When writing for InvestorPlace, I like to cover stocks of all different prices.
Search for stocks to buy under $10, and you get no less than three articles written by some of InvestorPlace’s writers just in the past few weeks alone.
I’m pretty sure there’s even an article or two for stocks over $1,000 a share.
Running out of ideas revolving around stock prices, I did a screen of stocks trading at $250 or higher. To my surprise, I came up with a list of 87 stocks that have a stock price above $250 and a market capitalization greater than $2 billion.
That gives me plenty of options for creating my very own portfolio of seven $250 stocks to buy.
Of course, for most investors except the Warren Buffetts of the world, it’s going to mean buying just a few shares of each company.
However, thanks to the proliferation of fractional share buying, the task is much easier.
$250 Stocks to Buy: Sherwin-Williams (SHW)
Representing the basic materials sector, Sherwin-Williams (NYSE:SHW) has traded above $250 since December 2014. Since then, it’s gained 131% through Dec. 17. Year-to-date, it has a total return of 46%.
InvestorPlace analyst Louis Navellier recommended SHW stock in his November article about five fast-growing stocks to buy. Navellier believes that Sherwin-Williams ought to keep growing its sales — it increased revenues from $400,000 in 1866 to more than $15 billion in 2018 — now that the housing market is back on track.
Not coincidentally, in July 2018, I called SHW one of seven stocks to buy over $200.
At the time, I argued that its purchase of Valspar would make the combination an unbeatable force. The same thought holds as we enter 2020.
Generating $1.9 billion in free cash flow over the trailing 12 months, it has a current FCF yield of 3%.
Representing the consumer goods sector, Apple (NASDAQ:AAPL) has only traded above $250 since October, making it an excellent addition to the group of $250 stocks to buy.
Of course, one probably forgets that AAPL traded above $250 once before. In June 2014, the company gave shareholders six new shares of stock for every share of AAPL already held. The split was done to ensure Apple’s inclusion in the Dow Jones Industrial Average.
Since its stock split in 2014, AAPL stock is up a whopping 221%. Year-to-date, it’s generated a total return of 77%.
While it’s true that Apple finished the decade that was the 2010s without a significant success story like the iPhone, it did have several little victories, including the Apple Watch, AirPods, Apple TV and most importantly, a services business that generates tons of sticky, recurring revenue.
Also, unlike Mark Zuckerberg at Facebook (NASDAQ:FB), Apple CEO Tim Cook has paid attention to privacy, and that could help it remain the largest public company in the world by market cap.
Generating $58.9 billion in free cash flow over the trailing 12 months, it has a current FCF yield of 4.7%.
SVB Financial (SIVB)
Representing the financial sector, SVB Financial (NASDAQ:SIVB) could just as easily be a part of the tech sector, given many of its loans are for up-and-coming businesses in the tech sector.
As for joining the $250 club, it first joined in January 2018, before backsliding late in the year with the rest of the financials. However, you can’t keep a good stock down. It’s up 34% year-to-date, providing long-time shareholders with an excellent bounce-back effort.
SVB Financial has been my favorite U.S. bank stock for some time.
I first recommended it for InvestorPlace readers in December 2013, calling it one of the five best stocks to buy for the next 20 years. Since then, it’s gained 147% with only a couple of hiccups along the way.
If you’re looking for a good way to leverage technology and life sciences stocks without the volatility, SIVB is a great alternative. Also, if you compare Silicon Valley Bank with the five largest American banks, you will see that its net interest margin of 3.3% is significantly higher than all of them.
You won’t go wrong owning SIVB. Hopefully, it will someday become a member of the $500 club.
Intuitive Surgical (ISRG)
Representing the healthcare sector, Intuitive Surgical (NASDAQ:ISRG) has been a member of the $250 club since March 2017. Since then, ISRG is up 133%. Year-to-date, it’s underperforming with a total return of 24%, 700 basis points less than the total U.S. market.
Intuitive, if you aren’t aware of the company, manufactures robotic surgical systems under the da Vinci brand name. With over 5,000 of the systems installed worldwide, it is the undisputed champion of high-tech surgical procedures.
That’s why I recently called it one of the 10 best stocks to buy for the next 50 years.
However, in a somewhat similar fashion to Apple, some believe that ISRG is a one-trick pony that needs to develop a new product beyond da Vinci. To that end, Intuitive intends to spend almost 12% of its revenue in 2020 for research and development. That’s up from less than 9% in 2016.
It generated $1 billion in free cash flow over the trailing 12 months for an FCF yield of 1.5%, which isn’t half bad considering it’s got a three-year annualized growth rate for net income of 24%.
Lennox International (LII)
Representing the industrial goods sector, Lennox International (NYSE:LII) is a new member of the $250 club, joining in March of this year. Dropping under $250 in the fall, it’s now comfortably back above this all-important mark.
Year-to-date, it’s got a total return of 10%, which is less than the markets as a whole. However, over the long haul, you can’t go wrong with LII stock. It has a 10-year annualized total return of 21%.
Lennox specializes in heating and cooling systems for both residential and commercial customers, Chances are good you own one of its HVAC units in your home or office.
The company continues to be excellent at allocating capital.
It tends to generate free cash flow equal to or above net income. Any free cash flow is used for share repurchases and dividends. In the first nine months of its fiscal year ended Sept. 30, Lennox paid out $80.9 million in dividends and repurchased $400 million of its stock.
Not much has been said about Lennox by InvestorPlace contributors in recent years. However, Navellier did recommend the mid-cap stock in an April article, suggesting that a healthy U.S. economy should help generate sales in the future.
Generating $280 million in free cash flow over the trailing 12 months, it has a current FCF yield of 2.4%.
The services sector provided the toughest choice for stocks to buy over $250.
I easily could have selected five others, maybe more. In fact, it might not be a bad idea to do an entire article focused on services stocks trading over $250 because there are 19 with market caps over $2 billion.
Costco (NASDAQ:COST) came close to hitting $250 on two occasions earlier this year (April and May) before breaking through in June. Since then, it’s gained 18% on its way to $300. Year-to-date, it has a total return of 45%, significantly higher than the markets as a whole.
The company reported first-quarter 2020 results on Dec. 12. Despite beating the estimate for earnings per share, COST stock fell on lower-than-expected sales in the quarter.
Frankly, when you’re building an excellent e-commerce business that no one expected you to be able to deliver, a miss of $290 million on $37 billion in sales is not a big deal.
Furthermore, Costco’s single store in China already has 200,000 members, and it only opened in August. For comparison, the average store has 68,000 members. Costco’s doing just fine.
Generating $3.4 billion in free cash flow over the trailing 12 months, it has a current FCF yield of 2.6%.
Alphabet (GOOG, GOOGL)
Representing the tech sector, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has traded above $250 consistently since August 2011. It is the elder of the $250 club. Since going over $250, GOOGL stock has generated a 442% (22.5% CAGR) cumulative return.
Of course, not many investors would be surprised to hear this, given Google’s hold on the digital advertising market. Between it and Facebook, the two companies rule the advertising business.
Recently, InvestorPlace contributor Will Healy made the case that Alphabet stock is even more valuable now that co-founders Larry Page and Sergey Brin have stepped away from the business, leaving Google CEO Sundar Pichai in charge of all the company’s various businesses.
He believes one of the first moves the new CEO will undertake is to eliminate Alphabet’s conglomerate structure. For example, the GOOGL stock price doesn’t fully reflect the estimated $175-billion value of Waymo, its self-driving vehicle unit. And that’s just one example.
Ultimately, Google could become even more valuable under Pichai’s leadership. I would tend to agree with that assessment.
Generating $28.1 billion in free cash flow over the trailing 12 months, it has a current FCF yield of 3.4%.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.