The most important part of having a strong portfolio is maintaining it. Many investors focus so heavily on finding stocks that will grow their holdings that they fail to make sure they include dividend or mixed stocks in order to create a solid foundation. This is a key aspect for successful investing, and a list of the best stocks for protecting a portfolio would include companies like Companhia de Bebidas das America (ABV), Treehouse Foods Inc (THS), Nu Skin Enterprises (NUS), Peet's Coffee & Tea Inc (PEET) and Cal-Maine Foods (CALM).
Finding Stocks to Protect a Portfolio
Solid earning stocks or ones that provide consistent gains and dividends are an important factor in building a stable portfolio. Focusing on companies in recession resistant business sectors can help investors avoid the highs and lows that affect many stocks. For this reason, the following companies are all excellent options for anyone looking to build a better portfolio.
Companhia de Bebidas das America
Companhia de Bebidas das America is a Brazilian company that specializes in the production, distribution, and sale of beverages such as beer, soft drinks, malt, and more throughout the Americas. Founded in 1888, the $115 billion company has licensing agreements to distribute famous brands like PepsiCo (PEP) and Budweiser (BUD) in North, Central and South America.
The benefit of holding stock in this company is continued growth and consistent dividends. Since soft drinks and alcoholic beverages tend to be in continual demand, the business prospects for Companhia de Bebidas das America are very good. Trading at nearly $37 per share, this stock has a one-year target of $38.29. This increase would give it a new 52-week high, (the range is $25.59 - $37.50) and it combines very nicely with the company's dividend to make Companhia de Bebidas das America a very nice, long-term holding.
Treehouse Foods Inc
Treehouse Foods is a distributor of retail and food service products throughout the United States. Founded in 1862, the company sells to grocery stores, as well as providing products to restaurants and other institutional concerns. The company has a $2 billion capitalization, and its share price of around $56.50 is near the midpoint of its $46.73 - $67.25 range for the past year.
Although Treehouse does not pay dividends, it is still a solid holding. Since eating is a necessity for consumers and investors alike, suppliers have a captive market for their products. This has been true for Treehouse, as it enjoyed a 22% climb in quarterly earnings. The company has a price to earnings ratio of 22.60 and a very low beta of 0.11, suggesting that additional growth and earnings are possible. With its one-year target estimate at $60.72 and its current price below its 50-day and 200-day moving averages, the signs point to this being a strong stock for continued growth.
Nu Skin Enterprises Inc
A climbing share price and an annual dividend is a great combination for a defense stock; Nu Skin Enterprises Inc has this desirable combination. The stock price of this manufacturer of beauty and anti-aging products has been on a steady climb for more than six months. Trading at nearly $51 per share, the stock appears poised to continue its bullish run, as it leads both its 50-day and 200-day averages.
Powered by quarterly earnings gains of 32.6% and possessing a price to earnings ratio over 23, the company is primed for continued growth. Nu Skin recently announced a new line of anti-aging products, and its one-year target estimate suggests that a 10% gain in share price is likely. In addition to its growth, the company is also a solid dividend payer, with its annual rate of $0.64 creating a yield of 1.30%. As consumer spending rises with an improved economy, Nu Skin could be quite helpful in adding stability to almost any portfolio.
Peet's Coffee & Tea Inc
Another product that rarely feels the effects of a sluggish economy is coffee, and Peet's Coffee & Tea Inc is a great way to perk up any portfolio. Peet competes directly with companies like Starbucks (SBUX) and McDonald's (MCD) in the highly competitive coffee market. This stock has recently drawn investor attention, as evidenced by Steven Cohen's (SAC Capital) play to increase his holding in Peet's stock.
Currently trading at $61.50 per share, Peet's stock has once again risen above its 50-day and 200-day moving averages. On a steady upward trend for the past year, the stock appears primed to push past its 52-week high of $65 on its current path. Although its quarterly earnings were down nearly 60% from the same quarter in 2010, the company still realized a revenue growth of almost 14%. With a price to earnings ratio of 44.5 and a low beta of 0.60, Peet's looks strong for continued growth, and the on-going demand found in the coffee market should keep the company's profits brewing.
Cal-Maine Foods Inc
While investors shouldn't put all their eggs in one basket, they should look at a good option like Cal-Maine Foods. Located in Jackson, MS, this $890 million small-cap is involved in the production, grading, packaging, distribution, and marketing of shell eggs. The company has more than 40 years in the business, and its earnings and dividends suggest that it is the type of investment that many need to add to their portfolio.
Cal-Maine Foods is currently trading near $37.75, just below the top end of a 52-week range that sits at $27.20 - $38.00. The company has been trading above its 50-day and 200-day moving averages for the past four months, and is now more than 15% above its 200-day average. Although this strength can drag on its upward trend, Cal-Maine has a number of factors in its favor, including quarterly earnings growth (53.2%), quarterly revenue growth (23.8%), a low beta of 0.61 and levered free cash flow of nearly $66 million. Cal-Maine Foods is a leader in its industry and considering its dividend of $1.30, (yield of 3.5%) this is a good stock to own.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.