“My assets froze while yours have dropped. Now is that? Is that?”
“Is That Love?”- as recorded by Squeeze by Chris Difford/Glenn Tilbrook
Last month, we published a note examining well known, large cap names with single digit P/E’s and dividend yields of 4% or higher. A month later we’ll reiterate that call. For investors with a longer term horizon, there’s gotta be a pony in here somewhere.
The S&P 500 is basically where it was when we posted the previous piece. So what’s changed? Not much except for the situation in Europe has gone from “bad” to “even worse”. Granted, there was a zero growth jobs report for the U.S. somewhere in the mix. But that’s not nearly as exciting as sovereign default.
Nevertheless, most of the names we profiled (COP, IP, INTC,LLY) are priced about where they were a month ago. The appetite for risk assets (aka “stocks”) wasn’t that great in August. It’s probably even weaker now. So Its difficult to step up to the counter and order with conviction. It will be even more difficult with the names we are about to look at as most of them deal with either U.S. industrial recovery or, cue ominous, scary music, a return of confidence in financial companies. All have forward P/E’s of 9.5 or lower and yield at least 3.5%.
Dow Chemical Co. (DOW)
Eaton Corp (NYSE:ETN)
AFLAC Inc. (NYSE:AFL)
EI DuPont de Nemours and Co. (NYSE:DDD)
Adding those names to our previous suggestions would help you build out quite the blue chip portfolio.
The question is still “are we there yet?” And the answer is still “I don’t know.” However, here is another handful of large company stocks with single digit forward multiples and respectable dividend yields. The good news is that markets are still quite volatile. Yes. That’s a good thing in that opportunities to buy high quality at good prices will be created thanks to fear and stupidity. Art Cashin, an NYSE veteran floor guy suggests that in times like these, investors should “turn their baskets” in order to catch some bargains they may want. The market may turn or not. Either way, there are worse stocks you could be stuck with.
Is that love or this week’s three lil’ piggies?