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(Scott Olson/2006 Getty Images)
(Scott Olson/2006 Getty Images)

TheStreet.com

Six U.S. stocks for the next six months Add to ...

Equity investors got a wild stock market ride in the first six months of 2010. First, the bulls took control and pushed the Dow Jones stock market index above 11,000 -- and then the bears bared their teeth and took it all back. And with the way things have been going lately with a few big moves both up and down for stocks, it doesn't look like the volatility will stop any time soon.

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But that doesn't mean that buy and hold investing is dead, or that investing in stocks has to drive you batty. By positioning your portfolio in low-risk, stable stocks right now you can insulate your holdings from whatever the market throws your way in the second half of the year. To help you prepare for the last 6 months of 2010, here are six stocks you might consider buying:

Recommended by: Richard Band, editor of Profitable Investing

Strategy: Low-risk retirement investing that beats the market

In the technology sector, I'm warming again to Microsoft, which is riding a sales spurt as customers upgrade to Office 2010 and SharePoint 2010. Mr. Softee's Windows 7 operating system is also selling briskly; it's far less buggy than its predecessor, Vista, and runs most applications faster.

At a mere 11X estimated year-ahead earnings, the stock is spectacularly cheap for a world-dominator business. (Only three years ago, MSFT sold for 18X forward earnings, so you're getting a 40 per cent discount to the "normal" share price.) Microsoft also pays a 2 per cent dividend, more than the highest-yielding bank money market account!

United Technologies

Recommendation by: Richard Young, editor of Intelligence Report

Strategy: Bedrock investing for the long term

When the world's most security conscious customers need solutions to their security problems, they turn to Lenel, a UTX subsidiary. Lenel's OnGuard system is a suite of security solutions that allows companies to create their own identity cards and badges, create video surveillance networks, track facility visitors, and control electronic lock, fire, and security alarm systems. You might see Lenel's security hardware and software being used at a hotel or on some of Lenel's corporate client campuses like Microsoft's, the U.S. Navy's, NASA's, and the Department of Homeland Security's.

Recent market jitters have forced United Technologies below its 200-day moving average. This is a major buying opportunity.



Recommended by: Louis Navellier, editor of Blue Chip Growth

Strategy : Large-cap growth stocks

SanDisk is a top producer of flash memory data storage devices. The company's best-selling products are removable and embedded memory cards that are used in a wide variety of electronic gadgets, including: digital cameras, medical devices, networking equipment and notebook computers.

In the first quarter, the company's sales rose 65.3 per cent to $1.09 billion, up from $659.5 million in the same quarter a year ago. During the same year-long period, SanDisk's earnings surged to $234.7 million, or $0.99 per share, compared with a loss of $208 million, or $0.92 per share, last year.

The analyst community had expected earnings of $0.59 per share on sales of $986 million so the company actually posted a 67.8 per cent earnings surprise and a 10.5 per cent sales surprise! For the second quarter, the analyst community is expecting 55.8 per cent sales growth and 138.9 per cent earnings growth.

Recommended by: Brian Perry, editor of Cash Machine

Strategy: High-income dividend investing

In this market, fund managers are seeking safe places to collect a high yield without taking undue risk. A telecom utility like CenturyLink is just the ticket. The company operates about 7 million telephone access lines used for voice calls and Internet access. This is a great investment for many who want to take in an 8.43 per cent current dividend yield while the company continues to integrate the assets of its recent acquisitions of EMBARQ and Qwest. We should see continued big cost savings from synergies generated from these accretive acquisitions.



Recommended by: Richard Band, editor of Profitable Investing

Strategy: Low-risk retirement investing that beats the market

If you're a little more inclined toward income (perhaps because you're near or in retirement), go with PG&E. This San Francisco-based utility, parent of Pacific Gas & Electric, will post record profits in 2010 -- no mean accomplishment when your service territory is still limping economically.

Yet the stock, which has pulled back about 6 per cent from its January high, now trades at only 6.5X cash flow (enterprise value divided by EBITDA). I consider 7.5X to be a fair price for regulated utilities -- and indeed, one recent takeover deal for a pair of Kentucky utes was done at 10X. So PG&E is a bargain. I've been loading up on the stock for both taxable and retirement accounts. The stock has a current dividend yield of 4.2 per cent.



Recommended by: Richard Young, editor of Intelligence Report

Dividend yield: 6.6 per cent

You have done very well in McDonald's if you bought this stock within the last year, even if the broader market hasn't had a very good go of it lately. But there's still upside, because my price chart shows MCD has fallen below its 50-day moving average. Revenues continue to rise at McDonald's as comparable sales grew 4.8 per cent in May. The revenue growth has been spurred by successful new product offerings and growth in core menu items like Chicken McNuggets. This stock has a strong record of global sales growth and is seeing good momentum in the U.S. with its McCafe premium coffee line.

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Security Price Change
UTX-N United Technologies 114.13 0.62
0.546 %
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