Breakout

5 Large Cap Stocks to Ride Out the Uncertainty

Breakout

Amidst all the sturm und drang* surrounding the dismal economic picture it's easy to forget that successful investing ultimately comes down to buying the right stocks at a good price. The trick is figuring out which companies those are. Since there's no surefire way to go about uncovering great stocks, Breakout stuck with the time-honored technique of letting a smart guy pick some stocks then argue about them with a meat-head like me.

In today's clip Bob Pavlik, the chief market strategist at Banyan Partners is in the role of insightful stock picker and I'm his foil. Pavlik is walking his talk; each of the five names below is one he currently holds in his personal and/or clients' accounts. Some of you may object to the idea of analysts "talking their book." Frankly I don't really care to listen to someone making a bullish case for a stock they don't like enough to own themselves.

Without further ado...

Caterpillar (CAT): Pavlik likes Caterpillar's exposure to mining and international operations. These aspects of CAT's business give the Dow component an edge over names like Deere (DE).

Amazon (AMZN): Economic downturn? Not a problem for Amazon as they win either way. If we avoid recession, all retailers will benefit. If not, Pavlik says "the fact that people are going to try to save money is going to outweigh anything else." Amazon is the best retailer operating today. If folks are buying stuff at all, they'll buy it on Amazon.com.

McDonald's (MCD): Considering I haven't eaten at a McDonald's since I did a TV segment on them in 2008, my near-worship of the undisputed fast food king is bizarre even to me. The company is just that good. Pavlik agrees, a fact that reduced our McDonald's discussion to little more than a fan fest.

Apple (AAPL): There is no real debate concerning Apple's trailing performance. They've been the best corporation in the world for several years. Yes, even better than McDonald's. The fate of Apple's stock from here depends almost entirely on new CEO Tim Cook's ability to spearhead creative product initiatives not already in the pipeline. Pavlik says Jobs' handpicked successor has the right stuff.

Google (GOOG): Pavlik thinks the search king will be able to expand its empire. He loves the acquisition of Motorola's patent portfolio, and thinks it'll expand Google's reach into the smartphone market in a more lucrative way. The question with Google is never about cash flows, it's about expansion opportunities. Pavlik likes their chances.

There you have it. Five stocks from only loosely related industries. The commonalities are strong management and a record of generating strong returns for shareholders. Not advice per se, but simply ideas to consider during these rather challenging investing times.

* A German term meaning "We are leaving the EU"

Rates

View Comments (22)