Blood isn’t running in the streets—yet.
But it could be the perfect time to snatch up these three stocks for an investment…
The old Wall Street expression, “The time to buy is when there’s blood in the streets.” is credited to British investor and nobleman Baron Rothschild.
It’s a contrarian monetary play, of course, as emotions tend to send most investors screaming to the sidelines while stocks drop like rocks.
The idea is sound, though. Stocks with solid businesses should be able to weather financial selling storms, particularly those that pay steady and growing dividends. They deserve at least a look from investors trying to decide if an investment is warranted.
While the blood may not be yet be running in the streets, the markets are certainly in the process of slicing up investors and their portfolios. The time is right to consider the following five stocks for an investment.
Let’s take a look at the prospects…
The folks in Cupertino are getting crushed…
Apple is down over 15% in the last 30 days, after dropping over 1% on Monday and Tuesday and continuing to head lower Wednesday. Indeed, Apple (AAPL) stock is now down 25% from it’s 52-week high of $134.
Sure, iPhone sales are coming under fire, margins are a tad lower than expected, worries about growth in China continue to concern analysts and, well, it seems like every excuse in the book is good enough to push the sell button on Apple.
After the selloffs, however, Apple still sells for about 11 times trailing earnings, compared to 20 times for the S&P 500. Really? Apple is discounted 45% from the S&P? Wow.
If Apple didn’t grow at all, it would still sit on $180 billion in cash available to investors for dividend increases from now until forever. Apple’s dividend yield just snuck up to 2.7%. A meager 10% bump will get the dividend to $2.20 per year and a dividend yield that, at 2.20%, suddenly looks pretty attractive.
We’re in the same camp as InvestorPlace’s John Devine on this one: Apple will be a fine investment for a long time.
General Motors (GM)
There’s no longer any doubt that the automakers are in the middle of a renaissance period…
With gas getting cheaper, jobs growth expanding and a growing amount of product and brand choices both here and abroad (although you might want to avoid Volkswagen (VLKAY) for the time being), the industry is booming.
So why has General Motors (GM) seen it’s stock sink over 5% in the last year, and over 10% in the last month?
There are many theories, but the bottom line is that GM should recover anytime now. GM just released its December 2015 results, and all looks pretty good for newly approved CEO Mary Barra.
GM’s Chevrolet, GMC and Cadillac brands drove an 8% year-over-year increase in retail sales, allowing GM to celebrate its 26th consecutive month of sales growth.
Indeed, GM’s products and brands sold well across the board, with truck sales soaring 14% compared to 2014. GM is also opening an additional shift at its Lansing Grand River Assembly Plant to make Camaros, another popular brand gaining ground in the market.
At the same time, GM works toward a future in which it envisions driverless cars and perhaps fewer cars purchased by the public. To that end, GM announced a $500 million dollar investment in ride-hailing service Lyft. The investment is targeted (at least in part) at the ideas of an on-demand service for self driving vehicles that might also come in the form of rental cars.
GM sells at just under 12x earnings, which suggests GM stock has room to run for 2015. They’re also paying out a very nice 35 cents per share quarterly dividend that generates a 4.45% dividend yield.
All in all, not too shabby for an automaker that’s seen its share price bleed just a little too much.
3M Company (MMM)
The blood’s not running too badly from 3M (MMM), but after a one-year drop of nearly 10%, now may be the time to get in on this outstanding diversified technology giant.
3M is universally regarded for its innovation, quality and breadth of product line that includes everything from abrasives to wiring and cable, with recognizable brands like Post-it, Scotch-Brite, Filtrete and ScotchBlue.
It’s the ability of MMM to diversify that makes it nearly immune to a severe downturn, and a company that can indeed weather a long storm for investors.
Part of the reason for the recent stock downturn was a revised earnings forecast for FY 2015, but 2016 revenues appear to be on track. Meanwhile, 3M continues to look for ways to streamline and cut expenses to help boost the bottom line.
While investors wait for the stock to come back, they’ll receive $1.02 in dividends per quarter from a company that’s raised its dividend payouts annually since 1959.
With another dividend increase virtually assured, growth in line for the year, and expenses managed properly, 3M will stanch any bleeding.
(Marc Bastow is long AAPL)
This post originally appeared in mainstreetinvestor.com.
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