Saturday, April 25, 2009

Top 10 Stocks to Buy: Part II

[This article is a continuation of Top 10 Stocks to Buy: Part I.]

6. Research In Motion Limited (RIMM)Top 10 Stock RIMM

I remember when Puff Daddy was the only guy in America using a Blackberry. In the five or so years since then, the Blackberry has become more and more mainstreamed. Pretty soon your grandmother will have one.

Think of RIMM as sort of a Hewlett-Packard for the 21st century mobile generation; a standout technology research and development company.

This is a stock I am comfortable buying at its current 20 times earnings.

7. Parker-Hannifin Corporation (PH)Top 10 Stock Parker-Hannifin

This stock is a cheap buy at 7.5 times earnings, and is even giving out 2.5% of its price through its dividend annually.

With governments broker than ever, aerospace-manufacturer Parker-Hannifin could appear to be in a bit of a bind. Its type of heavy, advanced technologies may have to undergo a longer (if not deeper) drought than other elements of the economy, but I can tell you that this is a very well-managed company with a long period of growth awaiting it in its future.

Listen to management’s conference calls and you will see why PH is in my top 10 stocks to buy for the long-term.

8. Yahoo! Inc. (YHOO)
Top 10 Stock Yahoo YHOO
Yahoo stock is way down since it totally blew an excellent opportunity to allow itself to be bought by Microsoft last year. “Ousted” CEO Jerry Yang made one of the more obviously bad choices of 2008 by letting his ego trump smart business by not selling his crappy ailing company.

However, many knowledgeable people, including the controversial Jim Cramer, seem to be big fans of new Yahoo CEO Carol Bartz. And negotiation has resumed with Microsoft (MSFT) rather quietly.

Buy Yahoo stock for the next 6 or 9 months and see what happens. I give it a 2:1 shot that Yahoo is bought for some premium by Microsoft over that time; or at least the two will team up in their online activities, giving unknowledgeable investors a reason to believe in them and send their stock prices higher.. At that point it’s time to sell, sell, sell! Because Google is the man online, and you don’t want to bet on their competitors in the long-term.

Thus, make buying Yahoo stock a shorter term play, riding the near-term likely occurrences and the stock market’s probable buying action.

9. CVS Caremark Corporation (CVS)
Top 10 Stock CVS
One of the great all-time companies, CVS, is down 33% since last June. This stock is selling at 13 times its earnings and reported a profit increase of 17% in the 4th quarter of 2008.

If you’re going to buy CVS stock, make it a long-term play; think in terms of holding this stock for at least five years. If in the meantime it becomes fairly overvalued, then sell it. But basically this is one of those companies that is a good bet over the long-term whenever it is kind of cheap.

My main concern with buying CVS stock is…

10. Wal-Mart Stores, Inc. (WMT)Top 10 Stock Walmart WMT

Walmart’s selling at 14.3 times earnings, and always seems to be positively surprising that it continues to dominate and grow. I don’t know if any of you saw CNBC’s documentary on Walmart, but the scene that stuck with me most was when they showed people at the company’s headquarters, whose databases update every hour or so with every single item that has sold at every single store over the past hour. Their analytics software is constantly and very smartly analyzing all that data in a very Walmart-ish way.

Personally, I would like to see Wal-mart overcome some of the unpleasantries encountered when shopping there. Specifically: crowded parking lots, long lines, crowded navigation of the aisles. If they could give me a clear path in, through, and out of there I think I’d do 100% of my shopping at Wal-mart.

If you missed my first five top stock picks, you can find them at Top 10 Stocks to Buy: Part I.

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