The start of the new year is finally at hand. With a very wild financial 2016 in the rear view mirror it is time once again to look forward to my potential stock picks for new month. If you recall, the market got off on a very bad foot at the start of 2016. In fact, it was the worst start for the markets ever, as all the financial headlines were declaring, ‘this is it!,’ the start of the long awaited correction and bear market had begun. Of course, we all know how wrong those calls were as 2016 turned out to be a very good year for many stocks and sectors overall.
With the start of the new year, once again, I’ll be able to invest in my ROTH which is nice since I wasn’t able to touch that account for a few months after fully funding it for the year with no cash left for trading. New year equals another fresh $5,500 to invest. With that being said I’d like to highlight several of my January 2017 stock considerations.
Looking to the month ahead I feel compelled to highlight two potential sectors I’d like to invest my fresh capital. The first, consumer staples and second REITs.
Looking at the consumer staples I am considering quite a few names that I have not “touched” in a long time and would potentially like to increase and/or initiate positions. First I’d like to mention Unilever PLC (UL) which has been my only go to consumer staple over the last few months. With a yield that’s north of 3% and a stock price that is around $40 or below, UL will be a name that will remain on my potential buy list. Now, on to the other consumer staples I like that I have not added to in a while. These stocks include, The Coca-Cola Company (KO), Kimberly-Clark Corporation (KMB), The Procter & Gamble Company (PG), General Mills, Inc. (GIS) and Diageo plc (DEO). I am fully aware that these stocks are still considered expensive by traditional valuation metrics but they are trading at much better levels than just a few months ago as the sector as a whole fell out of favor with financial, industrial and other sectors getting the spotlight. With each name yielding 3% and up I feel compelled to at least consider one or several of the names mentioned.
Of course, the REITs have not fared well either over the last few months as the sector as a whole took a serious pounding giving us much better buying opportunities today. Several names I am considering in the space include HCP, Inc. (HCP), Welltower Inc. (HCN), Care Capital Properties, Inc. (CCP) and a potential new pick from my watch list, LTC Properties, Inc. (LTC). These stocks come with slightly higher risk than the “standard” dividend growth stocks mentioned earlier but do offer much higher yield all around for that added risk. We all know that a rising interest rate environment can create challenges for REITs but I would imagine the additional financing costs would be passed along to the end consumer and while the sector (health REIT) may face near and mid term headwinds over the long haul they are operating with a huge aging population tailwind.
As you already know, I usually end these “considerations” posts with the caveat that Mr. Market makes all the rules and names or sectors that are not mentioned above may suddenly become attractive to accumulate.
What are some of the stocks you are considering for your January purchases? Are any of the above names on your monthly watch list? Please let me know below.
Disclosure: Long UL, KO, KMB, PG, GIS, DEO, HCP, HCN, CCP