7 S&P 500 Stocks to Buy Trading Within 10% of an All-Time High

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S&P 500 stocks - 7 S&P 500 Stocks to Buy Trading Within 10% of an All-Time High

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The S&P 500 spiraled downward through the December 4 trading day on the way to a 799.36 loss, one of the worst single-day declines by points in the index’s history. On that day it’s unlikely that many people were thinking about S&P 500 stocks to buy.

However, despite the carnage, 153 S&P 500 stocks are trading still within 10% of their 52-week high, many of them also trading within 10% of their all-time high.

Who are these companies that are bucking the downward trend that’s taken hold since the beginning of October?

Many of them are consumer-facing companies that generally win in good times and bad. There are, however, some other sectors doing well including financials and healthcare.

That said, whenever I can, I’m going to go with the businesses that I think can weather all kinds of storms.  For my money, these are the seven S&P 500 stocks to buy now, while they’re trading within 10% of their all-time highs.

S&P 500 Stocks to Buy: Starbucks (SBUX)

Source: Starbucks

Of the 505 stocks in the S&P 500, Starbucks (NASDAQ:SBUX) has the 99th best-performing stock according to Finviz.com.

It’s got a total return of 18.4% year to date through December 4, its best year since 2015, and within 3% of its all-time high of $68.98.   

That’s a much more positive story than the one making the rounds earlier in 2018.

“While Johnson [Starbucks CEO] has identified some specific things that are working against the company and has proposed solutions, it’s not clear anyone among Starbucks’ executive ranks fully understands how the marketplace has changed over the course of the past several years,” wrote my InvestorPlace colleague James Brumley on June 22. “Until investors start to see a complete rethinking of everything it is, don’t be surprised if the company continues to struggle.”

A few days later, our mutual colleague, Vince Martin, seconded his sentiment suggesting the drop in its stock price wasn’t a buying opportunity.

It’s up 34% since the end of June.

I’m not saying this as a slight against my colleagues. I’m saying so because you can never count out Starbucks. As I stated in late October, Bill Ackman is right on the money when it comes to his SBUX bet.

S&P 500 Stocks to Buy: Church & Dwight (CHD)

Church & Dwight CHD stock

Of all the S&P 500 stocks, Church & Dwight (NYSE:CHD) has the 36th best-performing stock according to Finviz.com.

CHD stock has a total return of 34.5% year to date through December 4, its best year in the past decade, and within 2% of its all-time high of $67.93.   

I’ve been a fan of Church & Dwight — makers of Arm & Hammer baking soda, Oxy Clean stain remover, and Trojan condoms and many others — as long as I can remember. Here’s what I said about the company back in April 2016:

“Its all-around performance has made Church & Dwight a very attractive M&A target for both Procter & Gamble Co (NYSE:PG) and Colgate-Palmolive Company (NYSE:CL) whose market caps are 18 and 6 times larger respectively. Both would consider CHD a light, midday snack… But, make no mistake, Church & Dwight would make for a very enjoyable meal given its operating margins are higher than most all of its competitors, Reckitt Benckiser Group Plc (OTCMKTS:RBGLY) being the only exception.”

Since then, I’ve easily recommended CHD stock a half-dozen times or more on InvestorPlace. It’s that good.

If you can only own one S&P 500 stock that plays both good offense and defense, Church & Dwight has got to be your pick.

S&P 500 Stocks to Buy: McCormick (MKC)

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Of the 505 S&P 500 stocks, McCormick (NYSE:MKC) has the 10th best-performing stock according to Finviz.com. MKC is up 50.3% year to date through December 4, its best year in the past decade, and within 2% of its all-time high of $154.32.   

Ever since the company acquired Billy Bee Honey in February 2008 for $75 million, I’ve become a fan of its business. As a kid, I visited Billy Bee’s Toronto-area plant to see how honey gets packaged and sent off to grocery stores across Canada.

The company’s grown significantly since making that tiny acquisition — its fiscal 2008 sales were $3.2 billion; they were $4.8 billion in fiscal 2018 — and thanks to MKC’s $4.2 billion purchase of the Frank’s and French’s brands in late 2017, it should go over $5 billion in revenue in 2019.

In its Q3 2018 report, McCormick increased its revenue year over year by 14%, 10% of the increase from Frank’s and French’s with its other brands including Club House delivering the rest.

MKC is not a cheap stock at 22 times cash flow. However, the long-term demand for spices and sauces should ensure that MKC stock moves higher over the next 3-5 years.

S&P 500 Stocks to Buy: Tractor Supply (TSCO)

TSCO Stock Is a Rural Lifestyle Play Worthy of Urban Attention

Of the S&P 500 stocks, Tractor Supply (NASDAQ:TSCO) has the 65th best-performing stock according to Finviz.com.

TSCO has a total return of 26.0% year to date through December 5, its best year since 2013, and within 5% of its all-time high of $97.65.   

A $10,000 investment in Tennessee’s not-so-secret specialty retailer a decade ago is worth almost $120,000 today. Not too bad for a company that doesn’t sell anything you can’t get at a lot of other places.

I’ve followed Tractor Supply’s growth for many years. Here’s what I said about it in 2015 shortly after joining the S&P 500.

Being a retail guy I have to go with Tractor Supply, the company whose slogan ‘For Life Out Here’ aptly describes its core customer: recreational farmers, ranchers and others who enjoy the rural lifestyle,” I wrote on March 18, 2015. “Offering a group of products that can’t all be purchased in one trip anywhere else, TSCO has developed a business model that’s tough to duplicate.”

And that’s the beauty of Tractor Supply. Not to mention it’s one of the best retail operations of any kind in the country.

S&P 500 Stocks to Buy: ResMed (RMD)

ResMed Inc. (NYSE:RMD)
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ResMed (NYSE:RMD) is the 39th best-performing S&P 500 stock according to Finviz.com.

RMD stock is up 34.1% year to date through December 4, the stock’s second-best year since 2012 — it had a total return of 38.7% in 2017 — and within 4% of its all-time high of $116.64.

If you’re not familiar with ResMed, it makes products that help people with sleep apnea sleep better; it also assists people with chronic obstructive pulmonary disease breathe easier.

My dad had bad COPD, so any company that can help reduce health issues like these, is a good company to own in my books.

I’d forgotten about ResMed — I’d recommended its stock in March 2013 — until Howard Lindzon, a San Diego venture capitalist and social media investor, mentioned the company in an August 2018 blog post.

Now RMD is back on my radar and recommendation list.

S&P 500 Stocks to Buy: Danaher (DHR)

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Of the 505 stocks in the S&P 500, Danaher (NYSE:DHR) has the 106th best-performing stock according to Finviz.com.

It’s got a total return of 15.0% year to date through December 4, higher than its five-year annualized total return of 12.2%, and within 4% of its all-time high of $110.86.   

Danaher is one of the last of a dying breed: it’s an industrial conglomerate. Perhaps you’ve noticed that these massive creatures are undertaking significant divestitures to focus on their core businesses.

General Electric’s (NYSE:GE) been forced to sell off many of its various pieces to survive, but others like Danaher and United Technologies (NYSE:UTX) are doing so to deliver greater value for shareholders while simplifying their corporate structures.

In July, Danaher announced that it was spinning off its dental business into a separate publicly traded company. The transaction is expected to be completed by the end of 2019.

When completed its dental business will have standalone revenue of $3 billion operating under the Nobel Biocare, Ormco and KaVo Kerr operating segments employing more than 12,000 people.Danaher post-spinoff will consist of three operating segments: Diagnostics, Life Sciences, and Environmental & Applied Solutions, generating $15.5 billion in annual revenue.

Danaher’s addition by subtraction makes it a stronger company in the future.

S&P 500 Stocks to Buy: McDonald’s (MCD)

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Of the 505 stocks in the S&P 500, McDonald’s   (NYSE:MCD) has the 161st best-performing S&P 500 stock according to Finviz.com.

It’s got a total return of 9.3% year to date through December 4, a mediocre return for a company that’s averaged an annualized total return of 16% over the past five years. However, it is trading within 4% of its all-time high of $190.88.   

InvestorPlace contributor Tim Biggam recently discussed why the world’s largest hamburger joint’s stock is extremely overvalued.

“MCD stock is now sporting a trailing P/E  over 28,  the highest multiple of the past 10 years. McDonald’s stock is also trading at the biggest valuation premium to the S&P 500 over that same time frame,” Biggam wrote December 5.

“MCD is certainly no longer a value stock. Price to sales (P/S) paints an even clearer picture of over valuation. MCD carries a nearly 7 times P/S ratio, by far the highest levels over recent years.”

He’s not wrong. You can find better value at Wendy’s (NASDAQ:WEN), which trades at less than three times sales, but you’re not getting nearly as good a business.

In January of this year, I predicted that MCD stock would hit $200 in 2018. It’s come pretty close getting as high as $190 before settling down into the $180s.

In 2019, as McDonald’s continues to revamp its U.S. stores, I’m confident that the company will benefit from those renovations and digital initiatives, to generate strong same-store sales and net income growth.

So, unless a recession hits, $200 in 2019 is pretty much a done deal. 

As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.


Article printed from InvestorPlace Media, https://investorplace.com/2018/12/7-sp-500-stocks-to-buy-trading-within-10-of-an-all-time-high/.

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