10 Best Stocks to Buy for Investment
In this article, we take a look at 10 best stocks to buy for investment. If you want to see more best stocks to buy for investment, go directly to 5 Best Stocks to Buy for Investment.
While different people have different opinions on what the best stocks for investment are, a decent number of investors think the stocks of leading companies with substantial competitive advantages whose shares are generally less volatile could be good candidates.
Less volatile stocks generally don’t move as much as the broader stock market does because the future financial performance of less volatile stocks is arguably more predictable. There are certain times where less volatile stocks can be more volatile, however, such as during earnings.
Less volatile stocks include leading consumer staples whose demand doesn’t change all that much in more challenging economic times. Some less volatile stocks are conglomerates or have multiple leading brands. As a result of having multiple different businesses or multiple different brands, the overall company’s results might not change as much as the results of an individual business or individual brand do.
Many of the same leading stocks with generally lower betas also have fair growth prospects due to various reasons. For some companies, they might have decent growth potential in faster growing emerging markets such as India. For other companies, they might be repurchasing a lot of their stock. If a company buys back substantial shares and doesn’t issue any new shares, its EPS could grow even if its overall earnings stay the same.
Although they might have fairly predictable businesses, individual stocks might still underperform if a company makes a bad acquisition, for instance, or if its overall market demand isn’t as strong as expected. As a result, it could be a good idea for long term investors to have a well diversified portfolio of leading stocks across many different sectors.
In terms of 2023, many of the leading lower beta stocks have not rallied as much as the market has year to date. In some instances, the lower volatility stocks have declined year to date as individual company earnings have not be as strong as expected. Nevertheless, analysts do expect the leading consumer staples conglomerates mentioned in this article to grow in the long term.
New York Stock Exchange
For our list of 10 Best Stocks to Buy for Investment, we picked 10 stocks that have lower betas than the overall market and that have decent growth potential according to their EPS next 5 Year Ratio.
We ranked each of the 10 stocks based on their market capitalization as of 2/15.
For those of you interested, check out 10 Best Stocks to Buy for an 18 Year Old.
10 Best Stocks to Buy for Investment
10. The Clorox Company (NYSE:CLX)
Market Capitalization as of 2/15: $18.99 billion
EPS Growth Forecast Next 5 Years: 13.38%
Consumer staple The Clorox Company (NYSE:CLX) has a fairly high EPS growth forecast over the next 5 years of 13.38% because its trailing TTM EPS is relatively low. As a result of trailing twelve month EPS of $3.51, The Clorox Company (NYSE:CLX) has a P/E of 43.79 which is pretty high. Given analysts expect faster earnings over the next 5 years, The Clorox Company (NYSE:CLX) could eventually grow into its valuation and still be an attractive investment in the next 10 years. Shares are up 9.55% year to date and 7.54% in the last year.
Alongside The Procter & Gamble Company (NYSE:PG), Walmart Inc. (NYSE:WMT), and Johnson & Johnson (NYSE:JNJ), The Clorox Company (NYSE:CLX) is a low beta stock with decent EPS growth potential.
9. Church & Dwight Co., Inc. (NYSE:CHD)
Market Capitalization as of 2/15: $20.35 billion
EPS Growth Forecast Next 5 Years: 7.81%
Church & Dwight Co., Inc. (NYSE:CHD) is a consumer staple that owns well known brands such as Arm & Hammer. For full year 2022, the company’s net sales rose 3.6% year over year and its organic sales increased 1.4% year over year. Adjusted EPS was $2.97, a decline of 1.7% compared to 2021 adjusted EPS. Church & Dwight Co., Inc. (NYSE:CHD) shares are down 14.46% in the last year given the weaker results due in part to higher inflation. While Church & Dwight Co., Inc. (NYSE:CHD)’s earnings didn’t increase in 2022, analysts expect the company to earn $3.07 per share in 2023, $3.33 per share in 2024, and $3.60 per share in 2025.
8. Kimberly-Clark Corporation (NYSE:KMB)
Market Capitalization as of 2/15: $43.12 billion
EPS Growth Forecast Next 5 Years: 9.49%
Kimberly-Clark Corporation (NYSE:KMB) is a leading personal care corporation that makes paper based consumer products. In terms of its portfolio, Kimberly-Clark Corporation (NYSE:KMB) has five billion dollar brands that are sold in over 175 countries. In terms of its 2021, developing and emerging markets accounted for 30% of its net sales.
When it comes to organic sales growth, the company has averaged around 3% growth from 2019 to 2021. For 2022, Kimberly-Clark Corporation (NYSE:KMB)’s full year adjusted EPS declined 9% year over year to $5.63. In terms of outlook, the company expects net sales in 2023 to increase 0 to 2 percent including organic sales growth of 2 to 4 percent.
7. Colgate-Palmolive Company (NYSE:CL)
Market Capitalization as of 2/15: $60.72 billion
EPS Growth Forecast Next 5 Years: 6.02%
Colgate-Palmolive Company (NYSE:CL) is a leading consumer products company that makes toothpaste, mouthwashes, and more. In terms of the next 5 years, analysts expect Colgate-Palmolive Company (NYSE:CL) to grow its annual EPS on average by 6.02%. Specifically, analysts expect the company’s EPS to increase from $2.97 in 2022 to $3.11 in 2023, $3.40 in 2024, and $3.70 in 2025. Colgate-Palmolive Company (NYSE:CL) shares have a dividend yield of 2.59% as of 2/15.
6. Unilever PLC (NYSE:UL)
Market Capitalization as of 2/15: $130.31 billion
EPS Growth Forecast Next 5 Years: 6.9%
Unilever PLC (NYSE:UL) is a leading household and personal products company whose underlying sales rose 9% in 2022. For the year, the company’s underlying earnings per share decreased 2.1% year over year, however, to €2.57. During 2022, the company bought back €1.5 billion worth of shares and also paid €4.3 billion in dividends. For 2022, Unilever PLC (NYSE:UL) added, “Unilever delivered a year of strong topline growth in challenging macroeconomic conditions. Underlying sales growth was 9.0%, driven by disciplined pricing action in response to high input cost inflation. Growth was broadbased across each of our five Business Groups, led by strong performances from our billion+ Euro brands. Despite sharp rises in material costs, we have prioritised stepping up our brand and marketing investment. Underlying operating margin was delivered in line with our guidance, with underlying operating profit up for the year.”
Unilever PLC (NYSE:UL) shares are up 2.44% year to date and have a dividend yield of 3.49% as of February 15.
Like Unilever PLC (NYSE:UL), The Procter & Gamble Company (NYSE:PG), Walmart Inc. (NYSE:WMT), and Johnson & Johnson (NYSE:JNJ) are low beta stocks with decent EPS growth potential.
5. McDonald’s Corporation (NYSE:MCD)
Market Capitalization as of 2/15: $195.23 billion
EPS Growth Forecast Next 5 Years: 7.3%
McDonald’s Corporation (NYSE:MCD) is a leading fast food restaurant chain whose stock has rallied 5.2% in the last year and 1.15% year to date. In 2022, the company’s global comparable sales rose 10.9% year over year, with U.S. comparable sales rising 5.9% year over year and the company’s international operated markets segment comparable sales rising 13.3% year over year. McDonald’s Corporation (NYSE:MCD)’s systemwide sales rose 5% year over year. McDonald’s Corporation (NYSE:MCD) free cash flow was $5.488 billion for 2022, down from $7.102 billion in 2021.
4. PepsiCo, Inc. (NASDAQ:PEP)
Market Capitalization as of 2/15: $242.41 billion
EPS Growth Forecast Next 5 Years: 7.55%
PepsiCo, Inc. (NASDAQ:PEP) is a beverage and snack giant whose shares have more than doubled from early 2013 thanks to the company’s strong brands and decent organic growth. In the last year, PepsiCo, Inc. (NASDAQ:PEP) stock has risen 5.58% despite inflation headwinds as the market anticipates EPS growth in the future.
3. The Procter & Gamble Company (NYSE:PG)
Market Capitalization as of 2/15: $327.83 billion
EPS Growth Forecast Next 5 Years: 5.07%
The Procter & Gamble Company (NYSE:PG) is a consumer staple conglomerate whose stock has declined 8.31% year to date given various headwinds. For the second quarter of its fiscal year, The Procter & Gamble Company (NYSE:PG) had core EPS of $1.59 per share on sales of $20.8 billion, versus the consensus of $1.59 per share on revenue of $20.73 billion. Q2 gross margin declined 160 basis points versus one year ago.
The Procter & Gamble Company (NYSE:PG) CEO Jon Moeller said, “We delivered solid results in the second quarter of fiscal year 2023 in what continues to be a very difficult cost and operating environment. Progress against our plan fiscal year to date enables us to raise our sales growth outlook for fiscal 2023 and maintain our guidance range for EPS growth despite significant headwinds. We remain committed to our integrated strategies of a focused product portfolio, superiority, productivity, constructive disruption and an agile and accountable organization structure. These strategies have enabled us to build and sustain strong momentum. They remain the right strategies to navigate through the near-term challenges we’re facing and continue to deliver balanced growth and value creation.”
With a market capitalization of $327.83 billion, The Procter & Gamble Company (NYSE:PG) ranks #3 on our list of 10 Best Stocks to Buy for Investment.
2. Walmart Inc. (NYSE:WMT)
Market Capitalization as of 2/15: $395.27 billion
EPS Growth Forecast Next 5 Years: 4.34%
Walmart Inc. (NYSE:WMT) is a retail giant that analysts expect will increase its EPS by an average of 4.34% annually over the next 5 years. One potential reason for the expected EPS growth is that the company’s board announced a new up to $20 billion share buyback authorization in November 2022. In recent quarters, Walmart Inc. (NYSE:WMT) has also benefited from more consumers shopping at its stores given the higher inflation. As of February 15, Walmart Inc. (NYSE:WMT) has a forward P/E ratio of 22.55 and a dividend yield of 1.53%.
1. Johnson & Johnson (NYSE:JNJ)
Market Capitalization as of 2/15: $416.67 billion
EPS Growth Forecast Next 5 Years: 3.89%
Healthcare giant Johnson & Johnson (NYSE:JNJ) ranks #1 on our list of 10 Best Stocks to Buy for Investment given its market capitalization of $416.67 billion as of 2/15. Analysts expect Johnson & Johnson (NYSE:JNJ) to grow its EPS by an average of 3.89% a year in the next 5 years with consensus estimates of $10.51 per share in 2023, $10.89 per share in 2024, and $11.28 per share in 2025. As of 2/15, Johnson & Johnson (NYSE:JNJ) has a forward P/E of 14.59 and a dividend yield of 2.84%.
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Biden issues his first veto on retirement investment resolution – CNN
President Joe Biden issued the first veto of his presidency Monday on a resolution to overturn a retirement investment rule that allows managers of retirement funds to consider the impact of climate change and other environmental, social and governance factors when picking investments.
Republican lawmakers led the push to pass the resolution through Congress, arguing the rule is “woke” policy that pushes a liberal agenda on Americans and will hurt retirees’ bottom lines, while Democrats say it’s not about ideology and will help investors.
The resolution, which would rescind a Department of Labor rule, passed both chambers of Congress with Democratic Sens. Joe Manchin of West Virginia and Jon Tester of Montana voting with Republicans in the Senate.
“I just signed this veto because legislation passed by the Congress would put at risk the retirement savings of individuals across the country. They couldn’t take into consideration investments that wouldn’t be impacted by climate, impacted by overpaying executives, and that’s why I decided to veto it – it makes sense to veto it,” Biden said in a video posted to social media Monday afternoon.
Biden is seen signing the veto in the video, taken in the Oval Office earlier Monday.
The veto makes good on Biden’s frequent promise to veto legislation passed by the GOP-controlled House he disagrees with. Even before Republicans took control of that chamber, Biden often mentioned his ability to nix their priorities. “The good news is I’ll have a veto pen,” he told a group of donors in Chicago just days before November’s midterm elections.
Opponents of the rule could try to override Biden’s veto, but at this point it appears unlikely they could get the two-thirds majority needed in each chamber to do so.
Biden’s first presidential veto reflects the reality of a changed political order in Washington with Republicans now in control of the House after they won back the chamber from Democrats in the 2022 midterm elections.
Previously, Democrats controlled both the House and the Senate. Now, the president’s party only has a majority in the Senate.
Most legislation passed by the current GOP-controlled House will not be able to pass the Democratic-controlled Senate. But the resolution to overturn the investment rule only needed a simple majority to pass in the Senate. Republican lawmakers advanced it under the Congressional Review Act, which allows Congress to roll back regulations from the executive branch without needing to clear the 60-vote threshold in the Senate that is necessary for most legislation.
Opponents of the rule have argued that it politicizes retirement investments and that the Biden administration is using it as a way to promote a liberal agenda.
Republican Sen. John Barrasso of Wyoming said at a news conference earlier this year, “What’s happened here is the woke and weaponized bureaucracy at the Department of Labor has come out with new regulations on retirement funds, and they want retirement funds to be invested in things that are consistent with their very liberal, left-wing agenda.”
Supporters of the rule argue that it is not a mandate – it allows, but does not require, the consideration of environmental, social and governance factors in investment selection.
Senate Majority Leader Chuck Schumer said in defense of the rule that Republicans are “using the same tired attacks we’ve heard for a while now that this is more wokeness. … But Republicans are missing or ignoring an important point: Nothing in the (Labor Department) rule imposes a mandate.”
“This isn’t about ideological preference, it’s about looking at the biggest picture possible for investments to minimize risk and maximize returns,” he said, noting it’s a narrow rule that is “literally allowing the free market to do its work.”
The statement of administration policy warning that Biden would veto the measure if presented with it similarly states, “the 2022 rule is not a mandate – it does not require any fiduciary to make investment decisions based solely on ESG factors. The rule simply makes sure that retirement plan fiduciaries must engage in a risk and return analysis of their investment decisions and recognizes that these factors can be relevant to that analysis.”
This story has been updated with additional developments.
Exclusive-Credit Suisse tells staff plans for investment banking to be informed later -memo – Yahoo Canada Finance
By Engen Tham and Julie Zhu
SHANGHAI/HONG KONG (Reuters) -Credit Suisse told staff its wealth assets are operationally separate from UBS for now, but once they merged clients might want to consider moving some assets to another bank if concentration was a concern, according to an internal memo.
The memo, dated Sunday and seen by Reuters, gave talking points to Credit Suisse staff for client conversations after a historic Swiss-backed acquisition of the troubled bank by UBS Group.
“For now, assets are still legally separated. Once that changes, you (clients) may of course want to consider moving some of your assets to another bank if concentration is a concern,” the memo said.
That response was suggested to Credit Suisse staff if they were asked by clients what they should do if they were also a UBS client and wanted to avoid too much asset concentration, which can be a concern for wealthy customers.
In a package orchestrated by Swiss regulators on Sunday, UBS will pay 3 billion Swiss francs ($3.23 billion) for 167-year-old Credit Suisse and assume up to $5.4 billion in losses.
UBS will become the undisputed global leader in managing money for the wealthy through the takeover of its main rival, triggering some concerns about concentration risks for clients.
Credit Suisse also told staff to inform clients that plans for its investment banking business will be communicated in due course as details of its acquisition by UBS were still being worked out, according to the memo.
“We do not expect there to be any disruption to client services. We are fully focused on ensuring a smooth transition and seamless experience for our valued clients and customers,” a Credit Suisse spokesperson said.
Credit Suisse is also going ahead with its annual Asia Investment Conference in Hong Kong, starting on Tuesday, the spokesperson said, adding the event, however, would now be closed to media.
In a separate memo on Sunday, the bank told employees that its day-to-day operations were unaffected after it agreed to the UBS takeover.
“Our branches and our global offices will remain open, and all colleagues are expected to and should continue to come to work,” Credit Suisse said in the memo sent globally and seen by Reuters.
Reuters reported on Friday, citing sources, that a number of major banks including Societe Generale SA and Deutsche Bank AG were restricting new trades involving Credit Suisse or its securities.
Regarding counterparties having stopped business with Credit Suisse, the bank said in the client talking points memo that it believed the transaction “will help to restore confidence to the financial markets more broadly.”
Market players remain concerned about the next moves at Credit Suisse and the impact on employees, investors and clients.
UBS Chairman Colm Kelleher told a media conference that it would wind down Credit Suisse’s investment bank, which has thousands of employees worldwide. UBS said it expected annual cost savings of some $7 billion by 2027.
(Reporting by Engen Tham in Shgnghai and Julie Zhu in Hong Kong; Additional reporting by Scott Murdoch in Sydney; Editing by Sumeet Chatterjee, Himani Sarkar and Jamie Freed)
Enbridge: Investment Grade Company Offering 7.6% Bond (NYSE:ENB)
Author’s note: All financial data in this article is presented in Canadian dollars.
Enbridge Inc. (NYSE:ENB), a North American energy transportation and distribution giant is currently finding itself near a 52-week low. Income investors may see the rising dividend yield, now at 7.1%, as a reason to scoop up shares. Interestingly, Enbridge has an extensive offering of corporate debt, and the longest dated maturity of 2083, is currently priced below par and offering a yield of greater than 7.6%. While many high yield investors may not be interested, it’s important to note that Enbridge holds an investment grade credit rating, which typically offers fixed income returns of almost 200 basis points lower.
Enbridge’s operation continued to grow in 2022 with revenues up $6 billion from 2021. The company’s expenses outpaced revenue growth, but that was mainly due to the $3 billion write off of assets and intangibles. Had the write offs not occurred, operating income would have been higher in 2022 than in 2021, but nevertheless, the $5.2 billion in operating income was sufficient to cover the company’s interest expenses.
While earnings of Enbridge looked healthy last year, the balance sheet tells a slightly different story. The business increased its total debt by more than $5 billion and shareholder equity declined by $1 billion. The company did succeed in building up some cash, but its current liabilities are $8 billion higher than current assets. This working capital deficit will likely lead to new debt issuance or refinancing in the next 12 months.
From a cash flow standpoint, debt investors need to see that Enbridge can generate the cash needed to pay down debt. In 2022, Enbridge grew operating cash flow by $2 billion and generated an impressive $6.6 billion in free cash flow. If Enbridge generated so much cash, why did debt increase in 2022? The answer lies in a combination of investing and financing activities. Enbridge invested $2 billion in investments and acquisitions that were not related to capital expenditures. On top of that, the company shelled out $7.3 billion in preferred and common share dividends, and redeemed $1 billion in preferred shares. The culmination of these activities led to the company needing to borrow more than $3 billion. (Note: I believe $2 billion in additional debt was placed on the balance sheet from other investing activities)
Under Enbridge’s current operating structure, additional capital is needed by either borrowing or selling assets to maintain the common share dividends. While the dividends on the preferred shares are very safe, they are actually yielding less than the coupon yield on the 2083 notes. Investors in long-term debt of Enbridge are getting a safer security for more income.
Complicating Enbridge’s future further is the fact that the company has over $14 billion worth of debt maturing over the next 2 years. The need to refinance this debt in a higher interest rate market combined with a working capital deficit is going to put pressure on the dividend. Enbridge may have to choose between its existing dividend and maintaining its credit rating. Fortunately for debt holders, the company does have over $9 billion in liquidity to work with among its existing credit facilities.
Even if Enbridge is downgraded into junk territory, the company’s 2083 notes are still trading at a higher return than the benchmark BB corporate yield. As in any case in life, there is a catch to what may be considered a “too good to be true” trade. These long term notes were underwritten with an automatic conversion covenant. In the event of a bankruptcy or related event of insolvency, the 2083 bonds would be automatically converted into preferred shares. This strange provision is the likely contributor behind the higher return on the notes.
While swings and uncertainties in the energy markets over the next several years could greatly change the risk landscape for Enbridge, I believe the company’s strong free cash flow makes it capable of weathering bear markets. Should the company need additional cash flow, it could reduce common share dividends and not impair the value of its bonds.
Note: These notes are not available with all brokerage sites, but they have been traded in increments as low as $5,000, therefore they are available to retail holders.
Maturity Date: 01/15/2083
Yield to Maturity: 7.63%
Credit Rating: (Moody’s/S&P): Baa3/NR
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