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What Are Your Current Top 5 Safe Large Cap Picks As Of Today


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Here is the scenario. Your mother comes to you an says she has $100,000 in cash and would like you to invest it in the stock market in the coming weeks. She is going to give the shares, down the road, to her grandchildren (forget about estate planning and taxes). Ideally she would like to own 10-15 different companies. Here are her filters:

1.) safety of principal, adequate return is paramount

2.) large cap only (S&P 1000 type)

3.) best in class, experienced management team

4.) minimal leverage, ideally net cash balance (this would exclude companies like BAM)

- easily able to weather current storm without having to issue shares (diluting existing shareholders)

5.) stock is on sale today (this would possible exclude a company like Amazon)

6.) company has long runway of growth potential looking 10 years into the future (expected to be a winning horse)

7.) total return is goal (dividend income is not required)

 

What are your top 5 picks as of today?

 

My no brainer picks would be: Google, Microsoft, Facebook and Berkshire.

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If I had that mandate I’d think hard about buying an index fund. You’re unlikely to beat the market by more than a point or two and that’s optimistic. The index will be driven by those 10-15 companies anyways, and you’re certain to do well over time, especially from today’s prices.

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GD - they do have exposure to cyclical business jets (which may even benefit from the covid epidemic in the long run if you think about it), but most of the business is defense. Full order book and very cheap.

 

They do have some debt, but considering their largest customer is Uncle Sam, it looks like a save bet to me.

 

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If I had that mandate I’d think hard about buying an index fund. You’re unlikely to beat the market by more than a point or two and that’s optimistic. The index will be driven by those 10-15 companies anyways, and you’re certain to do well over time, especially from today’s prices.

 

Concur: 2/3 SPy; 1/3 Country of origin. 

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My 5 No brainers are:

 

BRK- but we all own it.

 

Google [price is down nicely]

Disney [Price is down, and even if they have their revenue murdered this year, think 1, 3 and 5 years out.]

Bank of America [Great bank, great price presently]

Applied Materials, LAM, or a couple others in the Semi Conductor Industry.  [We are not going to need less technology, or fewer phones/devices.]

Amazon- [but I don't love the price.  It is good, better, but not great.  The herd has purchased into this position.  It is still a good long term one.]

Wells Fargo-  Price to value is amazing.

 

 

If you have a stomach for a volatile ride, I would look at VIAC, and some of the mid priced home builders like Lennar and DR Horton.

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TMO

 

 

edit, didn't really read the title of the thread as much as the op.

 

GOOG, BRK, ILMN, SPG, in addition to TMO. I'd also add MSG but its a smaller cap. Moats galore here. SPG probably seems quite speculative here, but so does basically all RE. I mean HHC for instance is at $40...

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Berkshire

Google

 

Are the obvious "safe" candidates IMO given diversified businesses and massive liquidity.

 

Exor is on the list - particularly if their 9 billion dollar sale of Partner RE closes and/or if merger and special dividends from Fiat come through, but comfortable at these prices if even if that's not the case.

 

Not sure if it counts as a large cap, buy I believe Annaly (NLY) is also a steal at these levels given its ability to navigate the mortgage crisis and it's portfolio of govt guaranteed mortgages.

 

 

 

 

 

 

 

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Berkshire - obviously

JPM+BAC+WFC - trillions of deposits

MO+PM - people will not quit overnight

INTC - I don’t own this but all the computing farms are still running intel cpus

GD - private jets is essential for rich people

SBUX- it’s a habit thing

TSCO - the horse, the chicken always need to eat.

BKNG - no net debt. Highly profitable and roe.

 

 

 

 

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Though I'd be tempted to just go long a portfolio of things you can get legally addicted to:

 

MO/PM

 

You believe the market has priced in the chance coronavirus has hastened the end of these companies? The possibility of being made illegal?

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Though I'd be tempted to just go long a portfolio of things you can get legally addicted to:

 

MO/PM

 

You believe the market has priced in the chance coronavirus has hastened the end of these companies? The possibility of being made illegal?

 

It isn't even illegal to marry a child in this country.  This is a country where masses of school children are riddled with bullets at school but freedom to own guns wins the day.

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while apple, google, facebook, disney, etc are great businesses, they are the names everybody is looking at too, even abroad (just look at forums in other languages, in other countries, you see those names again and again as "blue chips to buy now", "safest stocks to pick in this downturn", etc)

 

what are the chances that those stocks are mispriced? and if they are, which way?

 

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Berkshire - obviously

JPM+BAC+WFC - trillions of deposits

MO+PM - people will not quit overnight

INTC - I don’t own this but all the computing farms are still running intel cpus

GD - private jets is essential for rich people

SBUX- it’s a habit thing

TSCO - the horse, the chicken always need to eat.

BKNG - no net debt. Highly profitable and roe.

 

I like GD, but not for the reason you mentioned. Gulfstream is an important business for GD with many years worth of backlog, but the most important business is its defense business. These are nuclear submarines, combat systems, tanks, cyber defense etc.

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Berkshire - obviously

JPM+BAC+WFC - trillions of deposits

MO+PM - people will not quit overnight

INTC - I don’t own this but all the computing farms are still running intel cpus

GD - private jets is essential for rich people

SBUX- it’s a habit thing

TSCO - the horse, the chicken always need to eat.

BKNG - no net debt. Highly profitable and roe.

 

I like GD, but not for the reason you mentioned. Gulfstream is an important business for GD with many years worth of backlog, but the most important business is its defense business. These are nuclear submarines, combat systems, tanks, cyber defense etc.

Yes I agree. And GD is down a lot recently due to its gulfstream business.

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Though I'd be tempted to just go long a portfolio of things you can get legally addicted to:

 

MO/PM

 

You believe the market has priced in the chance coronavirus has hastened the end of these companies? The possibility of being made illegal?

 

It isn't even illegal to marry a child in this country.  This is a country where masses of school children are riddled with bullets at school but freedom to own guns wins the day.

 

Is there a constitutional right to tobacco I'm unaware of?

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Though I'd be tempted to just go long a portfolio of things you can get legally addicted to:

 

MO/PM

 

You believe the market has priced in the chance coronavirus has hastened the end of these companies? The possibility of being made illegal?

 

It isn't even illegal to marry a child in this country.  This is a country where masses of school children are riddled with bullets at school but freedom to own guns wins the day.

 

Is there a constitutional right to tobacco I'm unaware of?

In the US the smoking rate is what 25%? Try to take away the drug of choice for 25% of the population and see how that goes for you electorally? Maybe there is some coocoo kamikaze congressman out there that sees this as his wet dream coming to life. But for the rest of them ain't gonna happen.

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Though I'd be tempted to just go long a portfolio of things you can get legally addicted to:

 

MO/PM

 

You believe the market has priced in the chance coronavirus has hastened the end of these companies? The possibility of being made illegal?

 

It isn't even illegal to marry a child in this country.  This is a country where masses of school children are riddled with bullets at school but freedom to own guns wins the day.

 

Is there a constitutional right to tobacco I'm unaware of?

In the US the smoking rate is what 25%? Try to take away the drug of choice for 25% of the population and see how that goes for you electorally? Maybe there is some coocoo kamikaze congressman out there that sees this as his wet dream coming to life. But for the rest of them ain't gonna happen.

 

Maybe the tobacco industry gets on the bailout bill as well?

 

As far as the Argumentation goes - We had a really profitable business to kill our customers slowly to optimize NPV, now Covid-19 reaped our best customers quickly though no fault of our own! Put a picture of a tobacco farmer on a Deere tractor with Maga hat on the paperwork and off it goes.

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