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No. of Recommendations: 29
Well, since you asked so nicely, bayposter...


The following 16 stocks are companies that I feel offer safe and reasonable long-term growth prospects (listed in alphabetical order). They might not be the most exciting bunch of companies, but they are all leaders and innovators in the industries in which they operate. Most of the companies are very large corporations that have been in business for many decades. This fact suggests to me that my selections are capable of operating and succeeding under any economic situation that may arise. Many of these companies also have some of the most heralded management teams in the world.

I have always felt that capital appreciation is only half the battle when investing. Capital preservation is the other half. These 16 stock picks offer, I feel, the best of both worlds. They may not increase in value every month or every year, but over longer periods of time, you would be hard pressed to find a better group of stocks in which to invest.

Note: When choosing a stock in which to invest,'s Intrinsic Value Calculator (in the “Evaluator” section) can be a helpful tool to determine whether or not the company's current stock price merits an investment at that time. I feel that a discount rate of 12% is adequate for the majority of my stock selections; however, for all technology stocks, I use a 15% discount rate due to the increased risk that often accompanies the technology sector. For more information on Intrinsic Value, see . All “Long-term EPS growth rates” come from the average estimates of analysts who follow the particular listed companies. Please remember that these long-term estimates are exactly that – estimates. One of the criteria that I use in selecting stocks is their ability to exceed Wall Street's expectations. In other words, the predicted growth rates are likely to be on the conservative side.

Agilent Technologies (Ticker Symbol: A)
Long-term EPS growth rate: 19.3%
Agilent Technologies, Inc. is a diversified technology company that provides enabling solutions to high growth markets within the communications, electronics, life sciences and healthcare industries. The company, which spun off from computing products giant Hewlett-Packard, is a leading maker of analysis equipment. Agilent provides test instruments, standard and customized test, measurement and monitoring systems for the design, manufacture and support of electronic and communication devices, and software for the design of high frequency electronic and communication devices. The Company provides fiber optic communications devices and assemblies, integrated circuits for wireless applications, application-specific integrated circuits, optoelectronics and image sensors. The Company also provides patient monitoring, ultrasound imaging and cardiology products and systems. In addition, the Company provides analytical instruments, systems and services for chromatography, spectroscopy and bioinstrumentation. Agilent's Chemical Analysis unit provides instruments to life sciences companies. Customers include AT&T, Cisco, and Pharmacia. Nearly 55% of sales are outside the US.

American International Group (Ticker Symbol: AIG)
Long-term EPS growth rate: 14.4%
American International Group is a holding company that, through its subsidiaries, is engaged in a broad range of insurance and insurance-related activities and financial services in the United States and abroad. Helmed by financial legend Maurice Greenberg, American International Group (AIG) is one of the world's largest insurance firms. Best known domestically as a leading provider of property/casualty and specialty insurance, AIG also has strong life insurance operations abroad and is a growing presence in financial services and asset management (purchases have included leading annuities firm SunAmerica and other companies specializing in retail financial markets.) Other operations include auto insurance, mortgage guaranty, annuities, and aircraft leasing. With operations in 130 countries, AIG traditionally generates more than half of its revenues outside the US.

AOL Time Warner (Ticker Symbol: AOL)
Long-term EPS growth rate: 31.9%
AOL Time Warner, Inc. is an integrated, Internet-powered media and communications company. Whether you watch it, read it, listen to it, or log on to it, chances are it comes from the mighty colossus that is AOL Time Warner. The product of the 2001 marriage of online king America Online with media titan Time Warner, AOL Time Warner is a behemoth whose reach extends across the vast properties of the two companies from which it originated. America Online brings its flagship online service, CompuServe, Netscape, and several interactive online services to the AOL Time Warner fold. Time Warner's contributions span films and TV, music, cable networks and systems, publishing, and professional sports, and include such brands as Warner Bros., Time Warner Cable, and Warner Music.

AvalonBay Communities, Inc. (Ticker Symbol: AVB)
Long-term EPS growth rate: 10.3%
AvalonBay Communities, Inc. is a real estate investment trust (REIT) that focuses on the ownership and operation of upscale apartment communities in high barrier-to-entry markets of the United States. These markets include Northern and Southern California and selected states in the Mid-Atlantic, Northeast, Midwest and Pacific Northwest regions of the country. As of March 1, 2000, the Company owned or held a direct or indirect ownership interest in 121 operating apartment communities containing 35,648 apartment homes in 11 states and the District of Columbia, of which four communities containing 1,455 apartment homes were under redevelopment. AvalonBay is also building a dozen communities and owns the development rights to another 30 properties. Its complexes are located in high-visibility areas near major transportation arteries and commercial districts and usually include such amenities as swimming pools, tennis courts, and fitness centers.

Citigroup, Inc. (Ticker Symbol: C)
Long-term EPS growth rate: 14.3%
Citigroup, Inc., formed from the merger of Citicorp and Travelers Group, is a diversified holding company whose businesses provide a broad range of financial services to consumer and corporate customers in 101 countries and territories. The Company's activities are conducted through Global Consumer, Global Corporate and Investment Bank, Global Investment Management and Private Banking, and Investment Activities. Global Consumer delivers banking, lending, and investment services. Global Corporate and Investment Bank provides corporations, governments, institutions, and investors with financial products and services. Global Investment Management and Private Banking includes asset management services provided to mutual funds, institutional, and individual investors, and personalized wealth management services for high net worth clients. The Investment Activities segment includes the Company's venture capital activities and the realized investment gains and losses related to certain corporate- and insurance-related investments. Subsidiaries include Salomon Smith Barney (brokerage), Primerica (life insurance and mutual funds), and Travelers Property Casualty. Citigroup's e-Citi unit develops online financial service products. The firm acquired the investment banking business of Schroders PLC and Associates First Capital.

The Coca-Cola Company (Ticker Symbol: KO)
Long-term EPS growth rate: 13.2%
The Coca-Cola Company is the largest manufacturer, distributor and marketer of soft drink concentrates and syrups in the world. The Coca-Cola Company brackets the #2 soft drink, Pepsi, with #1 Coca-Cola classic and #3 diet Coke. Among its other brands are Barq's, Fruitopia, Minute Maid, POWERaDE, Sprite, and Dasani water. It also sells Crush, Dr Pepper, and Schweppes outside of Australia, Europe, and North America. The Coca-Cola Company has recently purchased Planet Java and Mad River Traders to boost its non-carbonated beverage portfolio. Coca-Cola also recently formed two joint ventures – one with Procter & Gamble to sell juices (Sunny Delight and Minute Maid) and snacks (Pringles) and one with Nestle to sell teas (Nestea) and coffees. The firm, which does no actual bottling, sells more than 240 brands of beverages, including coffees, juices, sports drinks, and teas, in some 200 nations. About two-thirds of its sales come from outside the US. Coca-Cola, commanding more than 50% of the global soft-drink market, notes that its products account for a mere 2% of global daily fluid intake -- for now. Of the approximately 48 billion beverage servings of all types consumed worldwide every day, beverages bearing the Company's trademarks account for more than one billion.

Duke Energy Corporation (Ticker Symbol: DUK)
Long-term EPS growth rate: 11.8%
Duke Energy Corporation is an integrated energy company delivering both electricity and natural gas to customers throughout the United States and abroad. Duke Energy is the #3 US investor-owned utility, behind Enron and PG&E. Its regulated utilities have a generating capacity of 18,300 MW and provide electricity to 2.2 million customers in North and South Carolina. Duke markets and trades gas and electricity in the US and Canada and plans to move into European marketing. In the US it operates an 11,000-mile interstate pipeline system and is a top natural gas liquids producer and natural gas gatherer. It builds merchant power plants throughout the US, and its Duke/Fluor Daniel venture is a leading builder of fossil-fuel plants. Duke's international projects are mostly in Australia and Latin America. Other services include telecommunications.

Exxon Mobil Corporation (Ticker Symbol: XOM)
Long-term EPS growth rate: 9.6%
Two descendants of John D. Rockefeller's Standard Oil were reunited at the end of the 20th century when Exxon bought Mobil to create Exxon Mobil, the world's #1 integrated oil company (ahead of Royal Dutch/Shell). Exxon Mobil engages in oil and gas exploration, production, supply, transportation, and marketing around the world. It has proved reserves of almost 21 billion barrels of oil equivalent. Exxon Mobil's refineries can handle more than 6 million barrels per day, and the company operates about 45,000 service stations in 118 countries under the Exxon, Esso, and Mobil brands. Exxon Mobil also produces and sells petrochemicals, and it has interests in coal mining, minerals, and electric power generation.

Note: ExxonMobil is my #1 stock pick. Exxon was my first stock purchase years ago, and it continues to be my largest holding. The company's unparalleled financial strength, its massive cash flow, its wise use of capital and efficiency, and its endless opportunities in the energy sector should make ExxonMobil a cornerstone in every portfolio.

Gateway, Inc. (Ticker Symbol: GTW)
Long-term EPS growth rate: 15.8%
Gateway, Inc., together with its subsidiary companies, is a direct marketer of personal computers and related products and services. The company, led by chairman and founder Ted Waitt (36% owner), is the #2 direct marketer of PCs in the US, behind global leader Dell. Gateway sells products directly to computer users ordering by phone or Web site, which cuts resellers' markup costs. Gateway develops, manufactures, markets, and supports a broad line of desktop and portable PCs, servers and workstations used by individuals, families, businesses, government agencies and educational institutions. Gateway also offers diversified products and services beyond the box, such as software, peripherals, Internet access services (, training programs, support and financing programs, Web hosting, and e-commerce development for small businesses. Gateway sells its products directly to PC customers through phone sales, its Internet Web site,, and the Gateway Country stores.

The General Electric Company (Ticker Symbol: GE)
Long-term EPS growth rate: 15.7%
General Electric (GE) is one of the largest and most diversified industrial corporations in the world. GE's products include major appliances; lighting products; industrial automation products; medical diagnostic imaging equipment; motors; electrical distribution and control equipment; locomotives; power generation and delivery products; nuclear power support services and fuel assemblies; commercial and military aircraft jet engines; and engineered materials. GE's services include product services; electrical product supply houses; electrical apparatus installation, engineering, repair and rebuilding services; and computer-related information services. Through the National Broadcasting Company, Inc., GE delivers network television services, operates television stations, and provides cable, Internet and multimedia programming and distribution services. Its financial arm, GE Capital Services, accounts for half of sales and is one of the largest financial services companies in the US. GE will expand its aircraft engines and plastics operations by buying Honeywell.

Harley-Davidson, Inc. (Ticker Symbol: HDI)
Long-term EPS growth rate: 19.1%
Harley-Davidson, Inc. operates in two business segments: Motorcycles and Related Products, and Financial Services. The Motorcycles and Related Products segment includes the group of companies doing business as Harley-Davidson Motor Company, and the Buell Motorcycle Company. This segment designs, manufactures and sells heavyweight (engine displacement of 651+cc) touring, custom and performance motorcycles as well as a complete line of motorcycle parts, accessories and general merchandise. Harley-Davidson offers 24 models of touring and custom cycles through a worldwide network of more than 1,300 dealers. The company's legendary high-powered Harley motorcycles include the Electra Glide, the Sportster, and the Fat Boy. The Financial Services segment consists of the Company's wholly owned subsidiary, Harley-Davidson Financial Services, Inc. (HDFS), which engages in the business of financing and servicing wholesale inventory receivables and consumer retail installment sales contracts (primarily motorcycles). Additionally, HDFS is an agency for certain unaffiliated insurance carriers providing property/casualty insurance and extended service contracts to motorcycle owners.

The Home Depot, Inc. (Ticker Symbol: HD)
Long-term EPS growth rate: 20.7%
The Home Depot, Inc. is the world's largest home improvement retailer and the third largest retailer in the United States. As of December 2000, the Company was operating 1,101 stores in 47 states, six Canadian provinces, Puerto Rico, Chile and Argentina. The company targets the do-it-yourself market and offers a broad product assortment (including appliances in a growing number of stores). Stores average 130,000 sq. ft. and stock over 40,000 items, including lumber, floor and wall coverings, plumbing and gardening supplies, tools, and paint. EXPO Design Center stores sell products and services primarily for design and renovation projects. Additionally, the Company operates two Villager's Hardware test stores, which offer products for home enhancement and small projects. The Company also offers products through two direct marketing subsidiaries: Maintenance Warehouse and National Blinds & Wallpaper.

Johnson & Johnson (Ticker Symbol: JNJ) (as if this is a surprise!)
Long-term EPS growth rate: 13.1%
Johnson & Johnson manufactures and sells a broad range of products in the health care field in many countries of the world. The worldwide business is divided into three segments: Consumer, Pharmaceutical and Professional. The Consumer segment's products are personal care and hygienic products, including nonprescription drugs, adult skin and hair care products, baby care products, oral care products, first aid products and sanitary protection products. The Pharmaceutical segment's worldwide franchises are in the antifungal, anti-infective, cardiovascular, contraceptive, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management and psychotropic fields. Best-selling pharmaceutical products for the company include Procrit, Risperdal, Remicade, Levaquin, Ultram, and Aciphex. The Professional segment includes suture and mechanical wound closure products, surgical equipment and devices, wound management and infection prevention products, interventional and diagnostic cardiology products, diagnostic equipment and supplies, joint replacements and disposable contact lenses. Johnson & Johnson expands its product line through acquisitions, making more than 50 during the 1990s. It also forms partnerships with smaller firms that provide the technology while Johnson & Johnson provides the marketing muscle. The company has announced it will purchase drug and drug-delivery system maker ALZA Corp. for more than $10 billion, its largest deal to date. Johnson & Johnson's pipeline will get a boost in several areas, including oncology, women's health, urology, pain management, and the central nervous system; Nicoderm nicotine patch, incontinence treatment Ditropan XL, and Concerta, a treatment for attention deficit hyperactivity disorder, will also be among the spoils.

United Technologies Corporation (Ticker Symbol: UTX)
Long-term EPS growth rate: 14.5%
Through such well known names as Carrier and Otis, United Technologies Corporation (UTX) makes building systems and aerospace products, including elevators and helicopters. Subsidiary Carrier, the world's largest maker of heating and air-conditioning systems, makes and services heating, ventilating, and refrigeration equipment. UTX's Otis is the world's #1 elevator manufacturer; Hamilton Sundstrand produces engine controls, environmental systems, propellers, and other flight systems; Pratt & Whitney makes engines for both commercial and military aircraft; and UTX's Sikorsky unit makes helicopters. United Technologies, which failed in a bid for Honeywell International, is acquiring Specialty Equipment Companies. United Technology, through its International Fuel Cells division, also works with fuel cell technology and is the #1 fuel cell company in the world.

Wal-Mart Stores, Inc. (Ticker Symbol: WMT)
Long-term EPS growth rate: 14.9%
Wal-Mart Stores, Inc. principally is engaged in the operation of mass merchandising stores, which serve customers primarily through the operation of three segments. It is the world's #1 retailer, with about 4,000 stores, including discount stores (Wal-Mart), combination discount and grocery stores (Wal-Mart Supercenters and ASDA in the UK), and membership-only warehouse stores (Sam's Club). Most of its stores are in the US, but Wal-Mart is expanding internationally; it is the #1 retailer in Canada and Mexico, and it also has operations in South America, Asia, and Europe. Subsidiary McLane Company is the #1 US convenience store distributor. Founder Sam Walton's heirs own about 38% of Wal-Mart.

WorldCom, Inc. (Ticker Symbol: WCOM)
Long-term EPS growth rate: 18.3%
WorldCom, Inc. provides a broad range of communications, outsourcing, and managed network services to both U.S. and non-U.S. based corporations. WorldCom is a global communications company utilizing a facilities-based, on-net strategy throughout the world. The Company's core business is communications services, which includes voice, data, Internet and international services. From private networking (frame relay and asynchronous transfer mode (ATM)) to high capacity Internet and related services, to hosting for complex, high-volume mega-sites, to turn-key network management and outsourcing, WorldCom provides one of the broadest range of Internet and traditional, private networking services available from any provider.

Formerly MCI WorldCom, the company trails only AT&T in the US long-distance race, and it has a controlling stake in Brazil's leading long-distance firm, Embratel. With a fiber-based diet (fiber-optic networks, that is), WorldCom also provides competitive local service in more than 20 countries, and its UUNET unit offers data services to businesses over its massive Internet backbone. Missing from WorldCom's plate, however, is a major wireless network. It tried to satisfy its appetite by buying Sprint, but regulators spoiled the deal. The company plans to create a tracking stock for its consumer long-distance business. WorldCom operates in over 65 countries.


The Following 12 stocks are other fabulous companies on which I will keep my eye...


When composing my list of 16 stocks, these companies just barely missed being on the list, often because I preferred a larger, more established competitor (for example, I choose WMT over GPS and GE over TYC). Sometimes, I choose one company over another simply because I am a huge fan of the company's products and a big believer in their future (for example, I choose GTW over DELL and KO over PEP). One clarification that I would like to make: I currently own shares in both KO and PEP. IMHO, PEP's near-future is much brighter than KO's, and this is why I am currently holding on to PEP's shares. PEP is the dominating worldwide force in snacks (Frito-Lay), Orange Juice (Tropicana), and (soon) sports drinks (Gatorade), and the company is a strong #2 in carbonated beverages. However, KO has recently taken many steps to strengthen its product line-up, and with KO's unparalleled distribution system, Pringles and Powerade (among other products) will surprise a lot of people. Of the two, I choose to go with KO over the long-haul, although I do feel that PEP will be a solid addition to my portfolio over the next 2-3 years.

Disclosure: I choose the above stocks after researching and studying numerous large-cap companies. The above stood-out to me for their financial strength, strong brand names, and a history of growth (there are some exceptions, but you all get my point). Please - do not take my advice without doing some of your own research. My picks may be too aggressive or too conservative for you - only you know how much risk you are willing to take with your money. The above stocks are merely meant to be an example, kind of like the MF's Rule Maker Portfolio (only better :-).


Take care and Go Long,
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