4 Stong Buys For Your Portfolio

|
 |  Includes: ACN, COST, JNJ, MA
by: Leonid Kanopka

I have compiled data on four companies that I feel are a "strong buy" at current prices. These four stocks work well together because they are so different, which is a good hedge against risk. When picking stocks I like to look for certain credentials: No debt and data signaling earnings growth, an underpriced stock compared to the industry (but still has strong fundamentals), and finally, recent news that does not seem to be reflected in the market price. Such news includes new practices or products (like at Apple (NASDAQ:AAPL) when the original iPod came out). The current prices for these stocks look very good, and their outlook is even better. This makes them jewels for any diversified portfolio looking for a safe haven from substantial risk.

  1. Accenture plc. (NYSE:ACN) operates as a management consulting, technology services and outsourcing company. The company was founded in 1995 and is based in Dublin, Ireland. The current price is $57.54 with a 1 year analyst price target of $62.67. This shows a forecasted upside potential of 8.92% within one year. I also like the fact that this company has a dividend yield of 2.3%, while current EPS is 3.4 with a P/E of 16.95x. Due to the grim outlook in Europe, particularly Ireland, there has been a lot of pressure on this stock to perform. Also, a recent settlement with the U.S. Justice Department determined that Accenture will pay a sum of $63.7 million to resolve a whistleblower lawsuit. Yet with the settlement, the share price should increase. I also like Accenture because it is a leader in consulting and systems integration and an emerging player in the business process outsourcing (BPO) services market. This is a market that shows a lot of potential for growth. Accenture is primarily focused on Fortune 500 companies, and it has consistently shown its ability to outperform competitors. Accenture also has virtually no debt and has reported an operating profit margin of 12.69% compared to an industry average of 7.34%.

  2. Johnson & Johnson (NYSE:JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The current price is $63.85 with a 1 year analyst price target of $72.08. This shows a forecasted upside potential of 12.89% within one year. I also like the fact that this company pays an excellent dividend yield of 3.50%. Johnson & Johnson has the most diverse revenue stream in the industry, with Pharmaceuticals, Medical Devices, and Consumer-related goods. Fundamentally, the company performs better than its peers. Johnson & Johnson has a net income of $11.61 billion compared to its closest competition (NYSE:ABT), which has a net income of $5.13B, and Covidien (COV), with a net income of $1.81B. Looking past fundamentals, I also like the fact that Johnson & Johnson acquired Crucell and Cougar Biotechnology, took a stake in Elan Pharmaceuticals, and acquired a partnership deal with Gilead Sciences (NASDAQ:GILD). These acquisitions show substantial growth potential. Johnson & Johnson also has a very diverse stream of income, which helped it offset the impact of a market slowdown, generic competition in pharmaceuticals, and the implementation of healthcare reform. Overall this stock is a 5-star pick.

  3. Costco Wholesale Corporation (NASDAQ:COST) operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. The current price is $82.23 with a 1 year analyst price target of $85. This shows a forecasted upside potential of 3.35%. I also like the fact that this company has a dividend yield of 1.2%. Most analysts agree that COST is a strong buy, not to mention this company has strong fundamental data. Costco has a P/E of 24.96x and an EPS is 3.30 while the industry average EPS is 1.12. COST is a large-cap stock, which implies low liquidity risk, not to mention It continues to be the dominant retail wholesaler based on its breadth and quality of merchandise offered. The only potential risk I see with this company is the rise in fuel costs because the company turns gasoline inventories faster than its competitors.

  4. MasterCard Incorporated (NYSE:MA) together with its subsidiaries, provides transaction processing and related services to customers, principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs as well as travelers cheque programs. The current price is $335.12 with a 1 year analyst price target of $371.61. This shows a forecasted upside potential of 10.89%, while keeping its shy dividend yield of .2% (equivalent to money market accounts). I am extremely bullish on this stock, not only because analysts agree this is a "strong buy," but analysts also expect positive fundamentals within the industry. Analysts also expect U.S. card volume to increase in the near term, and the growth rate is even higher internationally, where MasterCard has significant exposure. This data reflects significant growth potential, despite its already grotesque EPS of 16.14 and P/E of 20.77x. MasterCard has a 52-week return of 46.16% compared to the S&P return of 4.11%. Also, a beta of .64 shows MasterCard is less risky. MasterCard also has a profit margin of 34.85% and growing. Another reason I love this company is the fact that other than Visa (NYSE:V), MasterCard is uniquely positioned around the globe. There are high barriers to entry, which make MasterCard that much more attractive. Finally, perhaps one of the best things about MasterCard is no debt! This stock is a bit pricey, but very lucrative.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.