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 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 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 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 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)
The 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 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)
McDonalds 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 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
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.
The 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!
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.