#12 Wal-Mart Stores, Inc. (NYSE:WMT)
Wal-Mart Stores, Inc. (NYSE:WMT) shares have fallen by 31.6% year-to-date due to competition from Amazon and rising labor cost concerns. Investors fear Wal-Mart Stores, Inc. (NYSE:WMT) will no longer be as relevant as it was before. They also fear the hot labor market and higher minimum wage laws will cut Wal-Mart’s operating margins. The worries may be a little too negative, however, as many smart money investors are still optimistic. Warren Buffett’s Berkshire Hathaway owned 60.39 million shares at the end of June, while Bill & Melinda Gates Foundation Trust, managed by Michael Larson, sported a position of 11.6 million shares at the end of the second quarter. Shares trade at a cheap valuation of 13.76 times forward earnings and pay a 3.4% dividend yield.
#11 Pfizer Inc. (NYSE:PFE)
Despite various blockbuster drugs coming off patent in recent years, Pfizer Inc. (NYSE:PFE) has continued to deliver healthy profits and solid dividends. Shares are up 11.93% year-to-date, as the company has beaten analyst earnings expectations for nine quarters in a row. Pfizer Inc. (NYSE:PFE) has historically done well through M&A (having acquired the full rights to Lipitor by acquiring Warner-Lambert in 2000), and could be on to something equally as big, having acquired Hospira, one of the world’s leading makers of biosimilars and injectable drugs and infusion technologies. The global biosimilar market is estimated to be worth $20 billion by 2020 and the global market for generic sterile injectibles is estimated to be as big as $70 billion by the end of the decade. The company is also considering acquiring Allergan to lower its taxes. With a forward P/E of 14.19 and dividend yield of 3.32%, Pfizer is one of the cheaper stocks on the market today.
Follow Pfizer Inc (NYSE:PFE)
Follow Pfizer Inc (NYSE:PFE)
#10 Amazon.com, Inc. (NASDAQ:AMZN)
‘Your margin is my opportunity’. Amazon.com, Inc. (NASDAQ:AMZN) became a $315 billion company it is today by putting consumers first and forsaking margins for market share. Working in low margin sectors has made Amazon.com, Inc. (NASDAQ:AMZN) super efficient, and has made it almost unstoppable in its quest to become the everything store. With membership programs such as Amazon Prime, the company has the loyalty of a large percentage of American consumers who go to Amazon first to check on e-commerce goods. Amazon’s efficiency and its customers’ loyalty will allow the company to expand into many different adjacent sectors successfully. Meanwhile Amazon Web Services (AWS) continues to dominate the fast growing cloud sector.
Billionaire Stanley Druckenmiller had this to say about AWS in a recent investor conference:
If you’re starting a business today, you don’t need a tech department, you don’t need a back office, you can use AWS. By the way, it’s just ripping to shreds the 10 or 15 consultants from IBM … that you used to need, but you don’t need because now you go into cloud
Druckenmiller believes AWS profit margins will increase substantially over the next few years as the division realizes more economies of scale. Shares of Amazon are up 116% year-to-date.
Follow Amazon Com Inc (NASDAQ:AMZN)
Follow Amazon Com Inc (NASDAQ:AMZN)
#9 Verizon Communications Inc. (NYSE:VZ)
Verizon Communications Inc. (NYSE:VZ) shares are an essential part of any dividend investor’s portfolio, as the telecom company has durable and predictable cash flows and yield a dividend of 4.85%. Although Verizon Communications Inc. (NYSE:VZ) shares have only appreciated 1.6% year-to-date, the stock trades for a reasonable 11.36 times forward earnings. Analysts have a $50.41 price target.
