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INVESTING COMMENTARY
10 Reasons You Should Buy This Stock TodayBy Jim MuellerNovember 21, 2009 There are two things I've got to tell you up front. One, I'm not David Letterman, so I hope you're not expecting comedy in this list. Two, this company is not the most popular one around, so if you invest in it, you might get some dirty looks. But investing is about making money, and this one should help you accomplish that. In spades. The company I have in mind is cigarette maker Philip Morris International (NYSE: PM). And here are 10 reasons why you should consider owning shares.
No. 10: One product
No. 9: Long-term management
No. 8: Repeat customers
No. 7: Market domination
No. 6: Tons of cash flow
No. 5: High return on equity
No. 4: Hedge against a weak dollar
No. 3: In top 100 yielding stocks
No. 2: Commitment to pay the dividend
No. 1: A large, secure dividend
While Philip Morris is not a Motley Fool Income Investor newsletter pick, it would not surprise me to see it become one. That's because it fits many of the criteria advisor James Early looks for – namely, a growing dividend, a commitment to pay it, and the financial stability to continue doing just that. If you want to get paid by more of your companies, consider taking a free 30-day trial of Income Investor. There, you'll receive a new stock idea every month and be able to pick from all the past ones, as well. In fact, the recommended companies have an average dividend yield of 4.3% right now, and are beating the S&P 500 by 7 percentage points on average. There's no obligation -- simply click hereto give it a try. Jim Mueller owns shares of Philip Morris and Pepsi, and has a beneficial interest in Microsoft and GE. Pepsi and Procter & Gamble areIncome Investor selections, and the Fool owns shares of P&G. Microsoft is anInside Value pick, and Philip Morris has been chosen byGlobal Gains .Motley Fool Options has recommended a diagonal call on Microsoft. The Fool's disclosure policy doesn't like smoking cigarettes, but does like smokin' dividends. This article was originally published as 10 Reasons You Should Buy This Stock Todayon Fool.com Copyright © 2009 The Motley Fool, LLC. All rights reserved. A Fool Looks BackBy Rick Aristotle MunarrizNovember 21, 2009 There have been mixed signals on the state of the economy, but there are at least two interesting tidbits that hint that the consumer is back. Microsoft (Nasdaq: MSFT) announced that Windows 7 is the fastest-selling operating system in its history, selling twice as many units as any other platform during a comparable time period. Activision Blizzard (Nasdaq: ATVI) is reporting that its Call of Duty: Modern Warfare 2has grossed $550 million in its first five days on the market. It's a record, shattering the mark previously set by Take-Two Interactive 's (Nasdaq: TTWO) Grand Theft Auto IVlast year.Cynics will argue that Microsoft's new operating system was going to be a hit, given the nasty aftertaste of Vista. Skeptics will argue that franchise video game titles have sold well during economic downturns. However, the one-two punch of record-setting good news this week can't be ignored. The economy still has a way to go, but the upbeat signs are there if you look for them.
Briefly in the news
Until next week, I remain, Rick Munarriz This article was originally published as A Fool Looks Backon Fool.com Copyright © 2009 The Motley Fool, LLC. All rights reserved. An Unprecedented Investment OpportunityBy Tim HansonNovember 21, 2009 Here's reality: Hundreds of hotshot money managers and analysts convened at the Marriott Marquis in New York last fall to attend J.P. Morgan's annual Asia Pacific and Emerging Markets Equity Conference. My guarantee to you is that they weren't there because they're scared of investing in emerging-markets stocks. But you very well might be ... and I can't necessarily blame you.
Some very scary numbers
It's been a tough and volatile year for emerging-markets investors, and those who naively came to believe (thanks to the 2003 to 2007 period) that emerging-markets investing was all about outsized gains are scurrying away with their tails between their legs. This, however, is precisely the wrong time for that kind of reaction.
Take China, for example
Those are his words, not mine, though I do agree. The question, of course, is how does the individual American investor take advantage of this unprecedented opportunity?
Your four options
Each one of these approaches comes with its own set of pluses and minuses. Though the index fund is low-cost, for example, it will condemn your portfolio to holding nothing but enormous, bureaucratic, state-owned enterprises such as China Telecom . The actively managed fund might make more discerning stock picks, but it's also expensive -- and Malkiel's research showed that most actively managed China funds substantially underperform the index.
Can you pick your own stocks?
Of course, you'll probably feel more comfortable researching U.S. stocks that have a CEO who speaks your language (literally), that sell products familiar to you, and that release financials you're more likely to trust. That's particularly so since Malkiel recommends that when you're picking Chinese stocks, you avoid the big state-owned enterprises and instead focus on small caps that are run by passionate entrepreneurs, rather than the cautious (and Communist) Chinese government. These stocks have more potential and more upside, and they're more likely to have been heretofore overlooked by institutional money -- so you might get a screaming bargain. To do so, however, you need to know a thing or two about China. And at Motley Fool Global Gains , we'd like to help you with that.
Here's why
This article was first published Sept. 12, 2008. It has been updated. Tim Hanson does not own shares of any company mentioned. Wal-Mart is aMotley Fool Inside Value recommendation. The Fool has a disclosure policy . This article was originally published as An Unprecedented Investment Opportunityon Fool.com Copyright © 2009 The Motley Fool, LLC. All rights reserved. It's Finally Time to Buy These StocksBy Brian Richards and Tim HansonNovember 21, 2009 Stay away from small-cap bank stocks. It was nearly two years ago now that Tim first dished out
that advice. Though they looked cheap at the time, writedowns
were happening across the industry, making financial
institutions nearly impossible to value. On top of that, the
economy was showing signs of sputtering, with no resolution
in sight.
And while big financials such as Lehman, AIG (NYSE: AIG), Fannie and Freddie , and Citigroup (NYSE: C) have dominated the headlines, smaller financials have been hit just as hard. In fact, KeyCorp (NYSE: KEY) and Comerica (NYSE: CMA) have lost 83% and 48% of their value since this crisis began in late 2007! All of this is to say, it's still not time to start buying small-cap banks. It may, however, be time to start looking hard at
something a little off the beaten path: small-cap value.
So while you don't want to buy small-cap banks, you do want to buy small-cap value net of banks because, as Mark Hulbert noted in a New York Timesarticle at the end of 2008, these historical outperformers"produce their most explosive gains right at the start of a bull market." Indeed, Russell Investments recently released a report suggesting that "they could emerge as the frontrunners if the economy stages a recovery." True to form, over the past year, small-cap value has outperformed the S&P 500 by 10 percentage points.
Let us be clear
And thus: Now is a good time to start buying small-cap exposure for the long term. After all, a little exposure to this market segment gives you the chance to take advantage of this historical trend and puts you in the position for significant outperformance whenever this bear market turns for good.
What next?
We see two main issues with that approach. First, as we mentioned previously, your run-of-the-mill small-cap value index has nearly one-third of its assets in financial companies -- a sector that has been and will continue to be rocked by government intervention, regulatory changes, and low interest rates. Second, just as the SPDRs S&P-tracking fund is skewed toward the largest of companies, like $350 billion energy giant ExxonMobil (NYSE: XOM), small-cap value indexes are heavily weighted toward the larger likes of $3.5 billion SL Green Realty (NYSE: SLG), limiting the ability of smaller -- but perhaps better -- companies to have an effect on your returns.
Here's what we'd do
That way, you can weight your portfolio toward high-quality businesses with entrepreneurial managers who treat their shareholders with respect rather than to either small-cap banks or the small-cap value stocks with the largest market caps, as passive index funds will do. If that sounds appealing and you'd like some stock ideas
and additional guidance on how to unearth the best in
small-cap value, join our
Motley Fool Hidden Gems
service, which recently started building a new real-money
small-cap portfolio.
Already subscribed toHidden Gems ? Log in at the top of this page .
This article was first published June 6, 2009. It has
been updated.
This article was originally published as It's Finally Time to Buy These Stockson Fool.com Copyright © 2009 The Motley Fool, LLC. All rights reserved. Stocks That Keep Paying You BackBy Todd WenningNovember 21, 2009 Before the market crash last year, investors were woefully underexposed to bonds. A 2008 survey from the Investment Company Institute revealed the scary truth: Bond Portfolio Share Investors < 40 years Investors 40 to 60 Investors > 65 years More than 50% 3% 4% 7% 31% to 50% 7% 7% 12% 11% to 30% 20% 28% 22% 1% to 10% 31% 25% 25% 0% 38% 35% 34% Source: ICI.org. Based on this data, then, it's no surprise that it's been a very rocky year for investors of all ages. To put this in some perspective, despite the eight month rally we've had, the S&P 500 still remains 30% off its October 2007 highs. Meanwhile, the aggregate U.S. bond market stayed positive -- and a lot less volatile. Indeed, over the past 10 years, the S&P has posted negative returns while major bond indexes have delivered steadier -- not to mention positive-- growth.
Don't all jump at once
Metric Equity Funds Bond Funds Year-to-date inflows ($21.9 billion) $306.0 billion Source: ICI.org as of Nov. 19, 2009. No, that's not a misprint. But these new bond investors are taking on more risk than they might think. "Junk" bond funds, which have a higher chance of default and thus have higher yields to compensate for the extra risk, saw $346 million of inflows the week ended Nov. 12 alone -- and $28.6 billion year-to-date, already surpassing the previous record set in 2003. Companies with junk bond ratings include Hovnanian Enterprises (NYSE: HOV) and Sprint Nextel (NYSE: S). Sure, junk bonds deserve attention, but because they are issued by less stable companies, they aren't the safe haven investors imagine bonds to be.
Know the rules before you play
Consider another sandbox
The potential for higher interest rates and inflation down the road, together with tightening yield spreads, means bonds are less attractive today than they once were. Instead, now's a great time to double down on dividend-paying stocks. While dividends are never guaranteed, dividend payouts can grow at a rate faster than inflation and have the added bonus of capital appreciation from the stock price.
But why now?
Company Dividend Yield
Free Cash Flow
5-Year Dividend Growth Rate Kraft Foods (NYSE: KFT) 4.2% 47% 9.3% Honeywell (NYSE: HON) 3.1% 28% 9.5% Nucor Corporation (NYSE: NUE) 3.3% 31% 44.8% Paychex (Nasdaq: PAYX) 3.9% 74% 20.9% Exelon (NYSE: EXC) 4.5% 37% 13.6% Source: Capital IQ. Each of these stocks has a long track record of rewarding shareholders with consistent and growing dividends and appears poised to keep doing so for some time. While a 10-year Treasury will pay you a fixed 3.3% yield per year on your investment, the same investment in one of these stocks will likely have a larger annual payout by the end of those 10 years. That's why now is an intriguing time to consider dividend-paying stocks.
Finding the right mix
Good companies with well-covered dividend payouts are exactly what James Early looks for at our Motley Fool Income Investor service -- and he's finding plenty these days. If you'd like to see what the team is recommending now, consider a 30-day free trial. You'll also see all of the past recommendations and the best bets for new money now. Just click hereto get started. There's no obligation to subscribe. Already a member ofIncome Investor ? Log in at the top of this page . This article was originally published on September 18, 2009. It has been updated. Motley Fool Pro analyst Todd Wenning would like to recognize "The Bar-BQ Ranch" in Harrisonburg, Virginia, for its excellent hush puppies. He does not own shares of any company mentioned. Paychex and Sprint Nextel areMotley Fool Inside Value selections. Paychex is also anIncome Investor recommendation. The Fool has a disclosure policy . This article was originally published as Stocks That Keep Paying You Backon Fool.com Copyright © 2009 The Motley Fool, LLC. All rights reserved. The Fool's Look AheadBy Rick Aristotle MunarrizNovember 21, 2009
Monday
Come to think of it, nothing goes down with a hearty feast like an HP laptop on the table.
Tuesday
Analysts see Hormel and Heinz going in different directions. Wall Street expects Heinz's profit to slip to $0.70 a share, after the company posted net income of $0.87 a share a year earlier. For Hormel, the pros see earnings climbing 36% to $0.68 a share. If the Thanksgiving meal happens to take place during one of the three NFL games, there's no need to get cranberry sauce on your shirt as you run from the dining room to the living room. TiVo (Nasdaq: TIVO) is there to save the day. TiVo also will post its third-quarter financials Tuesday. Analysts see a small deficit for the quarter, though it would be the company's widest loss in nearly two years.
Wednesday
Thursday
Friday
Until next week, I remain, Rick Munarriz This article was originally published as The Fool's Look Aheadon Fool.com Copyright © 2009 The Motley Fool, LLC. All rights reserved. What to Do When the Dow Hits 7,500 AgainBy Austin EdwardsNovember 21, 2009 Talk about ironic. I originally submitted this article to my editor more than a year ago, after the Dow had fallen "all the way" to 11,500 -- but it didn't get published. And now, here we are, happy to be "all the way" back to 10,000 ... My original plan was to take you back to 1996 -- when the Dow surpassed the 6,000 mark for the first time ever -- to a Charlie Rose roundtablethat included Jim Cramer and Motley Fool co-founders David and Tom Gardner.
Another crazy call by Cramer
Meanwhile, David and Tom took a much different approach, telling viewers, "We don't care where the market is headed." They explained that they were focused on finding the best eight or nine stocks to grow your wealth over the long haul. Basically, they searched for stocks that: My article went on to show how, early on, this approach led them to America Online, Amazon.com , and eBay , among others -- and landed them on the covers of everything from Fortuneto Newsweek. But I also thought it fair to point out that it was hard notto get rich in that market. After all, Cramer was right on the money. The Dow soared to far more than 9,000 in 1998, and reached a whopping 11,500 less than two years after that -- which is exactly where it stood on Aug. 29, 2008, when I submitted my article.
Could my timing be any worse?
I even added, "I bring this up merely to illustrate that despite what all the talking heads on TV are telling you, you absolutely should be buying great companies right now -- while they are still selling at massive discounts." I'd almost jokingly insinuated that the Dow could drop to 7,500 ... and then, within six weeks, we were a mere 200 points from seeing it do just that.
How quickly we forget
Now -- just like back in 1996 -- most investors are spending their time debating whether the next thousand-point move will be up or down. While that's certainly an interesting topic of conversation, I'm going to instead suggest that you think about some advice that Tom Gardner recently gave us at a companywide "huddle."
How you can turn losses into a huge win
Meanwhile, when the going gets tough for the toughest, smartest, and most successful people out there ... they learn from it. And that's what sets them apart.
Case in point: Benjamin Graham
Early in Buffett's career, he mistakenly believed he could save a failing textile mill. After being forced to liquidate its textile operations, Buffett learned to pay up for quality. He turned that failing company into a $140 billion legend. Another great example is Pixar's John Lasseter. After he graduated from college, Disney (NYSE: DIS) hired him to captain its Jungle Cruise ride at Disneyland. Later, the company gave him a shot at being an animator, and he quickly recognized the ability of new computer technologies to revolutionize animation. But Disney was so unimpressed with his first feature that it fired him on the spot. So Lasseter went back to the drawing board. After fine-tuning his process, he moved on to the company that would become Pixar, where he's won two Academy Awards and churned out a string of blockbuster hits that included Toy Story, A Bug's Life, and Cars. Oh, and let's not forget -- he and Steve Jobs later sold Pixar to Disney for a cool $7.4 billion.
Now it's your turn
But now I know that anything is possible. And I think that rather than celebrating the market's recent run-up, or trying to guess where it's going next, the best thing we can do is focus on learning from our past mistakes, so that we can make better investments going forward. I've already learned that companies like wireless broadband provider Clearwire (Nasdaq: CLWR) -- which bleed cash quarter after quarter, and are years away from profitability -- may not be the best places for my money, no matter how intriguing their stories are. I've also learned that I should avoid investing in companies with business models that are a bit too complex for me to fully understand. That's why I probably won't be buying shares of any financials anytime soon -- no matter how intriguing they look. Now, I challenge you to use the comments function below to tell all of us what you've learned over the past year, and how you will use that information to make yourself a better investor. Feel free to chime in with stocks you think we should take a look at -- or avoid altogether -- as well. And if you're interested in discovering which stocks longtime investors like Tom and David Gardner are recommending, you can always take a free 30-day trial of their Motley Fool Stock Advisor service. You'll get in-depth analysis of every stock they've recommended, including their two top stocks for new money now. Click herefor more information. There is no obligation to subscribe. Already aStock Advisor member? Log in at the top of this page . This article was first published Oct. 27, 2008. It has been updated. Austin Edwards owns shares of Freeport-McMoRan and Clearwire. Amazon.com, eBay, and Disney areStock Advisor picks. Disney is also anInside Value recommendation, along with American Express.Motley Fool Options has recommended a bull call spread on eBay. The Motley Fool has a disclosure policy . This article was originally published as What to Do When the Dow Hits 7,500 Againon Fool.com Copyright © 2009 The Motley Fool, LLC. All rights reserved. | ||


