3 Stocks for Any Portfolio
By: Ryan Vanzo
Every private portfolio needs to have at least some exposure to each sector (Agriculture to Telecoms) and class of security (Growth to Value). In this article, I highlight 3 stocks that might fill in the missing piece of your portfolio.
Stable Blue-Chip: Proctor and Gamble (PG)
Although I am not always an advocate of large and stodgy ‘core' holdings, for reasons ranging from their lack of mobility to their over coverage from analysts, I think now would be a great time to add a respectable blue-chip to your holdings. The recent market run-up has largely occurred in the junkie, more debt ridden names, leaving high-quality companies such as Proctor and Gamble behind the curve. While many low-quality names have taken off, reaching new 52 week highs, Proctor and Gamble is still sitting pretty, much closer to its 52 week low. Most of the time 52-week ranges don't tell you much on a stocks direction, but you can pretty much bank on it not falling below the yearly lows. Earlier this year when stocks hit their lows, investors were pricing in Armageddon. Now that we know the end of the world is very realistic, we can basically assign the 52-week low price the worst-case-scenario price. So we know that PG is still near its lows at $52 ($44-$74 range), now let's take a brief look at its fundamentals.
P/E: 12x
Forward P/E: 13
Dividend Yield: 3.3%
Operating Margin: 20%
With shares historically cheap, a higher than average dividend yield (3.3% compared to five year average of 2.3%) and still high and improving margins, PG should withstand the recession well. With its diverse product line and respected brands, it's no wonder Morningstar rates PG 5-Stars with a Wide-Moat rating. Proctor and Gamble could be the perfect core holding to anchor your portfolio through troubled times and beyond.
Speculative Small-Cap: Myriad Pharmaceuticals (MYRX)
Spun off by Myriad Genetics in June 2009, this company has seen its share of problems already. Spun off in the $7-$8 range, MYRX fell to below $4 in a matter of weeks; in fact, it still only trades at $4.42. The cause for the rapid selloff wasn't because it was a bad investment, but because many funds were forced sellers. Myriad Genetics was a $4 billion company before it spun off Myriad Pharmaceuticals, which only has a market cap of $105 million.
