Finance & Business

Feb 19 2020

Best stock sectors for 2019

Best stock sectors for 2019

Best <a target="_blank" title="stock" href="">stock</a> sectors for 2019-Best <a target="_blank" title="stock" href="">stock</a> sectors for 2019
Best stock sectors for 2019-Our analysts weigh in.

Roundtable: The Best Stock Out There

Our analysts weigh in.

Price is very, very, very, very important. Very.

Buying stock in even the best company at a terrible price leads to a poor investment. This is undeniable.

But even the best companies go on sale occasionally. So today, I asked some of our top analysts to name names, and reveal the top stocks on their wish lists, by answering this question:

If you could own stock in any company at a reasonable price, which company would you pick?

Here are their answers.

Matt Koppenheffer: Two words: Berkshire Hathaway (NYSE:BRK-B) . Of course, Berkshire Hathaway is currently at a reasonable price, and I already own it, so let’s move on.

I would, however, be all over Visa (NYSE:V) if the price were right. Though credit cards have gotten a bad name through the financial crisis, Visa — unlike American Express and Discover — is only involved in the best part of the business — charging companies for using its network. It’s like a toll road on steroids.

For me to start getting excited about the stock’s price, I’d like to see it at or below $60 a share.

Tim Beyers: If only I had listened to my instincts. Two years ago, at $22.82 a share, I bet on Netflix (NASDAQ:NFLX) in Motley Fool CAPS, but I never added the stock to my real-money portfolio. Stupid.

“Were Netflix on pace to never become anything more than a movie-rental business, I wouldn’t just be selling the stock — I’d be shorting it,” I wrote at the time. “Yet, thanks to its emerging Watch Now instant-viewing service, I see a far richer future for Netflix than others might.”

The stock has more than doubled since. Sigh.

I’d love to own Netflix, but not at present levels. Valuation isn’t my primary concern. Instead, I believe that a topsy-turvy market should give me a chance to buy at less than $45 a share, or 25 times trailing earnings. That’s a fair price given Netflix’s growth opportunity, which just got bigger thanks to a streaming deal with Nintendo for the Wii.

Morgan Housel: Hands down, it’d be Costco (NASDAQ:COST) . Very few companies have managed to sell at the lowest price humanly possible while remaining profitable like Costco has.

Here’s a rundown of its business model:

  • Sell for a hair above wholesale cost, just barely covering the warehouse’s operating expenses.
  • Make all your profit on membership fees.

You get a good view of this by breaking out parts of its income statement:





Net Margins from Sales

So all profits come from membership fees. This is important, because competition has to have an equally large membership force to compete with retail margins. You can’t just start from day one and compete with Costco. The only way smaller competitors can be as profitable is to sell at higher retail prices. That moat means not only large, but also safe profits for years to come.

Alex Dumortier: The company I’m looking at has a long pedigree in the public markets, and it’s been a great success story. Moreover, its prospects still look good, even though it is being overshadowed by higher-growth foreign competitors. How much would you pay for the stock, which has a 1.9% yield and expected EPS growth over the next 3-5 years of 10.7%? At 20.8 times its average inflation-adjusted earnings over the prior 10 years (cyclically-adjusted earnings), it looks richly priced at present.

Toby Shute: Setting aside valuation, and thinking about which businesses you’d want to own, is a fantastic starting point for any investor. From there, you can decide what price you’d pay for each security, and then just watch and wait for Mr. Market’s next tantrum. That’s admittedly easier said than done, since most of us have trouble just sitting still. (I personally use CAPS to scratch that itch.) Sometimes, though, you don’t have to wait long.

In January 2009, I wrote about one of the best industrial companies I’ve ever seen — Graco (NYSE:GGG) . I proceeded to buy shares from around $21 on down to $15-and-change as the market tanked. I completely exited my position by the summer, when Graco traded at more than $25 and I spotted opportunities elsewhere. I’m feeling more than a bit of seller’s remorse. I’d love to own this company again if I could get in around $20. Danaher (NYSE:DHR) and Rotork plc also make my industrial dream-team list.

Those are our dream stocks. After you’ve shared yours in the comments section below, take a look at the 10 top-performing stocks in the market.


Best stock sectors for 2019


Best stock sectors for 2019 Best stock sectors for 2019 Best stock sectors for 2019 Best stock sectors for 2019

Best stock sectors for 2019

Written by NSA

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