The Motley Fool's Weekly Editors' Picks
Fools were out and about this past week in an investing world jam-packed with actions and ideas. Here are three articles you might find useful as you decide how to invest your money.
Can We Handle $4 Gas?
Gas garners headlines at $4 a gallon, but Fool analyst Morgan Housel points out that just as important is the news that home heating costs have fallen to decade-long lows. "Surging gas prices could wallop consumers if you assume all else is equal," Morgan writes. "But it's not." Crunching a few numbers about the decreased price of natural gas -- which heats about half of U.S. homes -- he reports that "[f]or a household using 60 gallons of gasoline per month, that savings offsets the entire recent spike at the pump."
Prices at the pump capture our interest and our attention, but Morgan agrees with a Standard & Poor's report that $4-a-gallon gas won't derail the U.S. economy. "Never underestimate the wrath caused by high gas prices -- and rising gas prices are something to be legitimately upset about -- but paying $4 at the pump might not be the nail in the coffin some presume it will be," Morgan writes. He suggests ExxonMobil (NYS: XOM) as one attractively priced stock to consider if you think oil prices are bound to keep going higher.
Read the article for more about gas prices.
5 Dividend Bargains From a Surprising Place
Hunting for dividend stocks is a popular sport. In his search for bargains, Fool analyst Dan Caplinger used two criteria: a dividend yield above 3% and a price-to-book ratio below 1. "[W]ith much of the world undergoing systemic stresses that potentially distort earnings, looking at an alternative valuation measure like book value can reveal some stocks that earnings-focused investors would have dismissed without a second glance," Dan wrote.
ArcelorMittal (NYS: MT) and Banco Santander (NYS: STD) made his list of stocks to consider. The former has a dividend yield of 3.2% and a price-to-book ratio of 0.55, while the latter clocks in with 5.9% and 0.71. Both are based in Europe, but Dan made the case that fears of a European economic meltdown have kept many stocks at attractive valuations. And ArcelorMittal and Banco Santander do substantial business beyond Europe.
In the case of ArcelorMittal, investors should note that "news that China expects to see slower growth going forward will have a more negative impact on the stock than anything that is likely to happen among the weaker European countries," Dan wrote. While Banco Santander "has been raising capital by offering stakes in its Latin American units, aptly establishing its ability to meet any liquidity event in Europe effectively."
Read the article for more on dividend bargains.
1 Stock to Buy in MarchFool analyst Anand Chokkavelu went looking for damp toddlers this week. More specifically, he turned his gaze to Europe to find "an entrenched company whose services are essential in good times and bad." He continued: "Ideally, it would be a blue chip selling for a discount -- i.e., a 'baby thrown out with the bathwater' situation."
Focusing on the strongest eurozone countries -- France and Germany -- Anand picked France Telecom (NYS: FTE) as one stock to buy in March. He describes it as the French equivalent to AT&T or Verizon. "Any way you look at its profitability, France Telecom is dirt cheap," Anand wrote. Also in the plus column is its international reach. Risks include sovereign-debt risk in the eurozone and a debt-laden balance sheet.
Read the article for more on France Telecom and to get Anand's take on the pros, the cons, and the mitigating factors.
If you think $4 gas is here to stay, energy stocks might be a strong play for your portfolio. Get free access to The Motley Fool's free report "3 Stocks for $100 Oil." It has the lowdown on three picks from Motley Fool Rising Star analysts.
At the time this article was published Fool online editor Kris Eddy owns no shares of any stocks mentioned in this article.The Motley Fool owns shares of ArcelorMittal.Motley Fool newsletter serviceshave recommended buying shares of France Telecom and ExxonMobil. 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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