By Austin Smith
Regardless of how the market does, there are a few stocks that investors love to own. Based on dividends and growth opportunities, I’ve identified five stocks that investors are bullish on. These stocks would be a great addition to any investor’s portfolio.
Apple, Inc. (AAPL) – Not only is AAPL one of the world’s most well-known and loved companies, but it is also a favorite among investors. The company known for its electronic innovations currently has a price tag of around $400 per share, slightly below its 52-week high around $425 per share. Although the company does not offer a dividend to investors, it is still has a low beta of 0.82, making it less volatile than the market. The company’s earnings per share of $27.68 give the stock a price-to-earnings ratio of 14.1; a ratio that is right in line with the industry average of 13.7, yet well below the S&P 500’s (SPY) ratio of 26.5. When comparing AAPL with the competition, it doesn’t really appear to be much competition. In regard to net income, AAPL current leads the industry with a profit of $25.92 billion. The next closest competitor is Google, Inc. (GOOG) with a net income of $9.58 billion. Even AAPL’s price to earnings growth is more attractive at 0.58, compared with GOOG’s of 0.89, although it is not bad in itself. With the Apple iPad 3 scheduled to come out in February 2012, the stock looks to continue the same market dominance it has shown in the past.
Google, Inc. (GOOG) – While being the only other tech stock on this list, GOOG is another investor favorite. Similar to AAPL, GOOG has a low beta of 0.85, making it less volatile than the market. Even though GOOG does not offer a dividend to investors, the company’s earning power still makes this sock an attractive buy. The earnings per share of $29.34 give the stock a price-to-earnings ratio of 21.0, which is slightly less than the market ratio of 23.3. When looking at GOOG’s competition in the company’s core business, GOOG is the leader. The net income of GOOG is much higher than AOL, Inc. (AOL) and Yahoo! Inc. (YHOO), with net incomes of $54.9 million and $1.07 billion respectively. As mentioned previously, GOOG has an attractive price-to-earnings growth ratio as well of 0.89 compared with its competitors at 8.41 and 1.54. Another factor that investors like to see with a stock is the confidence the company’s executives have in their own company. Currently, GOOG execs have offered to pay NASA $33 million to fully renovate Hangar One. However, in doing so, Google is looking to house its eight private jets. When a company has this kind of cash sitting around, you know the company has faith in its product.
Wells Fargo & Company (WFC) – As one of the country’s largest banks, WFC is a very popular bank stock among investors, including Warren Buffett. The company is slightly risky with a beta of 2.0 making it twice as volatile as the market. Unlike the previous stocks listed, WFC does offer a dividend of 1.80% or $0.48 annually. The company’s $2.70 earnings per share gives WFC a price-to-earnings ratio of 9.7. Although this is slightly higher than the industry ratio of 9.0, it does not necessarily mean that the stock is overvalued. Part of the reason for this is the fact that the banking industry in general is beat down with the recession. One competitor Bank of America Corporation (BAC) has been hit relatively hard as the net income of the company is a loss of $3.07 billion. This is quite the opposite of WFC with a net income gain of $14.37 billion. One reason WFC may be favored over other big banks is the fact that it focuses on banking basics and not taking on risky investments.
The Coca-Cola Company (KO) – The world leader in soft-drinks is also an investor favorite in the market. The stock has the lowest beta on the list of 0.49 making it the least volatile. KO also has one of the higher dividends with a yield of 2.80%, or $1.88 annually. The stock’s earnings per share of $5.44 gives KO the company a price-to-earnings ratio of 12.3, which is slightly lower than the industry ratio of 14.5. When comparing KO to Pepsico, Inc. (PEP), its biggest competitor, KO has the higher amount of net income. KO currently reports a net income of $12.69 billion while PEP has roughly half that at $6.38 billion. Even with the higher net income, KO has a lower price-to-earnings ratio as PEP’s ratio is 16.11. One of the biggest attractions that investors have to KO is the fact that the company has raised the dividend payout for more than 25 years. With the rising dividend payout and relatively cheap price compared with competitors, KO is one stock that any investor can enjoy owning.
Walt Disney Co. (DIS) – The media giant finishes up the list of stocks, however that doesn’t mean investors like the stock any less. The stock is slightly more volatile than the market with a beta of 1.37. The company does offer a dividend to investors of $0.60 annually, or 1.60%. With the company’s earnings per share of $2.52, DIS has a price-to-earnings ratio of 14.6. This is right in line with the industry average of 14.1, making it appear to be reasonably priced. Although DIS doesn’t have a competitor that offers similar products and services, the closest competitors would be News Corp. (NWS) and Time Warner Inc. (TWX). DIS has the highest net income amongst the three at $4.81 billion compared with $1.02 billion and $2.87 billion respectively. With interest rates low from the Fed, investors are beginning to look more toward dividend yielding stocks. One aspect that makes DIS look even better is the fact that the company recently stated it would raise the dividend, making it look even more attractive to investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.