Jonas Elmerraji from Thestreet.com reminds us that Friday marks the first trading day of July and then asks, "But will the new month bring a shift in market sentiment for beaten-down investors?"
As we enter the second half of the year, Jonas tries to find pockets of strength. He searches for companies with short-term gain catalysts and longer-term growth potential.
To find them, he runs a quantitative screen that seeks out stocks with a combination of analyst upgrades and positive earnings surprises. You can read more here. But here are the five stocks that he thinks will do well in July and beyond.
- Tech giant Apple (AAPL) has officially held onto "Wall Street darling" status for the last couple of years, and rightly so - the $300 billion company has carved out an enviable economic moat in the mobile device and content distribution businesses in the last decade, and it doesn't look like any challengers can knock this company from its perch.
- Despite non-stop selling pressures, 2011 is turning out to be a solid year for DuPont (DD) shareholders. The company is looking at total returns in the mid-single digits year-to-date when its 3.16% dividend yield is factored in. That's an impressive bit of performance for a basic materials stock in a sluggish economy. And now, Wall Street analysts are taking note of the outlook in shares of this company.
- Professional consulting firm Accenture (ACN), one of TheStreet Ratings' top-rated IT services stocks, has fared even better this year. In 2011, shares have climbed more than 17% on the heels of solid earnings results this year. Investors should be looking to ride the trend higher in the second half of the year.
- Even though the gas business may not be the most glamorous, it has proven to be very lucrative for Airgas (ARG). The $5.35 billion company is the country's largest supplier of gasses for industrial, medical and specialty uses.
- Housewares retailer Bed Bath & Beyond (BBBY) arguably holds the most-attractive positioning in the industry, offering a one-stop shop for everything from fine china to kegerators at its namesake stores - and the firm manages to do that at prices that its competitors have difficulty matching.
We will enter this portfolio and compare it with the Fool's Matt Koppenheffer selection of what he considered five stocks for long term dividend performance. All five have dividend yields well in excess of the S&P's, and trade at reasonable valuations.
Company | Dividend Yield |
|---|---|
| Johnson & Johnson (JNJ) | 3.4% |
| McDonald's (MCD) | 3% |
| Kimberly-Clark (KMB) | 4.1% |
| Sysco (SYY) | 3.3% |
| Mattel (MAT) | 3.5% |
We will also compare this with our ETF dividend portfolio benchmark:
| Asset | Fund in this portfolio |
|---|---|
| REAL ESTATE | ICF (iShares Cohen & Steers Realty Majors) |
| CASH | CASH |
| FIXED INCOME | TIP (iShares Barclays TIPS Bond) |
| Emerging Market | VWO (Vanguard Emerging Markets Stock ETF) |
| US EQUITY | DVY (iShares Dow Jones Select Dividend Index) |
| US EQUITY | VIG (Vanguard Dividend Appreciation ETF) |
| INTERNATIONAL EQUITY | IDV (iShares Dow Jones Intl Select Div Idx) |
| High Yield Bond | HYG (iShares iBoxx $ High Yield Corporate Bd) |
| INTERNATIONAL BONDS | EMB (iShares JPMorgan USD Emerg Markets Bond) |
- Street's 5 Rocket Stocks to Grab Gains in July - Total of $10K invested equally in each stock
- Fool's 5 Dividend Payers to Save your Portfolio - Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate - Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate - Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
| Portfolio/Fund Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Street's 5 Rocket Stocks to Grab Gains in July | 25% | 139% | 20% | 59% | 30% | 91% |
| Fool's 5 Dividend Payers to Save your Portfolio | 20% | 166% | 13% | 57% | 13% | 65% |
| Retirement Income ETFs Strategic Asset Allocation Moderate | 15% | 154% | 5% | 23% | 6% | 26% |
| Retirement Income ETFs Tactical Asset Allocation Moderate | 11% | 118% | 11% | 86% | 12% | 83% |
This is a very interesting selection of equities. It was performing well before the great recession and has come roaring back afterward. This is largely dominated by the stellar performance of Apple so there is a risk as to whether this will continue. In any case, this is certainly worth consideration for those who want to build a long term equity portfolio.
We will continue to track this portfolio as this could be a long term winner.
Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
Additional Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
