The Best Retirement Portfolio for Any Market
Over the past two months, I've made some big decisions about my retirement portfolio public. I selected 10 stocks for what I'm calling the "Cheesehead Portfolio" -- in honor of my home state of Wisconsin -- and vowed to pay a penalty if I sell shares within the next three years.
Today, I'm going to show you how five of those 10 picks are great buys right now for the long-term, buy-and-hold investor.
But first, how have they fared so far?
If you want to see my original thesis for any of the five stocks, simply click on the publication date in the table, and it will come up.
As you look over these five, remember that from the earliest pick until now, the broad stock market is down about 12%.
|Coca-Cola (NYS: KO)||6/21/11||$66.26||$63.96||(3%)|
|Whole Foods (NAS: WFM)||7/5/11||$63.82||$54.00||(15%)|
|Amazon (NAS: AMZN)||7/12/11||$211.23||$194.13||(8%)|
|Apple (NAS: AAPL)||7/30/11||$390.48||$363.69||(7%)|
|Johnson & Johnson (NYS: JNJ)||8/1/11||$64.41||$60.20||(7%)|
Sources: Fool.com, Google Finance.
Though these stocks, if weighted evenly, are down about 8%, beating the market by roughly 4 percentage points. As I'll show you, all five of these companies are even better buys today than when I recommended them.
Solid dividend payers
I included both Coca-Cola and Johnson & Johnson in my portfolio precisely for times like this. When scary times hit, investors run for safety; dividend stocks provide just the safety they're looking for. And because they have solid yields of 2.8% and 3.7%, respectively, investors are rewarded for being patient and sticking with the companies.
For Coke, in fact, I don't think things could be any better. The company's sales were up 47%, thanks in part to growth in Asia. Gross margin came in at a mind-blowing 61%, and earnings per share grew nearly 18%.
Johnson & Johnson also showed strong growth in its last earnings announcement. Worldwide sales were up 8.3%. More impressive was that international sales ballooned to show almost 16% growth year over year.
As the results show, both of these companies provide safety in their size, balance sheets, and dividend payments. But one thing that too many overlook is how international exposure can be a growth catalyst for strong brands like Coke and Johnson & Johnson.
Biggest company in the world?
Earlier this week, Apple passed venerable Exxon Mobil (NYS: XOM) as the largest company in the world. Though the two companies will probably be playing music chairs for first place for some time, Apple's standing is an impressive feat for a company that a few decades ago was on the brink of bankruptcy.
Apple now has $76 billion in cash and investments -- or about $82 per share. Its earnings have grown at an astounding 66% per year over the past five years. Yet even with the popularity of Apple's iEverything, the company's P/E is sitting at an unbelievably low 14.6.
Consider some of these numbers about Apple and combine them with what you see around you on a regular basis, and you'll see why I think this stock is in the bargain basement right now.
My two conviction buys
When friends ask me what stocks I think everyone should own, my answer has been the same for a while now: Whole Foods and Amazon. I believe that Amazon will be the e-tailer of choice for decades to come.
Amazon also has its hands in several other spheres: offering cloud computing, designing e-readers, and even challenging Netflix's (NAS: NFLX) movie-streaming monopoly. The company's most recent earnings statement backs this up: Revenues were up 51% over the same time last year.
Whole Foods, on the other hand, is driving the conscious-capitalism movement. As more and more consumers educate themselves about food and change their relationship to what they eat, organic foods have continued to gain favor. Though a lot of people call it "Whole Paycheck," my own investigations show that it offers far better deals for organic food than other grocers do. Consumers appear to agree: During the second quarter, same-store sales were up 7.8%.
Care for more ideas?
If you like these five stocks, I suggest you check in for my next installment of this series, in which I'll review the other five stocks that are in my retirement portfolio. Remember, in volatile times like these, take your time and make your investment decisions in a cool, level-headed state of mind.
If you'd like five additional ideas and you don't want to wait to see what I'm revealing, you can gain access to a special free report from the Motley Fool -- 5 Stocks the Motley Fool Owns and You Should Too! The report is yours today, absolutely free of charge.
At the time this article was published Fool contributorBrian Stoffelowns shares of Apple, Whole Foods and Amazon. He will be purchasing shares of Coca-Cola and Johnson & Johnson as soon as his old 403(b) rolls over. The Motley Fool owns shares of Apple, Coca-Cola, Whole Foods, and Johnson & Johnson.Motley Fool newsletter serviceshave recommended buying shares of Coca-Cola, Whole Foods, Apple, Johnson & Johnson, Amazon.com, and Netflix; creating a diagonal call position in Johnson & Johnson and a bull call spread position in Apple; and buying puts on Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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