We think that demographics and health care are favorable over the long haul. So health care is a growth area we like to invest in.
Johnson & Johnson (JNJ): In the businesses of pharma and medical devices, the diversified company has a super-high-quality triple-A credit rating, a 3% dividend yield and a terrific balance sheet.
It’s taken a meaningful step toward final resolution of the multi-year litigation — which will cost $13.7 billion payable over 25 years — concerning the pending talc lawsuits against the company and its affiliates in the U.S.
The MedTech segment is expected to grow revenue north of 6% in each of the next few years. We think the litigation will eventually play out, and that certainly could be a catalyst for the stock to come back.
The multi-year consolidation in shares offers a great entry point for investors to pick up a defensive, long-term growth opportunity at a reasonable P-E.
Molson Coors (TAP): An amalgamation of three brewing companies, Molson, Coors and Miller, the company offers brands across the value spectrum.
The stock is inexpensive, trading for less than 10 times earnings per share projected in each of the next few years, though management is faced with deleveraging the company.
[People] are not likely to stop drinking beer. TAP has consumer loyalty to Miller and Coors brands.
Prudential Financial (PRU): The largest U.S. life insurer has more than $1 trillion of assets under management and additional operations in Asia, Europe and Latin America.
Operating income grew by 10% in fiscal Q2 on strong product sales and constructive interest rates.
CEO Chuck Lowrey has suggested that the historic levels of Americans who will turn 65 — and many additional people in the red zone for retirement — represent a $137 trillion retirement opportunity in the U.S. and $26 trillion in Japan by 2050.
While interest rates have retreated, we expect there are still benefits from bond reinvestment given where rates were in the years following the (global) financial crisis. PRU yields 4.3%.
United Parcel Service (UPS): We just bought UPS a couple of weeks ago. Shares have tumbled this year as volume and cost headwinds took their toll. The whole package-delivery [segment] has gone through booms and busts.
CEO Carol Tome noted, “Our second-quarter performance was a significant turning point for our company, as we returned to volume growth in the U.S., the first time in nine quarters.”
UPS is trading at levels not seen since late 2020 and has attractive valuation metrics. The dividend yield is 4.9%.
E-commerce will be part of the overall retail equation long-term.
Whirlpool (WHR): Shares of the top major appliance manufacturer in the world remain unloved, falling more than 15% over the last year.
But now there’s the likelihood of lower interest and mortgage rates, and [many] first-time home owners.
CEO Marc Bitzer said, “Our solid Q2 results and actions put us firmly on-track towards expanding our margins sequentially throughout 2024, setting up our business well for the eventual recovery of the housing market.”
We think Whirlpool will also benefit as emerging markets incorporate modern conveniences into daily living.
We also like that the firm is on course to deliver cost savings of $300 million to $400 million in 2024. And the dividend yield is a whopping 6.8%.
The post 10 of John Buckingham’s Favorite Overlooked Stocks appeared first on Insurable Interest Canadian Insurance Blog.
