by Bryan Perry | March 15, 2013 6:15 am
As the market strolls toward new highs (and taking its time along the way), we’re being led forward by the multinationals.
Recently, a lot of the big winners have been consumer staples and consumer non-durables: things like Johnson & Johnson (NYSE:JNJ[1]) and Procter & Gamble (NYSE:PG[2]). But from here, we need to see good vibes broaden out from these stocks — the safest names on the board — to more cyclical names.
Luckily, we’re starting to see some bullishness spread to cyclicals, such as Home Depot (NYSE:HD[3]), which has been a star recently. There’s a very strong move into home-improvement spending, hence the new highs in Home Depot and other building materials companies — the classic cyclicals.
Going forward with this theme, I’m looking for the kind of names that we call “stalking horses” — ones that we can put in our stable and ride those ponies all year long, all the way up. In addition to Home Depot, I’ve got a lot of other names I really like that fit the bill. Here are a few:
Boeing (NYSE:BA[4]) is one stock I’ve got on my watch list. It’s breaking out of a major multiyear triple-top, it’s a fabulous company that does it right most of the time, and now a plan is in the works to fix one of those rare “rest of the times” — namely, the battery issue with its Dreamliner aircraft. BA had been spring-loaded because of the 787 issue, but it’s clearing up, and things will only get better once the issue is fully in the rear-view mirror.
Visa (NYSE:V[5]) is another one of my favorite companies out there from the standpoint of the large-cap market, and the theory behind this one is simple. The whole world is going to electronic payments — and Visa is a high-quality company that allows you to get involved in this global mega-trend.
Then you’ve got Schlumberger (NYSE:SLB[6]), which has one of the most pristine charts I’ve seen in a long time.
The company has a great history, having been founded in Paris before moving to Houston at the very time when the United States became the go-to spot for energy development. It’s a wonderful story, and SLB is the 800-pound global gorilla in the oil and gas exploration sector.
Schlumberger had great numbers in the last quarter, and guided higher. Now, the stock looks like it might make a move from the $77 area to $85 or $90. That’s the thing about these drilling stocks: When they move, they really take off, especially if they’re going in the right direction — and this one looks very bullish to me.
The great thing about all these companies is that they’re fundamentally wonderful stocks. And as an added bonus, they also have enough volatility that you can make some decent premium by writing call or put options.
That’s a win-win in my book.
Bryan Perry is editor of Cash Machine[7], a newsletter focused on dividends and income investing. His newest service, Extreme Income[8], also focuses on dividend investing with “income boosters” like momentum plays, option strategies, and more. As of this writing, he did not own a position in any of the aforementioned securities.
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