Last week, I began to look at companies that, despite the
financial crisis, hadn't posted one single unprofitable year dating
back to the crash of the "tech bubble," which is considered by many
experts to be the beginning of a "lost decade" for stocks. What I
had hoped to find were a handful of large companies that were able
to keep the momentum going through this tough period, posting solid
long-term gains and -- with any luck -- were now trading at
bargain-basement levels, thanks to the current down
My results yielded no less than 20 stocks that I think present some
real buying opportunities for the type of blue-chip "
" StreetAuthority Co-founder Paul Tracy preaches about to his
readers. These are the types of stocks that, no matter what happens
or the stock market -- short of absolute Armageddon -- you could
feel reasonably safe about owning over the long-term.
I decided to divide up the 20 stocks I found into four groups and
profile them for you. [Read Part 1
, Part 2
and Part 3
Here's a look at the final five of the 20 blue chips you should be
focusing on right now...
16. NetApp (Nasdaq:
Fiscal (April) 2003 sales: $892 million
Fiscal 2011 sales: $5.1billion
All of those new web pages generated in the past decade needed to
be archived, ready for instant retrieval when necessary. NetApp's
storage devices, which connect to major enterprise software
systems, have often been the product of choice, fueling very steady
growth through the decade.
This trend continues. Demand for even more storage capacity is
expected to boost sales another 25% in the current
to $6.4 billion. And that's going right to the
-- NetApp is expected to earn a record $2.46 a share this year, up
more than 20% from fiscal 2011. Meanwhile, the broader market gloom
has sucked this stock down into the vortex, pushing it from $55 in
early July to a recent $35. This is right where the stock stood
five years ago, when the company's revenue base was half the size.
trade for just 12 times projected fiscal 2013
forecasts, which is at the bottom end of the historical
price-to-earnings (P/E) range.
17. News Corp. (NYSE:
Fiscal (June) 2003 sales: $17.4 billion
Fiscal 2011 sales: $33.4 billion
Rupert Murdoch's entertainment empire has come under fire this year
for a phone hacking scandal that revealed a major lapse in
corporate ethics. Perhaps equally scandalous is the fact Murdoch
hasn't made his shareholders a dime in the last decade. Its stock
fell from $30 in 2000 to $25 in 2007 to a recent $15. The
much-ballyhooed $5 billion purchase of Dow Jones, publisher of
The Wall Street Journal
, in 2007 failed to provide the ignition for a stock rally.
But even with the lower stock price, this is a substantially larger
company that can now be counted on to generate $2 billion to $3
free cash flow
every year. In response to a weakening share price, News Corp.
announced plans in July to buy back $5 billion in stock during the
next 12 months, which could reduce the share count by more than
10%. Shares are unlikely to ever reach the heights seen five or 10
years ago, but a move back up to $20 appears logical, according to
analysts at Goldman Sachs. That target equates to 12 times their
projected fiscal 2013 EPS forecast of $1.64.
18. Parker-Hannifan (NYSE:
Fiscal (June) 2003 sales: $6.3 billion
Fiscal 2011 sales: $12.4 billion
This manufacturer of hydraulic and pneumatic power systems has been
scaling new heights of profitability throughout the past decade.
After earning $1.09 a share in fiscal 2003, EPS steadily grew to
more than $3 a share in 2006, $5 a share in 2008, $6 a share in
2011, and should exceed $7 in the current fiscal year.
That financial progress has enabled management to start focusing on
, which was hiked 24% in fiscal 2011 and another 18% in the current
fiscal year to $1.48. A rising dividend, coupled with a stock that
has fallen from $99 in late April to a recent $64, has boosted the
up to 2.3%. Goldman Sachs sees shares returning right back to that
, a 48% potential gain. Key catalysts for the stock include the
accretive impact of an ongoing $600 million share buyback, and
tuck-in acquisitions. Parker-Hannifan has a history of deal-making
that almost immediately boosts per share profits.
19. Robert Half International (NYSE:
2002 sales: $1.9 billion
Fiscal 2011 (est.) sales: $3.8 billion
With employment trends stuck in neutral, this would be seem to be
an odd time to focus on staffing stocks like Robert Half. But
business is better than you might think, thanks to a focus on temp
workers and full-time IT and
staffers -- areas that are getting employer attention even as
broader hiring plans remain on hold. Sales are rising at a 20% clip
in 2011, and are expected to rise another 10% in 2012. If the
economy finally starts to strengthen in coming quarters,
double-digit growth can be sustained in 2013 and beyond as well.
Just as important,
margins are quickly expanding because the company has successfully
pushed through price increases. Earnings per share are on track to
more than double this year, and rise another 40% to $1.44 in 2012,
according to consensus forecasts. Shares now trade for just 13
times that 2012 view, after falling from $30 a decade ago to a
recent $21. Analysts at Merrill Lynch rate shares a "buy," with a
, noting "Robert Half will
, including over 350 offices, resulting in high incremental margins
exceeding 25% over the next several years."
20. Schlumberger (NYSE:
2002 sales: $9.8 billion
2011 sales (est.): $39.6 billion
In the past decade, Schlumberger has emerged as one of the most
important companies in the global energy industry, providing an
incredibly vast range of products and services to oil giants like
and state-owned firms like Saudi Arabia's Aramco. In recent years,
the company has made a series of tuck-in acquisitions that not only
boost sales and profits, but also extend Schlumberger's offerings.
This is boosting the company's already impressive
, and ensuring sustainable growth for the years to come.
Growth has already been quite impressive, not just on the top-line
noted above, but the bottom line as well. EPS are projected to grow
at least 30% in 2011 and 2012, moving toward the $6 mark by 2013.
After plunging from $95 to $61 in just two months, shares now trade
for just 11 times next year's projected EPS of $5.45. The fact that
this stock trades at the same price as five years ago, even as
sales and profits are vastly higher since then, should really get
Risks to Consider:
As is the case with other stocks profiled in this series, this
could be a "dead money" portfolio until the market finally regains
its footing. Parker-Hannifan likely has the greatest
and would see a large reduction in
estimates if the global economy fell into a prolonged slump. News
Corp. likely carries the least
risk, while NetApp likely has a strong floor in place due to the
stock's low valuation.
Action to Take -->
If I had to single out one name of the 20 that have been in focus
in this four-part series, it would be the last one -- Schlumberger.
Virtually all of the profiled stocks looked poised for decent
rebounds, and you should spend your time researching all of them
before choosing a few that are most appropriate for your risk
profile. Yet Schlumberger stands out as offering perhaps the most
robust upside of any stock profiled.
When oil prices stage their inevitable rebound past the $100 mark,
this stock will again sport a much higher profit multiple as oil
turn into more orders for Schlumberger. A move back to the $110
peak seen in 2008 -- or more than 80% above current levels -- is
not out of the question for this stock when the stars re-align.
-- David Sterman
P.S. -- This is just the tip of the iceberg. There are other
"forever stock" opportunities out there -- you just have to know
where to look. That's why StreetAuthority Co-founder Paul Tracy put
together this special presentation, "The 10 Best Forever Stocks to
Hold Forever." If you haven't seen it yet, I urge you to take a
Disclosure: Neither David Sterman nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.