How I miss the NBC show, “30 Rock”. Suave exec Jack Donaghy asks head writer Liz Lemon if she watches CNBC. “No, CNBC gives me a headache. I get all my money advice from PBS.” Cut to Liz on sofa watching a cartoon fox asking, “Where should I put my money? Tech stocks or the housing market?” Liz jumps up and down screaming,”Tech stocks, Foxy Moneybags!! Tech stocks!!”
All I can say is a sotto voce, exasperated Donaghy-ism, “Good God, Lemon!”
Liz, like the 34% of women who don’t understand investing according to surveys and who think “Blerg,” whenever stock stories come on TV, you can easily put together a portfolio that’s less risky than your hapless love life and more dependable than your TGS stars Tracy Jordan and Jenna Moroney (fun clips here or below).
Where’s my mac n’ cheese?!
Liz, start off by buying a company you love. After you turned over the break room table screaming for your mac n’ cheese, it’s obvious you’re a fan of Kraft Foods Group Inc (NASDAQ:KRFT).
Kraft Foods hit a 52-week high on May 3 and offers a 3.90% yield. That’s very good, Liz. The consumer staple giant has a 19.31 P/E and a PEG of 3.08, somewhat high for a defensive stock.
The company just reported a solid Q1 on May 2, with growth of 2.1% in net revenue to $4.5 billion, operating income growth of 9.2%, and EPS of $0.76 with a $0.12 and $0.13 charge for restructuring charges and interest expense, respectively, after it split from Mondelez, the international part of the former Kraft. The company reaffirmed its guidance for the rest of 2013, expecting $2.75 in EPS and $1 billion in free cash flow.
Kraft Foods Group Inc (NASDAQ:KRFT) operates in five divisions: Beverage, Refrigerated Meals, Cheese, International & Foodservice, and Grocery, which includes your fave Kraft Macaroni and Cheese. Their brands are in 98% of American kitchens.
Tech stocks, Foxy Moneybags!
Liz, your staff uses Macs to write skits. Why not buy Apple Inc. (NASDAQ:AAPL) now that it pays a dividend?
Don’t be late to this party, Liz; Apple Inc. (NASDAQ:AAPL) gained back over 15% since its 52-week low of $385.10 and pays a 2.8% dividend at a 10.74 P/E. That’s very good as Foxy Moneybags would tell you, better than most big techs and at a 0.54 PEG, a bargain.
You know its iPhone, its iPods, iTunes, and iPads; and now it’s in the cloud. Get Jack to explain that to you. It also has the lowest (best) corporate governance risk rating of 1 and no debt.
Image: Apple Inc. (NASDAQ:AAPL)
I want to go to there!
Yes, that’s the famous line you uttered when you first saw Jon Hamm (sigh, me too) as your doctor neighbor. You know showbiz, Liz, and you just adopted two kids. You’re going to become intimately familiar with The Walt Disney Company (NYSE:DIS). It’s the biggest branding company globally and owns ABC, ESPN, the Disney channels, the travel destination parks, cruise line, and the movies whose lines you will know by heart.
Since you dressed as Princess Leia to avoid jury duty, you’ll be pleased to know Disney bought Lucasfilms and its Star Wars franchise. It also bought Marvel and all its characters. Marvel character action film “Iron Man 3” will likely be a blockbuster here, opening overseas to record box office numbers.
Disney has a 20.90 P/E with a 1.20% yield. It hit yet another 52-week high on May 2 of $64.85 for a 51% gain over the last year. Its operating margin is 20.74%. The only thing to consider is that The Walt Disney Company (NYSE:DIS) holds $17.46 billion in total debt to $3.21 billion in cash. Liz, you know better than anyone that entertainment companies run their business like this so it’s not a Dealbreaker.
What the what?!!
KableTown rationed flu shots for employees and you bristled at the unfairness, “What the what?!” Jack said, “Important people get better healthcare.” Ouch. What he should have said is it’s important to get a better healthcare stock and one of the best Big Pharma names is Pfizer Inc. (NYSE:PFE), maker of Viagra (that’s right) and many other drugs.
Compared to other Big Pharmas, Bristol Myers Squibb Co. (NYSE:BMY), Abbott Laboratories (NYSE:ABT), Merck & Co., Inc. (NYSE:MRK), and Johnson & Johnson (NYSE:JNJ), Pfizer has one of the lower P/Es at 14.92 and a yield of 3.20%. The company bought back $6.3 billion worth of shares year to date and that’s a good thing, Liz…. that shows it’s shareholder friendly and believes in itself.
Pfizer Inc. (NYSE:PFE) reported Q1 earnings on April 30 and disappointed mostly on lowering numbers due to foreign exchange, currency devaluation, and charges related to the Zoetis Inc (NYSE:ZTS) IPO. The company still owns an 80% stake in Zoetis Inc (NYSE:ZTS), its animal health unit, a cash cow (pun intended) for Pfizer. Pfizer slumped 4.5% after earnings but analysts still believe in it with a median price target of $32, which translates into an upside of 10%.
Finally, you want a sin stock. As KableTown’s company physician Dr. Spaceman told you, “Sounds like you need some R&R, Rum and Ritalin.” In that case, buy Diageo plc (ADR) (NYSE:DEO), the world’s largest producer of alcoholic beverages and based in the U.K. You know their products and you could use some foreign exposure. Diageo has a 1.8% yield and a 19.13 P/E.
Like most defensive stocks, Diageo plc (ADR) (NYSE:DEO) has run almost 20% over 52 weeks and the PEG at 2.11 is slightly stretched, but no worse than the industry average at 2.09. Buy in moderation, although with little strong competition except BEAM Inc (NYSE:BEAM) and SABMiller plc (LON:SAB) (mostly beer and wine), the company has a moat made of spirits around it.
I can have it all!!
Liz, you have it all: husband, career, and kids. Time to grow up and realize not investing is a Dealbreaker. These well known brands with good dividends and low volatility will let you sleep soundly while you dream of Cheezy Blasters, Mexican cheese curls, and Philly cheesesteaks.
AAPL Total Return Price data by YCharts
The article Turn a Lemon (Liz Lemon) of a Portfolio Into Lemonade originally appeared on Fool.com and is written by AnnaLisa Kraft.
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