We launched a new series of articles a few weeks ago with the premise of building a dividend portfolio from scratch by leveraging the collective knowledge and opinions of the Seeking Alpha community. In parts 1 and 2, we highlighted the investment plan and strategy for the portfolio and parts 3-11 will highlight each sector in the S&P 500, including high-rated stocks within each sector to consider for the portfolio. Readers can either vote on the stocks we suggested for the portfolio or "write in" their own stocks to vote on. Majority will rule.
Below is a schedule of the entire series. Please make sure to "follow" us so that you will be notified when each new article is published.
- Part 1: Introduction
- Part 2: Establishing A Buy Zone and Watch List
- Part 3: Consumer Staples (3a) / "Buy Zones" (3b)
- Part 4: Utilities (4a) / "Buy Zones" (4b)
- Part 5: Healthcare (5a) / "Buy Zones" (5b)
- Part 6: Consumer Discretionary (6a) / "Buy Zones" (6b)
- Part 7: Financials
- Part 8: Technology
- Part 9: Industrials
- Part 10: Materials
- Part 11: Energy
- Part 12: Unveiling the Portfolio
Picking Consumer Discretionary Stocks For The Portfolio
As you know, our goal is to build a watch list of great stocks by sector that we can use to build the portfolio over time (purchasing shares when the prices are right).
We suggested five great Consumer Discretionary stocks for folks to vote on in Part 6: McDonald's (NYSE:MCD), Cracker Barrel (NASDAQ:CBRL), Mattel (NASDAQ:MAT), Tupperware (NYSE:TUP), and Genuine Parts (NYSE:GPC). Readers also suggested some great "write-in" votes, including Target (NYSE:TGT), Leggett & Platt (NYSE:LEG), and Darden Restaurants (NYSE:DRI).
Well, we tallied up the votes and the most popular stocks among the group were MCD, GPC, TGT, and CBRL (in that order). The Honorable Mention awards go to MAT and LEG.
Let's put all 6 of these stocks on our watch list and patiently wait for their respective Buy Zones.
Which Consumer Discretionary Stocks Are In The "Buy Zone?"
The current Fed-induced rally has expanded P/E multiples across the board and the Consumer Discretionary sector has been one of the main sectors leading this rally. That said, several of our watch list stocks are creeping closer to their respective Buy Zones. Let's take a look at the current charts for each and compare where they trade in relation to their respective Buy Zones.
MCD is down almost 10% from its 52-week high and the stock currently trades in the Buy Zone!
GPC currently trades 6.5% above its Buy Zone. Ideally, we would like to purchase the stock under $74.00 (which would equate to a forward P/E ratio around 17.0x and a forward yield around 3.00%).
TGT currently trades only 0.2% above its Buy Zone. Ideally, we would like to purchase the stock under $64.00 (which would equate to a forward P/E ratio around 16.0x and a forward yield around 2.75%).
CBRL currently trades 10.6% above its Buy Zone. Ideally, we would like to purchase the stock under $97.00 (which would equate to a forward P/E ratio around 17.0x and a forward yield around 3.00%).
MAT currently trades 2.1% above its Buy Zone. Ideally, we would like to purchase the stock under $43.00 (which would equate to a forward P/E ratio around 16.0x and a forward yield above 3.25%).
LEG is down almost 13% from its 52-week high and the stock currently trades in the Buy Zone!
Of the watch list stocks highlighted above, MCD and LEG are the only ones currently in the Buy Zone. As such, we will likely start positions in this stock in the coming days.
Dividend investing is a marathon, not a sprint. Identifying good stocks is easy... patiently waiting for the right price is the hard part.
We'll send around updates throughout the entire process so please follow along and participate as much as you can. The next sector on the agenda will be Financials (including REITs). Please make sure to "follow" us so that you will be notified when each new article is published.
Disclosure: I am long MAT, DRI, TUP, MCD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.