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Stocks to buy now

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October 14, 2008 – Comments (1)

It's hard for everyone to invest when things are falling apart.

First, there are some consumer products stocks that are priced attractively right now. Diageo, Coke and Pepsi have strong portfolios of brands. The latter two are more exposed to commodity prices and Pepsi posted relatively weak quarterly results because of that and other issues. However, all three are in a position to weather a recession well. I think Pepsi's portfolio is especially strong. The firm is on track to dominate the snack food industry globally. I'm not concerned at all about today's sell off. Diageo and Coke have weathered last week fairly well and are still in buy territory. I've previously owned Cadbury Schweppes, but I have sold it. I don't think that firm is in distress at all, but its brands and management team are not as good as Pepsi's. I only bought it late last year because it was selling at a discount, whereas Coke and Pepsi had had a nice run.

 Second, a number of big pharma blue chips are selling cheap. I think Johnson and Johnson is still a buy despite a small pop today. It's a health care giant that's diversified enough and well managed enough to weather most anything. Pfizer is less so, but its huge cash hoard will enable it to partner with emerging drug manufacturers on attractive terms. Novartis is still in buy territory.

Third, big biotechs have actually also weathered the storm well. A Morningstar analyst put it thus: "Mortgage defaults have no bearing on the success or failure of a Phase III cancer drug." To that end, I'd consider Biogen, Amgen and Novo Nordisk in roughly that order. Amgen has the most diversified portfolio

 

For investors inclined to take on some risk, there's an arbitrage opportunity with Anheuser Busch shares selling for $63, and an offer from Inbev for $70 a share. The credit markets are uncertain, of course, but it looks like InBev has got its financing lined up. They suspended a rights offering today due to turmoil in the European markets; it would be unwise for them to issue shares at today's prices unless they absolutely had to. I don't believe they have to. Inbev says the deal should close by year end.

1 Comments – Post Your Own

#1) On October 14, 2008 at 9:40 PM, Varchild2008 (84.65) wrote:

for a LOW VOLUME (flying under the radar pick of the night)

G   (GenPact)

Standard and Poor's initiated coverage on the stock back in August of this year with a 12 month target price of $17.

Currently trading at $8.54.   Might be a speculative short term pick to sell off on any bounce.

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