Many of you I have spoken with are tired of CNBC, tired of Cramer, tired of Bloomberg TV/radio. I get it, trust me. After 20 years of financial services, I find the less your stocks are on tv the better. Every analyst has an agenda. Either they want to peddle books or be the one guy that has a $100mm influx of cash this quarter from unsuspecting lemmings. I have always picked stocks that are under the radar, with such obviously successful business models that its almost too easy to make money with them. I know what you are saying, but when you see the ones I have chosen below, you will sit at your computer and shrug your shoulders in agreement.
Borg Warner (NYSE:BWA)-- One of the industry leaders in auto parts manufacturing across a wide spectrum of divisions. They operate is North America, Asian and Europe. Emissions, ignition, turbochargers, chain, exhaust, valves, for gas and diesel, and the list goes on and on. The stock is trading today at a 52 week high, in a turbulent auto market, why is that? Good management. Their corporate governance risk indicator (GRI) rating is "low concern-medium concern". 103% of the stock is held by institutions and 12.3% of the float (roughly 14 million shares) are short as of October 14, 2011. Sorry short fellas, you are getting smoked, better cover before BWA hits $80. The stock was trading around $25 at the end of 2008, so it has enjoyed a nice run. Of course people will say the run is over. I can't predict the future, and there will be a bump here and there, but as far as value investing goes, this is a winner. As an added benefit, if you like to write covered calls, the December 80's are around $2.50 (3.2% premium) if it expires worthless. Not terrible for "the boring auto industry".
Sherwin-Williams (NYSE:SHW)-- One of those stores you see when driving through town that always looks good on the inside and out. They own and operate almost 3,400 paint stores and 564 branches, under Sherwin-Williams, Dutch Boy, Krylon, Minwax, and Thompsons Water Seal. Sherwin sells these products in North and South America as well as Europe, Asia and the Caribbean. They have been around since 1866, so you can see they have staying power. Their competitor, Benjamin Moore was recently acquired by Berkshire Hathaway (NYSE:BRK.A), but you don't want to compare returns over the past 2 years. SHW is up 48% while BRK.A is up 20%. As with BWA, SHW's GRI rating is low-concern across the board. I will warn you that this company is boring and won't give you that 30% a year you are looking for, but if you want to sleep at night, buy it and forget it. 70% of the stock is held by institutions, and investors are not betting against it because the short position is small. Currently, it's trading at 5% off of its 52 week high. As far as covered calls are concerned, the Dec 85's are paying $2 (2.4% premium).
J.M Smucker Company (NYSE:SJM)--Ok, yes, with a name like Smuckers, it has to be good. This is clever marketing, because not only is the product good, so is the chart. The company has have been around since 1897, and you won't believe what it owns, which is why no one ever talks about them. Love the product list: Smuckers, Folgers, Millstone, Dunkin Donuts, Crisco, Jif, Hungry Jack, and Pillsbury, to name a few of the household names. They have other branding in the USA and Canada as well, and sell all over the world. The stock is a mere 3.5% off of its 52 week high, so it has enjoyed success while the markets are flailing. Actually it's up 27% or so since January 2011. You also get 2.5% dividend. It's not much, but it's still paying more than the 10 year Treasury currently. Market cap of just under $9b, and 73% of the stock is held by institutions. Last week it purchased Sara Lee's coffee and hot beverage business for $400mm in cash. This deal alone will boost annual net sales by $285mm. Give me a deal like that anyday. It doesn't have great covered call premiums, and don't be in such a rush to get called away either. Spread the word (get it?)
Diageo PLC (NYSE:DEO)--What do people do when the world is in shambles and their stocks are tanking? Drink. What do people do when the world is glorious and their stocks are up every day? Drink. Ok, I am simplifying things but it is true. You go to the liquor store and buy your favorite brand, but don't care to look and see who makes it, because you just want to pour it and drink it with friends. Do you like beer? Because the company owns Guiness, Harps, Red Stripe, Smithwicks Ale, and Tusker Lager. If wine by the firepit is more your speed, the company owns Blossom Hill, Sterling Vineyards, Acacia Vineyards, Rosenblum Cellars and Santa Rita. Ok, you like the hard stuff, well enjoy Johnnie Walker, Smirnoff, Baileys Original Irish Cream Liquer, Crown Royal, Captain Morgan run, Jose Cuervo, JeB, Ketel One, Tanqueray gin, Bushmills Irish Whiskey. Now I know why their market cap is above $50b, and the stock is only 2.5% off its 52 week high. Diageo, on top of all of that, is paying 3.7% dividend as well. This is another example of buy and forget.
Sorry to say you won't see these stocks on any popular investment shows, but I am ok with that. Their business models, wide range of product offering, and corporate compliance are enough for me...
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.