Create A Rip Van Winkle Portfolio With These 4 Stocks - Investment Ideas
2012年9月24日 - 9:00AM
Zacks
There is a difference between trading in stocks and investing in
them but too often they get confused as being the same thing.
Trading is usually done in a short time period, much like the day
traders of the dot-com era, whereas investors are supposed to take
a longer term view.
The problem is that too many investors think like
traders and get sucked into thinking about stocks in the short
term.
Warren Buffett, one of the great long term
investors of all time once said:
"I never attempt to make money on the stock
market. I buy on the assumption that they could close the market
the next day and not reopen it for five years. As far as you are
concerned, the stock market does not exist. Ignore it. Much success
can be attributed to inactivity. Most investors cannot resist the
temptation to constantly buy and sell."
Could you buy and hold a stock for 5 years without
checking to see what it is doing? Could you ignore it
completely?
Warren Buffett's five year rule reminds me of the
Washington Irving story about Rip Van Winkle. Irving described a
man who goes up to the top of a mountain, falls asleep, and awakes
20 years later to find that life has turned upside down.
Rip Van Winkle doesn't recognize anyone. His wife
is dead. His small New York town is no longer controlled by the
British but has a new government with George Washington at its
helm.
The Rip Van Winkle Strategy
What if you were to pick stocks as if you were Rip
Van Winkle? It would be a strategy where an investor buys a company
with the belief that he could "wake up" five years later and that
investment would still be sound.
I can hear you thinking, "that's impossible to do.
Too much can change in those 5 years."
Sure, Borders is no longer in operation and Best
Buy is on the ropes. Neither of those companies would have been
good investments in a Rip Van Winkle strategy five years ago.
But there are plenty of other companies that have
stood the test of time and are likely to not just survive, but
thrive, in the coming years.
4 Stocks For a Rip Van Winkle Portfolio
What do these four stocks have in common? They all
are businesses with an edge.
1. Agrium (AGU)
If Rip Van Winkle could choose a stock to wake up
to years later, Agrium would be it. We all have to eat, right?
Agrium produces all three of the major fertilizers
as well as micronutrients and plant protection products. It is the
largest direct-to-grower retailer in North and South America,
selling seeds and irrigation products.
P/E = 10
2012 EPS Growth: 2.6%
2013 EPS Growth: -0.12%
Zacks #2 Rank (Buy)
2. The TJX Companies, Inc. (TJX)
A retailer might seem a strange choice for an
investor who is looking out five years because the sector can be
volatile but the TJX Companies have been growing earnings in the
double digits for the last 3 years and has been operating its low
priced model since 1956. It operates TJ Maxx, Marshalls and home
furnishing stores like HomeGoods in the United States, Canada and
Europe.
P/E = 18.1
F2013 EPS Growth: 23.9%
F2014 EPS Growth: 11.4%
Zacks #2 Rank (Buy)
3. The Madison Square Garden Company
(MSG)
Do you think Madison Square Garden is going
anywhere in the next five years? The Madison Square Garden Company
also operates other famous venues including Radio City Music Hall,
the Forum and the Chicago Theatre. It also owns the New York Knicks
and New York Rangers sports franchises. Additionally, the company
manages a media division which consists of web, digital and
television networks.
Owning a piece of the Garden isn't cheap,
however.
P/E = 31
F2012 EPS Growth: -4%
F2013 EPS Growth: 24.7%
Zacks Rank #3 (Hold)
4. Chipotle Mexican Grill, Inc. (CMG)
Chipotle is in the midst of worldwide expansion. It
currently only operates Mexican casual dining restaurants in the
United States, Canada, Great Britain and France. In five years, its
expansion is likely to continue.
Chipotle is an aggressive growth stock with a big
P/E but with large double digit growth projections to match.
P/E = 37
2012 EPS Growth: 33.3%
2013 EPS Growth: 21.2%
Zacks #3 Rank (Hold)
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Tracey Ryniec is the Value Stock Strategist for Zacks.com.
She is also the Editor of the Turnaround Trader and Value Investor
services. You can follow her on twitter at @TraceyRyniec.
AGRIUM INC (AGU): Free Stock Analysis Report
CHIPOTLE MEXICN (CMG): Free Stock Analysis Report
MADISON SQUARE (MSG): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis Report
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