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Three starter stocks for the long term-Part III

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June 27, 2012 – Comments (0) | RELATED TICKERS: AAPL , WFC , PX

Here is the last of three articles designed to give the beginner a solid long term portfolio that is diversified and will grow for years to come.  In the first article I gave my selections for the health/pharma industry (JNJ), the telecom sector (T), and the consumer non-cyclical sector (KMB).  The second article we made our picks for the capital goods sector (MMM), the oil and gas industry (CVX) and our restaurant choice was (MCD).  In this article we will cover the tech, financial and basic materials.

 

The tech call is an easy one these days.  Apple is positioned to dominate tech for years to come.  Right now it's an absolute bargain at around $570 per share.  Apple grew its income by 85% last year and sales were up 66%.  Now here's the kicker.  AAPL has a forward P/E of 10.53.  I love their products and have been using macs since the clamshell laptop came out in early 2000.

 

The financial sector is a tricky place to navigate these days.  But there is one clear winner among all the others.  Wells Fargo has a solid balance sheet, great management, and managed to stay out of trouble during the 2007-08 financial crisis.  Not only did they stay out of trouble but they made a couple key acquisitions along the way adding to their footprint and value.  WFC is a stable company with a decent and dependable yield.  In this sector that's hard to find.

 

Finally, our basic materials selection.  This was a struggle.  I am not a fan of basic materials simply because of the volatility that this sector can experience during heavy economic upturns/downturns.  Some may be surprised that I'm not picking a gold, iron, or steel producer for this sector.  But once again this is about stability and long term growth so I just can't bring myself to recommend these stocks to any beginner.  However, Praxair is an exception.  PX specializes in gasses.  Not very exciting or pretty to look at but very necessary in everything from medical applications, computer-chips, aerospace, beverages, steel making, fiber optics, and many other things.  The diversity of their customer base, solid profits, great management, and past performance make this basic materials stock one of the few you can own and still sleep well at night.

 

So ladies and gentlemen for your consideration I give you my beginner portfolio.  Any comments are welcome and I hope you all enjoyed reading my little articles. 

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