This coming weekend will be full of barbecues, fireworks and red, white and blue. It’s the American way when it comes to the Fourth of July holiday weekend. But there are more ways to celebrate than with hotdogs and burgers. Instead, investors could look at a number of American stocks to buy.
While we’ve seen a recent selloff in technology stocks, it has been dragging some other stocks down too. Perhaps if we’re lucky, we’ll get a moderate correction that lets up scoop up some of the best stocks to buy — but this time, on a discount.
For the patriotic types, we have a look at seven of the best stocks to buy, but with a twist. This is a look at All-American stocks, where their roots can be traced back to American innovation, hustle and drive.
Sure, we didn’t have room to include every American pastime, but that doesn’t discredit the list we have put together. Let’s take a look.
American Stocks to Buy: Disney (DIS)
Walt Disney Co (NYSE:DIS) might not be the first thing to come to mind when thinking of American stocks to buy. But Mickey Mouse, Disneyland and of course Captain America are as American as they come. Throw in the fact that it owns ESPN — for better or for worse — and Disney is even more American than we thought.
Walt Disney, the founder, didn’t have such an easy time as a company founder. After trying and failing at numerous ventures numerous times, he finally gained some traction. He went on to build an empire. That’s the American dream right there.
Disney stock is no slouch either, though it has been in a bit of a slump in the past two years. But consider that DIS is still up more than 200% over the last decade and up more than 13,500% since the late 1970s.
Over the past two years, ESPN and cord-cutting concerns have stifled DIS stock’s upward trajectory. After topping out at $120, twice, shares have struggled to stay above $100 until 2017. With the stock at $106 though, investors are wondering if that level will now be support.
Although DIS has been through ups and downs — just like its founder — the odds that it perseveres are high. Disney has ESPN issues and the shift in entertainment consumption is a concern, yes. But it has some of the best content, which is king in the entertainment world. While cord-cutting may be a threat for cable providers, remember that Disney also has a stake in Hulu. While this isn’t an overly valuable stake in dollar terms today, it can act as a “hedge” against the rise of over-the-top streaming.
In the end though, with its movie division, cable networks and theme parks, Disney is an American-born thoroughbred.
American Stocks to Buy: Tyson Foods (TSN)
“So American, you can taste it.” Do you know what slogan that stands for? Try Ball Park Franks, a brand of hotdog made by Tyson Foods, Inc. (NYSE:TSN). The hotdog is pretty darn American — especially when it’s tied to America’s pastime, baseball.
Tyson has got more than hotdogs, though. Any’tizers, frozen chicken nuggets, bacon, Jimmy Dean, Sara Lee and more just pad its American street credit.
So what about the stock? TSN roared higher in 2016, but struggled going into the end of the year. It has now given up all of those big gains and is actually down about 6% over the past 12 months. For recent investors, those results are uninspiring. But for long-term folks, the 234% gains TSN stock has over the past five years puts their mind at ease.
While earnings growth of about 14% this year is attractive, next year’s estimates of sub-1% growth isn’t. Flat sales growth in 2018 also isn’t attractive. But that’s why investors are paying just 12.5x earnings for the stock. When it comes to the dividend, TSN pays a 1.4% yield. Another good-but-not-great attribute. However, with a payout ratio of just 15%, management could commit far more capital to the dividend in the future.
So is Tyson Foods one of the absolute, very best stocks to buy? Not really. But it is a good, consistent stock. And for a lot of people, that’s all they really want. Investors looking for a company with the negatives seemingly priced in, TSN could be there stock.
American Stocks to Buy: Nike (NKE)
We talked about America’s pastime, but that’s not the only sport the country craves. Let’s not forget about football, basketball and hockey. There’s golf, tennis and a number of others too, and guess what company has got its hands all over these sports? Yep, Nike Inc (NYSE:NKE).
First, Nike is the official uniform and apparel provider for the NBA and NFL. It has got numerous contracts with large universities to supply equipment and apparel as well, notably the University of Michigan’s Jordan brand.
Nike also endorses top athletes, from Serena Williams to LeBron James.
Perhaps another great American attribute of Nike is its hustle. Like so many other great American companies, founders didn’t realize their companies were behemoths in the making. In the 1960s, Nike employees — then called Blue Ribbon Sports — were selling shoes out of the back of their cars.
It’s a top pick among athletes and consumers alike, and that’s being reflected all around the world. Sales are strong out of China, while Western Europe also has promising growth.
And even though Nike is caught up in a whirlwind storm in retail, the brand will find a way to thrive. Its direct-to-consumer business has shown impressive growth. And while physical retail has taken a pounding, e-commerce is booming. That’s why Nike’s getting ahead of the curve and teaming up with Amazon.com, Inc. (NASDAQ:AMZN).
Sports play one of the largest roles in American entertainment. That’s unlikely to stop anytime soon, allowing Nike to remain an important, iconic piece of American culture.
American Stocks to Buy: McDonald’s (MCD), Wendy’s (WEN)
The hamburger holds a relatively high place on the All-American list. McDonald’s Corporation (NYSE:MCD) holds the fast food crown, but you could mention Wendys Co (NYSE:WEN) too — which also has a savage social media presence.
There are others, too. Like Burger King (now owned by Restaurant Brands International Inc (NYSE:QSR), which is based in Canada), Shake Shack Inc (NYSE:SHAK) and a vast array of others.
But they all have one thing in common and that’s the American dining classic: The hamburger.
CEO Steve Easterbrook has done an excellent job at McDonald’s, initiating All-Day Breakfast, boosting same-store sales and bringing the stock out of the doldrums. MCD is a classic buy-and-hold stock and it has been that way for a long time. Long-term shareholders can more than justify a long position in MCD.
But even though it’s a clear-cut American stock stud and pays a 2.5% dividend, investors should be cautious. MCD stock is already up 26% on the year and could be ripe for consolidation. Instead though, investors can also consider Wendys. The stock has a similar forward price-to-earnings ratio as MCD — 27x vs 22x — but its outlook is far more attractive. Analysts expect WEN to grow earnings 15% in 2017, 24% in 2018 and 16% annually for the next five years.
All this with a 1.8% dividend yield isn’t bad.
American Stocks to Buy: Coca-Cola (KO)
What better way to wash down that burger than by taking a gulp from The Coca-Cola Co (NYSE:KO). Some may want to throw PepsiCo, Inc. (NYSE:PEP) on the list too, especially given its list of excellent snacks, and that’s fine too.
But there’s something nostalgic, classic and very American-esque about Coca-Cola.
Coca-Cola was introduced an impressive 131 years ago and went public in September 1919. Its dividend is even more impressive. “The Coca-Cola Company has paid a quarterly dividend since 1920 and has increased dividends in each of the last 55 years,” its site reads.
That tells long-term shareholders all they really need to know. Regardless of the fight on sugar and the shift towards natural and organic, Coca-Cola and Pepsi are two classic American stocks. Are they the best stocks to buy? They certainly have their merits — and their hangups. PEP has built a wonderful portfolio of teas, Gatorade and snacks to help diversify away from its main soft drink lineup.
Coca-Cola, unfortunately, has not done such a great job. But thanks to the company’s recent reorganization, it’s now far leaner and will have the flexibility to (hopefully) copy some of PEP’s blueprint.
The high valuation and low growth may make Coca-Cola a no-touch for new investors. But buy-and-hold investors who’ve had KO for years have little reason to part ways now.
American Stocks to Buy: Domino’s Pizza (DPZ)
Man, if there was one stock I wish I had bought years ago, it would be Domino’s Pizza, Inc. (NYSE:DPZ). Well, not the only the stock. But I should have known it when I was ordering pizza online and having it delivered to my college apartment. Life choices…
Anyway, DPZ stock has been one of the best stocks to buy. Shares are up more than 550% over the past five years — sporting a casual compound annual growth rate of more than 46%. The last 10 years are equally as impressive, with shares soaring more than 1,050%.
It’s hard to believe this all from a pizza company. But Domino’s has found a way to fuse two of the things that America does best: technology and pizza.
Whether ordering online, on its app, or even on Facebook Inc (NASDAQ:FB), Domino’s continues finding ways to win. It has led to incredibly strong earnings and sales growth, a trend that won’t stop anytime soon.
Analysts expect earnings per share to grow approximately 27%, in 2017, 19% in 2018 and 18% annually for the next five years. And they better too, because shares trade with a forward P/E ratio of 33.
Domino’s is a fund favorite and it’s easy to see why. It continues to deliver excellent result after excellent result. If investors are lucky enough to see DPZ get knocked lower in a broader market pullback, it’d be wise to mull over a position in this All-American pizzeria.
American Stocks to Buy: Apple (AAPL)
I had a hard time not picking a defense contractor like Lockheed Martin Corporation (NYSE:LMT), a gunmaker like Sturm Ruger & Company Inc (NYSE:RGR) or an automaker like Ford Motor Company (NYSE:F). While the defense industry, firearms and cars are quite American — especially to the outside world — there’s one company we couldn’t ignore: Apple Inc. (NASDAQ:AAPL).
So what makes Apple so special? Even though shares are down about 8% from its all-time highs, AAPL still remains the largest public company, sporting a market cap of $740 billion.
Like many other great companies, Apple’s founders started off working in a garage. Its Macintosh computer played the little brother role to Microsoft Corporation (NASDAQ:MSFT) for years. But then Steve Jobs, who was forced out of the company, came back. And he came back with an innovative vengeance. After disrupting the music industry with the iPod and iTunes, he soon set his sights on a world-changing device: the iPhone.
The iPhone — which just turned 10 — changed how carriers like AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) used to control user experience. It pulverized companies like BlackBerry Ltd (NASDAQ:BBRY) who refused to adapt. It has paid out billions to application developers and allowed companies like Uber to come to fruition.
It set a precedent in the smartphone market, as companies desperately tried to copy Apple’s design and interface. But they were no match. The iPhone and its operating system had captured the global market, as AAPL now rakes in billion upon billions in profit each year.
So while we have pizza, soda, hot dogs, sports and other American pastimes, it’s hard to argue about the impact Apple has had on the world. And that makes it quite American in itself.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long NKE.
