize their potential. If they sell the properties, I'd expect eBay to use anything but their own auction system...
Americans are forgetting the $4.65 gasoline now.
They start to drive like nuts again.
We are hooked deeper and deeper with OIL.
We are addicted to it. Period.
On Mar 07 05:07 PM Egg wrote:
> Wow, y'all have actually convinced me to buy Ebay this week.
>
> I'm willing to take a chance on it with such an extreme negativity
> expressed here.
>
> We'll see if you are truely contrary indicators...
Sad.
On Mar 08 09:41 PM StockMarketSage.com wrote:
> I went to boxing match and a hockey game broke out...I went to stock
> story and an Ebay Brawl has broken out.
They could even buy EBAY, Mention EBAY to AMAT and see what happens.
I have no idea what would happen but please will someone mention EBAY to AMAT and tell us what does happen.
With major changes coming from the Administration in healthcare, those companies that provide actual care, insurance coverage or prescription pharmacueticals are likely to come out on the short end of the stick. If you look back to the effect that proposals out of the Clinton Administration had on healthcare stocks, especially big pharma, it should be evident that the impact of coming legislation, once fully disclosed, could have a negative impact on earnings and stock prices in that industry for several years.
I, for one, expect that this economic downturn will be the worst we have experienced since the 1930s. I am not suggesting that this will definitely be another depression, just that it appears now that this downturn will last longer and run deeper than anything we have experienced post-WWI. It has the potential to change the consumption and savings habits of people all around the globe. If that is the case, then high-end resorts and potentially gaming stocks could see further deterioration to earnings and stock prices for a very long time. I don't have a crystal ball, so I don't anything for sure. I just think that adding a stock in a category where the future could potentially change adds too much risk for too little return. After all, wasn't this supposed to be a list of low-risk investments?
While both companies' stocks could probably be higher in ten years, I suspect investors may be reiquired to be very patient over the next three-to-five years because by that time their investments may only be breaking even.
GE Capital sets $8 bln, FDIC-backed debt sale -IFR
Mon Mar 9, 2009 12:57pm EDT Email | Print | Share| Reprints | Single Page[-] Text [+]
Market News
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Oil rises above $47 on chance of OPEC cut
More Business & Investing News... NEW YORK, March 9 (Reuters) - General Electric's (GE.N) finance unit, General Electric Capital Corp, plans to sell $8 billion in bonds backed by the Federal Deposit Insurance Corp, in a four-part sale, said International Financial Review on Monday.
The sale includes $4 billion in two-year fixed rate notes expected to price at around 8 basis points over mid-swaps and $1 billion in two-year floating rate notes expected to price at around 8 basis points over the three-month London interbank offered rate, said IFR, a Thomson Reuters service.
The sale also includes $1.5 billion of three-year fixed rate notes expected to price at around 20 basis points over mid-swaps and $1.5 billion in three-year floating rate notes expected to price at around 20 basis points over three-month Libor, IFR said.
Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and RBS Greenwich Capital are co-managing the sale. (Reporting by Karen Brettell; Editing by Leslie Adler)
NOW THAT...
What happens in a downgrade? The Fortune article presents a good summary:
On page 53 of GE's 2008 10k recently filed with the SEC, the company says that at the end of last year, if it had a rating of AA-, GE Capital would have been required to provide about $3.5 billion of capital to support a group of entities that are funded by issuing guaranteed investment contracts (GICs). A GIC provides a fixed return on an mount of capital that the GIC issuer invests.
Another entity at GE Capital also issues GICs and then loans the proceeds back to the finance arm. If GE Capital's rating were to hit AA-, GE Capital would have to provide about $4.7 billion to repay the GIC holders.
The total $8.2 billion GE would owe could swallow up the $4.2 billion freed up by the recent dividend cut as well as further weaken the company's cash holdings. In an environment where it's difficult to raise cash, that would put GE at risk of further ratings cuts - and more ratings cuts would cost the company even more money.
GICs can burn GE in another way. Should the liabilities in the GICs exceed their fair market value, GE Capital would have to provide the difference. As long as GE is not forced to sell these contracts, this should not be a problem. But had the company sold the GICs at the end of 2008, according to the annual report, the fair value of their assets were only $9.2 billion and the liabilities totaled $10.7 billion, which would make a loss of about $1.2 billion.
GE's annual report also says that if the rating on GE, or applicable entities, falls six notches to A-, then covenants will be triggered on its swap, forward and options contracts that force the company to pay money to its counterparties to account for the additional risk. The fair value of this risk was about $4 billion at the end of 2008, according to page 52 of the 10k.
A cut to its short-term debt rating would also be a blow to GE. Should GE's short-term debt ratings fall below A+ (or A1 in Moody's parlance), then it would no longer be eligible to participate in the Federal Reserve's Commercial Paper Funding Facility program.
GE currently has $60 billion in commercial paper outstanding, i.e. short-term loans that roll over every month or so. It is essential that these loans roll over - meaning that lenders continue to let GE borrow on a short-term basis - because these loans fund the company's daily operations.
it will be too long.
Why MSFT ? It's like a company of Snails.
MO ? with added $10+ tax on ciggaretes, and 500% tx
on Tobaco ? Looks like someone wants to destroy MO.
WFC ? its like riding an elevator.
MCD ? yes, I go there all the time, they are doing extremely good. Don't forget to ask for Senior Coffee if you are over 55. half price.
KOF is trading at a P/E of 15 and div of 1.7% I would have thought that the current decline in the DOW from 14K to 7K would have told the writers that people have wised up from big P/E's and no dividends.
No brand names should ever be stated in ad copy meant to sell copies or knock-offs of copywrited brand names!!! eBay doesn't see it this way, so I am gone and I was there for 10 years. What a bunch of greedy, compromised execs running that place.
On Mar 07 01:19 PM Marcap wrote:
> I can't possibly imagine why eBay would be in the above list. <br/>
>
> I am confident that eBay shares will never again rise much above
> their current level. On the contrary, they will likely continue to
> decline unless and until there is a complete change in eBay management
> and its anti-seller policies are retracted. And that includes getting
> rid of John Donahoe. Only then will confidence in eBay begin to rise,
> and start it on the road to recovery. But until then, eBay unfortunately
> in my opinion, holds little value for its sellers, its buyers or
> its shareholders.
>
> And as for the claim that "The company is also doing everything it
> can to minimize counterfeit problems", clearly the writer has very
> little experience dealing on eBay, or she would know just how completely
> inaccurate that statement is.
>
> eBay is doing next to nothing to curb the sale of counterfeit items
> on its site. As many know, eBay is awash with counterfeit items by
> some of eBay's largest sellers...and their businesses continue to
> flourish unchecked. The fact of the matter is that eBay only gives
> lip-service to counterfeiting, with the occasional take-down of a
> few items merely to appease complainers. But in reality, there is
> next to nothing eBay can do without slitting its own throat. In short,
> getting rid of the counterfeiters would result in eBay cutting a
> great deal of its own revenue, and I am not convinced that is something
> eBay is prepared to do...especially while fighting the occasional
> counterfeiting lawsuit costs them a lot less.
Agree with you.
"hold" may mean "stuck"