10 Stocks For 2012 (& Beyond)

If I were to pick stocks just for 2012, I would be speculating. I prefer stocks for the long term. My top picks for the coming year is not just for 2012, I would like to hold on to most of it even if the returns are less than spectacular.

These companies have weathered disappointing times before and I believe they can going forward as well.

Although, I am staying away from technology and financial stocks. With technology stocks, it is hard to predict where the next Steve Jobs will emerge from and with financials, it is hard to tell who is cooking the books or which way the feds might sway.

My top picks for 2012 and beyond:

Unilever N.V. (UN)
Unilever logoUnilever is a supplier of consumer goods dealing with packaged foods, household and personal care products. Unilever products are used in over 180 countries with more than 50% of their sales coming from emerging markets. Popular brands include Dove soap, Lipton teas and TRESemme hair care products.

I like Unilver’s breadth of products and its exposure to emerging markets. If we are going to bet on emerging markets, Unilever has had a headstart.

Walmart Inc. (WMT)
Walmart logoWalmart is the world’s largest retailer employing over 2.1 million people worldwide. Walmart operates in over 28 countries under 60 different banners and topped $400 billion in revenues last year.

Though the times are tough, I like Walmart’s ability to negotiate prices down with suppliers. Walmart’s aggressive push into emerging markets adds to its strength. Although the India deal fell through, I think it is only a temporary setback. Walmart has an EPS of 4.44

Altria Group, Inc. (MO)
Altria logoAltria is a holding company that operates through its subsidiaries Philip Morris USA, for the manufacture and sale of cigarettes, John Middleton Co, for the manufacture and sale of cigars and pipe tobacco, UST LLC for the manufacture and sale of wine and certain smokeless products and Philip Morris Capital Corporation with its portfolio of leveraged and direct finance leases. Altria also holds 27.1% economic and voting interest in SABMiller Inc.

Even though there will always be the dual threats of litigation and regulation, Altria also has the advantage of being in a segment very few can enter. Its diversified portfolio of products, many of which are market leaders, puts Altria in a very strong position.

Nestle S.A. (NSRGY)
Nestle logoNestle is the world’s largest food company operating in the nutrition, health and wellness sectors. With over 6000 brands and operations is almost every country in the world, Nestle’s sales were around 109 Billion (CHF) in 2010.

Nestle diverse portfolio of products, many of which are market leaders in its category, combined with its reach across the world gives it a distinct advantage over its competition. A stock to own for the long haul.

The Coca Cola Company (KO)
Coca Cola logoThe Coca Cola Company is the world’s largest maker of non alcoholic beverages, it’s most famous brand being the Coca Cola carbonated drink. Coke products are sold in over 200 countries and employs over 139,000 people worldwide.

There are very few countries where Coca Cola doesn’t have a presence. There has even been an effort to get Coke into North Korea!

Exxon Mobil Corporation (XOM)
Exxon Mobil logoExxon Mobil is one of the largest publicly traded corporations in the world by market cap. The company primarily engages in the exploration, production, distribution and sale of natural gas and crude oil. With operations in 21 countries, Exxon Mobil employs over 82,000 people worldwide.

If I’m going to bet on energy companies, I might as well bet on the largest!

McDonald’s Corporation (MCD)
McDonald's logoMcDonalds manages and operates more than 33,000 fast food franchises around the globe. It employs 1.7 million people in 119 countries. McDonald’s is the second largest fast food chain in the world.

McDonald’s stock has rewarded investors very well. A dollar invested at the beginning of the lost decade would’ve appreciated more than 54% towards the end of the decade. In addition, McDonald’s has increased its dividends every year since it started paying dividends in 1976.

Vodafone Group Plc (VOD)
Vodafone logoVodafone is a British telecommunications company with over 340 million mobile subscribers worldwide. It has a network reach in over 70 countries either directly managed or via its partners. Vodafone owns 45% of Verizon in the US.

Among global telecom providers, Vodafone is my favorite. It’s global reach makes Vodafone an attractive long term investment

Colgate Palmolive Company (CL)
Colgate Palmolive logoColgate Palmolive is known for its popular toothpastes marketed under the Colgate name. But Colgate also manufactures shampoos, gels, detergents and shaving products.

The firm also caters to the pet nutrition segment through its subsidiary Hill’s. Colgate products are sold in over 200 countries and employs over 39,000 people worldwide.

A majority of Colgate’s sales comes from outside of the US. It has a healthy profit margin and excellent track record. Though competition has been fierce lately, I’m sure Colgate will prevail.

Gold
Gold coinsThe insatiable demand for gold from emerging markets like India and China will keep gold bugs happy for a long time. I consider Gold as a hedge. If we have another lost decade, this precious metal should do quite well. Market uncertainty feeds into this asset.

If we have a period of prosperity, Gold could swing either way depending upon how consumers in India and China react.

Either way, a little bit of gold shouldn’t hurt!

Closing thoughts
The stocks above don’t necessarily follow a theme or mean’t to provide diversification. In my opinion, stable low beta, defensive stocks are better positioned to smooth out market turbulences and provide investors some stability especially during these trying times.

Disclosure: Long on all stocks mentioned above.


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48 thoughts on “10 Stocks For 2012 (& Beyond)

  1. MC, you have the right idea, buying good companies is not an annual event though it’s good copy. I own a few of these, I would be cautious about buying them now they have all run up a lot.

    sfi

    • Thanks SFI. Some of the companies are slightly above my comfort level of 15 p/e, but my point was not to time the purchase. (None of them have crazy valuations either – remember McDonald’s during the dotcom boom with a P/E of over 75?)

      For the long term, I believe in these companies and their ability to reward investors.

      In fact starting 2012, I will be tracking the progress of these stocks. I haven’t put up the page yet – working on it.

    • Also SFI, you should read this post where I *do* time my purchases – I picked a date, the worst possible date, when the market was at its peak, to purchase low beta, defensive stocks and you would come out a winner even during the lost decade.

      http://www.moneycone.com/15-stocks-to-survive-anothe-lost-decade/

      Not the same stocks, but there are some repeats.

  2. These are all great stocks and congrats for owning them. They also pay dividends which is a great way to make money even if the market itself is treading water or declining.

  3. I am moving toward more dividend paying stocks, but I will do it through mutual funds.

  4. Good selection. I definitely agree that a long term view is important.

    • Whenever I add to any of these stocks, it doesn’t bother me if the markets are up or down the next day. One nice side effect of investing for the long term!

  5. all large cap and constantly performing stocks. I have KO, MO and MCD. Very satisfied with MO specially, given the 2011 performance. A gold or any other precious metal should add to the diversity in the portfolio, won’t hurt and acts like hedge. Good pick.

  6. Good stock selections, MC. Consumer staple Dividend-paying blue chips are an excellent defensive move if we have another sideways decade. I like Unilever quite a bit, and the chunky div helps the like.

  7. These are all definitely much better choices than the penny stock rush that I got in when I had a little cash to blow. I will definitely keep these in mind when I’ve got investing – who can go wrong with Hellmann’s Mayo? :)

  8. Hey MC,
    I see a lot of dividend-paying, blue chips with large global presences on your list. That’s definitely solid. I completely agree with your long-term investment strategy. It doesn’t necessarily make for an “exciting portfolio,” and that’s the point :)

  9. I’m not a big stocks guy, but whenever I see stock picks, I typically assume that the recommendations will be companies I’ve never heard of. But it’s interesting to me that I already knew all of these companies.

    I’m still a bit nervous on the gold, but the bubble hasn’t burst yet so looks like a good investment for now.

    • I’ve been doing a lot of backtesting Jeffrey and the more time I spend the more I’m convinced on the the potential of stable, defensive stocks.

  10. I like KO and MCD. They have been very good to dividend investors and I’ll try to buy a few shares in the 2012. Nice picks.

  11. You have selected high quality stocks here MC. I like companies with a strong history of positive cashflows and consistent dividend increases. Nothing conveys strength like a dividend. KO is my sentimental favorite. I appreciate you comments about Altria. But, I have no doubt there will always be a hardcore 20-25% of the population that chooses to smoke, despite the documented health risks.

  12. I’ve owned Altria for some time (Vector group as well); nice dividend yield for a flat market. As far as gold, I have to wonder if it’s seen its brightest days. With all the recent developments that should have caused gold to rally (Iran, Russia turmoil, EU collapsing, etc), gold hasn’t budged – it’s lost value in fact. Is this a sign of the bubble deflating?

    • You are right on Gold Darwin. I see Gold as a hedge. If we have good times ahead, gold will fall. Another lost decade and period of uncertainty, gold will continue its momentum.

      Gold and the rest of my picks have an inverse co-relation.

  13. Large cap, dividend paying stocks mostly I guess. I would like to start some stock investing (I have a couple but only to a hobby level). 2011 we mostly invested in dividend paying mutual funds. 2012 I might concentrate more on individual stocks, at the very least to learn more about stock picking.

  14. What do you think about IBM? I think IBM will do well in the future.

    • Buffett gave it a thumbs up recently! As I mentioned I’m keeping out of technology and financial stocks. IBM is a great company and they transitioned nicely from a technology company to a technology/services/consulting company.

      • You are absolutely right about IBM. In order to survive, many other companies are going through this transition and into other industries. Did you know even he defense contractors like LMT and NG are getting into health services and civil sector?

  15. When I look at this list my ethics and values come into play. Sure some these companies are real money makers and would be good to invest in but when I think of what they stand for, I don’t think I can swallow it. For example, I hate how Walmart drowns out local businesses. I hate how McDonald’s supports an unsustainable and unmoral food industry. My conscience outweighs my desire to make money.

    • I respect that Miss T.

      Align your values with your investments. There are some companies I won’t touch (Monsanto, Dow Chemicals, Haliburton etc.), since they don’t align with my values.

      Your conscience is your best advisor.

  16. Robert @ The College Investor says:

    Those are some great picks. I’m bearish on gold, but everything else is solid. Keep us updated all year!

  17. Well rounded portfolio lineup. I used to own Walmart and also Target but I had no idea what I was doing at the time so I ended up selling them both at a loss. I didn’t know McD’s employs that many people worldwide, wow. Hopefully they will continue to roll out healthier + affordable menu items! -Sydney

    • India and China with a population of over 2 billion, is a huge growth opportunity for McDonald’s. If MCD plays this right, this could be quite rewarding for investors.

  18. Great picks MC! Blue chips and dividend stocks. I really need to look more into these. I’m shocked that MCD is only the second largest fast food chain, what’s the first?

  19. Great picks! I was looking at some of the bigger money-making companies last year, but I passed them over for General Mills. I may revisit others in the new year. Good luck with your picks!

  20. I am long WMT as well so I agree with you on that one. After the turbulent markets this year, I needed a steady stock to balance things out.

  21. Great picks here MC. I’m long 6 of them and like the future prospects of all these companies. Although some of them have been bid up a bit lately, especially MCD, there is still value here for the long-term. And you have to focus on the long-term…like 10-20 years out.

    Best wishes for your 2012!

  22. Interesting picks. Thank you for the suggestions. This will be the first year I buy dividend stocks rather than dividend mutual funds. I think I will also hold onto Apple a little longer.

  23. Hope these socks will perform according to the indications as they shows in the business and deals behind the scenes.

    It’s not necessary all will return as our expectations and hence we all should also keep watching at the updates they gives out via media.

  24. Looks like a dividend investor’s portfolio. All good, solid companies. I’d probably replace MO with PM, and argue that KO and MCD are very richly priced….. maybe PEP as a replacement for KO, and maybe DRI for MCD…..

  25. Hi there, I have recently did a bit of analysis on Big Oil companies and published it on my blog.
    ExxonMobil paid the lowest dividends among them.
    Why are you bullish on it?

  26. I like most of them… beside gold!
    I would rather buy a company that is selling or digging gold than simply the yellow metal. Over a long period of time, gold has never been doing better than the inflation.

    What do you think of companies that set their dividend payouts according to the price of gold? like Newmount?

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