Unless you are an incredible market-timer and stock trader, making money this year has been almost impossible. Oh sure, if you timed the June to August bear market rally just right you could have made money, but unless you grabbed it quickly, you gave it all back in a few weeks. In reality, the consumer price index number that comes out Thursday, while probably off the summer highs, will still be painful. As consumers know well, the prices of many everyday items, especially food, are much higher than the stated inflation numbers.
While historically September is the worst month of the year for stocks on an annual basis, the real scary month this year could be October, and not just because of the potential for a spooky Halloween. With third-quarter earnings reports on deck this week, typical seasonal worries and what likely will be another increase in the federal funds rate of 75 basis points in early November, the best ideas are the safest ideas.
We screened the Goldman Sachs Conviction List of top stock picks looking for dividend-paying blue chips that worried investors can look at now. Eight top companies hit our screens, all of which are of course rated Buy. It is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.
Bank of America
Interest rate increases are welcomed by banks, and this is one of the biggest in the country. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.
Bank of America has expanded into several new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.
Note that Warren Buffett owns a stunning 1.1 billion shares of the bank.
Shareholders receive a 2.87% dividend. Goldman Sachs has a $40 target price on Bank of America stock. The consensus target is $41.15, and shares closed Tuesday’s trading at $29.77.
Constellation Brands
If any company has products that stay in style, it is this one, and it has only 7% foreign sales. Constellation Brands Inc. (NYSE: STZ) is a leading global producer and marketer of beverage alcohol. Its wideanging portfolio spans wine, spirits and imported beer.
The company is one the world’s largest wine companies overall and is the largest global premium wine company. Key brands include Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Black Velvet and SVEDKA vodka. It also owns 100% of the rights to brew, market and sell Modelo’s Mexican beers in the United States.
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