Sunday, 24 May 2009

Choosing simple investments in turbulent times

The recent rise in stock prices might foretell what inflation will do to the market. Companies selling products with stable demand should do well, since they will be able to raise their wholesale prices as fast as inflation hits.

In turbulent times, my choice goes for simplicity and stability. Well-established consumer brands and pharmaceuticals sell the kind of products that don't go out of fashion overnight. Most prescription drugs continue to sell well in times of economic recession and few people will skip their breakfast cereal.

The following six companies represent my favourite investments, today May 24, 2009, as possible additions to my own portfolio:

1.- KRAFT FOODS (NYSE:KFT). A major international food manufacturer that sells its products in 140 countries. In addition to cheese and chocolate, Kraft makes different sorts of snacks. The wide multi-national base of its income should allow this company to compensate for problems in any given territory. Its current dividend yield is about 4% and its price/earnings ratio is about 14.

2.- KIMBERLY CLARK (NYSE:KMB). A multi-national manufacturer of hygiene and personal-care products. Its disposable diapers and facial tissues are sold around the world. This company owns, amongst others, the Kleenex brand. At today's share price, the dividend yield is around 4.5% and the company shows a price/earnings ratio around 13.

3.- KELLOGG (NYSE:K). Its breakfast cereals are sold in supermarkets around the world and represent one of the best-known consumer brands. Kellogg's products are sold in 160 countries and has a loyal customer base. The shares show a current dividend yield around 3% and a price/earnings ratio about 14.

4.- NOVARTIS (NYSE:NVS). This Swiss pharmaceutical company sells its medicines in 130 countries and owns numerous patents. In addition to medicines, it sells diagnostic kits and vaccines. Its worldwide income from many different products provides this company with a good risk distribution. Its shares show a dividend yield of about 4% and a price/earnings ratio around 12.

5.- CLOROX (NYSE:CLX). This multi-multinational manufacturer of household and cleaning products has sales in the five continents, in about 90 countries in total. It possesses a stable customer base and its brand Clorox is well-known around the world. The shares show a dividend yield around 3.5% and a price/earnings ratio around 13.

6.- JOHNSON AND JOHNSON (NYSE:JNJ). A major manufacturer and distributor of cosmetics and personal-care products. Its mouthwash brand Listerine is known by consumers in many countries. The company markets as well many pharmaceutical products. The shares show a dividend yield around 3.5% and a price/earnings ratio about 13.

As always, when you make investment decisions, avoid following any advice blindly. It is your own money and you should check all details yourself.

Devoting reasonable efforts to researching shares is the only way to make well-informed choices. In today's market, you should not lack opportunities to find good investments.


[Image by nacholau under Creative Commons Attribution License. See the license terms under]

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