March is upon us, and that means the most exciting part of the sports year to many: college basketball’s Final Four tournament.
One of the clearest lessons illustrated by championship teams is that you can’t be a one-trick pony. Defense is crucial, but it’s hard to win titles without scoring. Raining down 3-pointers is great, but rebounding can be just as vital. And then there’s the importance of depth and teamwork to ensure that you don’t live and die on the performance of one superstar.
Those same guidelines are useful to investors. In this challenging market, it’s important to build a balanced portfolio that both protects you from downside risks and allows you room to run.
Some investors pick role players for their portfolio — say, a hot small-cap momentum stock to tap into growth and A-rated bonds for slow and steady returns. But with a little scouting, you can find some superstar blue chips that have it all.
Here are three such “triple threat” blue chips to consider adding to your investing team that have stability via a great dividend and strong cash horde, momentum based on both short-term and long-term performance, and growth that signals future gains:
Don’t think Intel (NASDAQ:INTC) is just inside desktop computers. The company has been making a big move into mobile, including a recent announcement that a new European telecom partner will begin offering a smartphone designed and powered by Intel chips.
The company admittedly has some catching up to do with compared with companies like ARM Holdings (NASDAQ:ARMH), which designed the chips that now power many sexy consumer gadgets including the Apple (NASDAQ:AAPL) iPhone. But with a roughly 16% share of the entire semiconductor market — the largest in the world, blowing away the 9% held by No. 2 Samsung (PINK:SSNLF) — it’s hardly like Intel is a tech dinosaur.
Here’s the scouting report:
- Dividend and cash: The fact that INTC pays a 3.1% dividend might surprise you. But this chipmaker raised its dividend 15% in 2011 and has $15 billion in cash and short-term investments to back up reliable payouts. The fact that Intel is the largest semiconductor foundry in the world provides this consistent revenue — and thus, consistent and growing dividends.
- Performance: Intel stock has outperformed significantly in both the short term and the long term. Looking back five years, INTC is up around 31% — that’s 10 times the 3% added by the Dow Jones Industrial Average in the same period. Even if you want to compare Intel to the better performance of the Nasdaq — an 18% gain in the past five years — INTC still is up by almost double. In the short term, Intel is equally impressive. Across the past year, INTC is up 24% vs. roughly 7% for both the Dow and the Nasdaq. The stock is up an impressive 12% so far in 2012, too, keeping pace with the outperformance of tech and easily beating the broader stock market. And despite this standout performance, INTC stock still boasts a relatively cheap price-to-earnings ratio of about 10.8 based on 2012 earnings projections of $2.53 per share.
- Growth: On the revenue side, Intel has seen its sales increase year-over-year in eight out of the past nine quarters, dating back to 2009. Profits are even more dramatic, with 16 straight quarters of year-over-year growth. The company is predicting roughly 14% EPS growth across 2012, after 14% growth in 2010 and 15% in 2009.