# Recession Shopping List



## Argonaut (Dec 7, 2010)

The stock market is a leading indicator. It's pricing in a recession, and though it isn't always right, I think it is this time. It's also a leading indicator for a recovery, temporary or otherwise, just as it did in mid-'09 when everything was still gloom and doom. 

That being said, I'm licking my chops for some great buying opportunities this time around, because I didn't have any money in '09 just coming out of university and travelling Europe. Also, nobody would have given me a LOC then, and I can certainly get one now. 

So lets put together our buying list for when the bottom looks like it has hit, or prices are too good to pass up. My list is only US companies, because I'm already set with my TSX names. All are growth & income type stocks.

1. *Caterpillar*: Great company, but cyclical. Was yielding over 5% at the bottom of '09, and didn't cut dividend. Price increase of over 4x from bottom to top.

2. *Chevron*: The best name in oil. Love that it's integrated; oil barrels have dropped significantly but gas is still 1.26/L at the pump. People will always pay it.

3. *IBM*: Forget Apple, this is the premier name in tech. Instead of sitting on a rotting mountain of cash, they reward shareholders with dividends and share buybacks. Price appreciation has been steady. Unlike Microsoft, Dell, etc., they have innovated and found their niche in the post-PC era. Hewlett-Packard is trying to copy them now.

4. *Deere*: Long-term agriculture is a sure-bet. I would only buy one of this or CAT, or take a half position in each. They are such similar stocks.

I've already taken a position in AmBev, of which my thoughts are in another thread. It may have been too early, but I'll take it one stock at a time and this one is a good long-term growth & income stock.


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## sensfan15 (Jul 13, 2011)

Coke, Mcdicks, Pepsi

I can't see anyone stop drinking coke and pepsi and eating McDonald's anytime soon.

I would just like the prices to fall more!


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## KaeJS (Sep 28, 2010)

McDonalds is so good.

Why, oh why did I sell at $77? 

I could go for a quarter pounder with cheese, large fries, large chocolate milkshake, 3 ketchups, one napkin and a straw... right about now.


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## Argonaut (Dec 7, 2010)

MCD is a good one. Always on my radar but probably just on the cusp of a buy. I'm setting myself up as a 10 stock guy, MCD may be top 15 on my list. I used to like Coke a lot until I found AmBev. Much more upside for a little bit more risk. Great to balance growth and income in a portfolio. Pepsi is a dog compared to the two aforementioned.

For the TSX, what I hold is what I like the best, and that's the way it should be. My four favourite stocks: IPL.UN, REI.UN, T, CNR. I'm holding Fortis but they are on the cusp of a sell. If they increase the dividend by only 0.01c next year, they are eliminated from my roster. Will instantly plow $5000 into these names in my TFSA next year. TD I like and hold separately in fractional shares.


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## Abha (Jun 26, 2011)

Apple rewards its shareholders with an insane track record of earning blow outs and capital appreciation.

I take great offense to anyone trying to remove Apple from its throne as the King of All Stocks.

IBM's okay too...


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## sensfan15 (Jul 13, 2011)

Not familiar with AmBev. I would buy KO before PEP, but I like how PEP is in the snacks business too.

Canadian Stocks: Any Cdn bank, BCE, TRP, ENB, CNR


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## Argonaut (Dec 7, 2010)

I do think Apple delivers and will continue to deliver. As much as I hate the fad-driven nature of their company and products, it pains me to say so. But the best way to play it is just buying calls for every quarterly announcement. You'll get the same effect. By holding the stock outright you get the Steve-Jobs-may-croak-at-any-time overhang as well.

sens: AmBev is a subsidiary of Anheuser-Busch, selling beer and Pepsi products as well. They're in high-growth Latin America, Brazil especially.


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## Abha (Jun 26, 2011)

I was in Best Buy the other day (totally non scientific observation) and it was a mad house around the Apple table and there were like 3 - 4 people wandering around the PC area.

It brought tears to my eyes (happy tears). Everyone and their mother wants anything apple related. 

I also think the Steve Jobs discount (once he sadly passes away) is somewhere in the range of 5 - 15% No way smart investors are going to punish this company...and let's face it, the biggest owners of this stock are hedge fund and mutual fund managers.

After HP's earning call today, I'm going to go out and buy a TouchPad when it sells for $100. Can't believe they completely gave up on their tablet strategy after only a few weeks. 

http://www.pcworld.com/businesscent...hp_touchpad_changes_the_tablet_landscape.html


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## KaeJS (Sep 28, 2010)

Argonaut said:


> For the TSX, what I hold is what I like the best, and that's the way it should be. My four favourite stocks: *IPL.UN*.


Still not sure how I feel about this one.

I owned it for a bit, got frustrated and sold it for like a $8 profit. Its a frustrating stock to own, really.

Maybe 100 shares of it would be okay, but I find it annoying...


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## Argonaut (Dec 7, 2010)

I like Inter Pipeline better than TRP and ENB for that growth & income theme I have going. They have a higher yield, and have the most exposure to the growing oil sands. As a trade-off you get a shorter track record and higher debt. 

It is not a stock to get frustrated over. I have held the exact same shares since I bought in October at 13.79. They announced a raising of the dividend two days later and I've been smitten ever since. Every month I can DRIP a new share. Like a faucet. Drip, drip, drip, drip. Maybe not something a swashbuckler would like, but it's steady. Beta of 0.38.

Anyways, as the thread title goes, what is your shopping list? If you finished shopping on the TSX, what would you buy on the NYSE if another '09 mega-bottom hit?


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## Abha (Jun 26, 2011)

I'll add my shopping list.

1. Altria & Phillip Morris - These cash cows have never done me wrong

2. Abbot Labs - Great play -Very undervalued as people always compare unfairly with JNJ

3. Pepsi & Coke - No need to explain - These will be around long after I die

4. McDonalds - low cost food provider, thrives in recessionary environments.

5. Goldman Sachs - Too much carnage affecting this name

6. Ford - This dog has never done me good but I'll continue to blindly throw money at it


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## sensfan15 (Jul 13, 2011)

I forgot Phillip Morris. That is near the top of my list too...

What is a swashbuckler?


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## Argonaut (Dec 7, 2010)

Abha, you must be the current largest shareholder of Ford. You could probably go to a shareholders meeting and decide the whole thing. But I agree, I would certainly backup the (F-150) truck if the share price hits $2 again. But wouldn't hold long-term.


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## Abha (Jun 26, 2011)

Argonaut said:


> Abha, you must be the current largest shareholder of Ford. You could probably go to a shareholders meeting and decide the whole thing. But I agree, I would certainly backup the (F-150) truck if the share price hits $2 again. But wouldn't hold long-term.


There are others who feel my pain with Ford, they're just shy.

If this goes to $2, I'm going to drive one of those Tata Nano cars for the rest of my life as a protest.


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## KaeJS (Sep 28, 2010)

sensfan15 said:


> What is a swashbuckler?


Thanks to humble, that appears to have become my nickname around here. I didn't know what it meant, either, the first time I heard it.

_swashbuckler_ [ˈswɒʃˌbʌklə]
*n.*
:a swaggering or flamboyant adventurer

humble is a living dictionary/thesaurus


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## Argonaut (Dec 7, 2010)

I knew swashbuckler from playing Baldurs Gate 2 and the like.

Another cyclical name that I have been bullish on in the past is Boeing. However, 50% of their revenue is from defense, and if I were the US I would _have_ to cut defense spending drastically. Plus their delays with the 787 are starting to show some real incompetence. CAT and Deere are better for industrials.

Easy defensive buys in the US are KMP and ED. Could be bought right away but I already have a pipeline and utility.


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## gibor365 (Apr 1, 2011)

Argonaut said:


> Easy defensive buys in the US are KMP and ED. Could be bought right away but I already have a pipeline and utility.


I'd add T (AT&T) - dividend aristocrat with more than 6% dividends. D, DUK, BMY.

From tobacco names except PM and MO, RAI looks good.


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## Causalien (Apr 4, 2009)

TSLA
BAC-WTA
V
TPE:2049
PZA.UN
SCU

These are things I'd buy. The other 50% is currently in some form of neutral option strategy that's taking advantage of a 0% interest rate.


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## ddkay (Nov 20, 2010)

I'm looking for massive gains like Cliffs Natural Resources (CLF) that bottomed at $13.03 in 2009 then went to the moon at $102.38 this year. Or Sotheby's (BID) that bottomed at $6.47 in 2009 then peaked at $55.67 this year. I don't think that kind of bounce is repeatable but anyway.

American/Intl dividendsy... I'd like some Unilever plc ADR (UNC), Pepsi (KO), General Mills (GIS), ConocoPhillips (COP), Vale ADR (VALE), Verizon (VZ), Thomson Reuters (TRI), Tyson Foods (TSN), Brookfield Infrastructure Partners L.P. (BIP), Accenture Plc (ACN)

I'm still thinking really hard about which Canadian companies with international reach to choose from, there's a lot of great utility stocks with high yields but I have to think twice because of geographic concentration. I like IBI Group (IBG) for urban development consulting and engineering and stuff. I was holding Second Cup (SCU) for awhile, they might be okay long term I know they also have a significant footprint in the Middle East.


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## Dmoney (Apr 28, 2011)

KaeJS said:


> McDonalds is so good.
> 
> Why, oh why did I sell at $77?
> 
> *I could go for a quarter pounder with cheese, large fries, large chocolate milkshake, 3 ketchups, one napkin and a straw... right about now.*


Oddly specific... I could go for 6 junior chickens... so much food... so many calories... such bad heartburn... soooo goooooood.

I'm not seeing enough pullback in some of the names I'd like to add to (T.TO, KO, JNJ, GIS etc.). All pretty defensive, so seeing 2009 levels is unlikely, but if they happen I'll hop into the lowest ones.


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## humble_pie (Jun 7, 2009)

lol the bright young things are not buckling any swashes in this thread. I mean coke ? philip morris ? ibm ? big macs ? big railroad ? some even saying puh-puh-puh-pepsi ?

good grief ya'll sound like your own grandfathers ...


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## Argonaut (Dec 7, 2010)

Don't worry General Custer Pie, I would dabble in options as well but only a certain percentage. Picking up lifetime longs at historic yields would make me more excited, though. And I wish one of my grandfathers sampled Big Macs and big railroad, instead he got into penny stocks with a lecherous broker. My other grandfather is a great investor, he's who I got a lot of my ideas from. He taught me to never ever sell physical gold and horde it from the gov't and other such sumbitches.


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## Homerhomer (Oct 18, 2010)

Here is my list and thoughts:

MCD - my largest holding right now so I won't be adding anymore, one can see the strenght of this stock holding on to it's 52 week high why most are in retreat.

ABT - also own and like, may add a bit more, but this one isn't without dangers, first of medicare may hugely affect it and they have their biggest drug Humira coming off the patent in 2016 I believe.

Industrials:

DE - my favourite, many positives here; link to agriculture, Asia expansion, dividend grower, bought it a sold it for a profit last week, will re purchase when it goes down a bit more

ITW - raised dividends 43 years in a row, well diversified, will be adding on weakness

CMI - this one is interesting, had huge drop yesterday I gather due to report from J&D reducing car production estimates, linked to trucking industry but is diversified beyond that, 50% outside USA. If natural gas really takes of in trucking industry this one will be big winner, think it has a potential to be purchased much cheaper. Started growing dividends in 2006, yield is still quite low.

UTX - can provide further diversification in the sector, double digit dividend grower.

Rails.

CNR would be my favourite but CP is beaten down, will also look at NSC in States.

Pop and Soda.

Both KO and PEP would have to come down in prices a whole lot.

Utilities

ENB, FTS and TRP if they retreat.

Energy.

COP - a bit smaller than the other giants already mentioned, decent yield already, good dividend grower recently, will split operations. Will be interested below 60.

Insurance.

There is no need to rush into them, with low interest rates staying around there should be even better buying opportunities in the next couple of years, prefer the once that didn't cut the dividends, SLF and GWO.

That's it for now.


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## sensfan15 (Jul 13, 2011)

Love those blue chips. I just don't feel comfortable putting my money into anything else. I might be young, but i'm not stupid (most of the time).


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## gibor365 (Apr 1, 2011)

So, when everyone starting to shop ?


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## leoc2 (Dec 28, 2010)

gibor said:


> So, when everyone starting to shop ?


Last 2 weeks of September. Let's see what the human's at major investment firms decide to do with their program trading computers. Right now the humans are on vacation at Cape Cod. Heehee.


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## GOB (Feb 15, 2011)

I think AAPL and IBM are both good stocks but if I had to pick one it would be AAPL without a doubt. Look at recent and longer term past growth (both real and stock), future earnings projections, current valuation on virtually any basis. And that "rotting" pile of cash is an enormous safety net. Apple should continue to grow for many years to come and can then announce a nice dividend that they'll be able to easily pay when the level off. Compare the difference in growth between the two companies and that 2% IBM dividend becomes a rounding error. If things change and Apple is no longer the innovator in the tech field, it will be easy to see and get out of. I don't see this happening anytime soon though - Apple has been the innovator since, well, the dawn of computing.


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## Argonaut (Dec 7, 2010)

Apple has already been the largest company in the world at times this month. Where can they go from there? Some folks in the forum bought in at $400 last month. Now they've taken a 12% loss, and if we have a recession it will be a while before they make their money back. All the while they aren't being rewarded for their patience. If you play their earnings with options you have access to 100 shares of Apple.. over $30,000 of stock.. for the most important four days of the year.

If IBM drops to pre-QE2 levels, one could lock in a 2.5% yield that grows every year, with likely price appreciation to boot. That is so much better than what a 10 year bond could do for you. And they have shown that they could survive the dot-com bust, declining PC age, and '08-'09 recession.

Anyway, I'm not saying Apple isn't a good idea for the shopping list. Just pointing out the reasons I like IBM better.


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## GOB (Feb 15, 2011)

I don't buy the theory that the largest company cannot grow based on that fact alone. Apple continues to have extremely high growth and high margins, and is in markets that are in their infancy (most of the world still doesn't use smartphones, tablet market is just over a year old, China, etc.). Nobody is going to stop buying their stuff because they're now a huge successful company.

As for the 12% drop, now you're just being silly. The NASDAQ is down 20%+ from its recent high and IBM down 15%. Apple's drop has nothing to do with the company or the fact that it's the largest (in fact, it has survived the recent drop extremely well given the high beta - a good sign that it is undervalued). Does that 2% dividend really make you feel safe? When the market recovers, even if it takes 5 years, Apple's stock growth will far outpace IBM's, even taking those cumulative dividends into account, which will be 15% tops. Apple can and will rise that amount in a day or two on a strong earnings announcement or in a healthy market. IBM's beta is almost half of AAPL's, yet is down more during this correction - a 2% dividend makes up for that telling fact?

I do appreciate your take though and like the choices on the rest of your list.


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## humble_pie (Jun 7, 2009)

argo i have to tell you this. I came upon a video today, some red-haired lady analyst who allows as how she has a Wharton school MBA says she's recommending century-old american companies. Among them: jp morgan & johnson & johnson.

(signed)
traditional general custard pie


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## Abha (Jun 26, 2011)

Anyone who bought at $400 can rest easy. This stock is flying to $500. Don't believe me. Wait for Q3 / Q4 numbers which are generally their best two quarters, because of back to school sales and Christmas presents.

HP gave up their tablet strategy in 44 days. Nobody is coming close to touching Apple anytime soon. Sprint is not carrying the next Playbook and Android is still not being monetized by Google.

Samsung / Google are trying as hard as they can, but they're playing catch up. 

Anyways, this is turning into a pissing contest. Apple and IBM are both great companies and they each have their strengths and drawbacks.

Can't go wrong with either. Just decide what type of investor you are, and make your move.


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## Sherlock (Apr 18, 2010)

I would add AMD to the list, it's definitely undervalued.


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## Causalien (Apr 4, 2009)

Sherlock said:


> I would add AMD to the list, it's definitely undervalued.


Nope. Don't like AMD. Even after a record Q1 and Q2 sale, they are still just barely profitable. It does look ripe to be acquired though.


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## Argonaut (Dec 7, 2010)

Abha said:


> Anyone who bought at $400 can rest easy. This stock is flying to $500. Don't believe me. Wait for Q3 / Q4 numbers which are generally their best two quarters, because of back to school sales and Christmas presents.


I'm not saying I don't believe you, I'm saying the best way to play a high-growth no-dividend stock is with earnings announcement options. When the growth is finished, you won't be left holding the bag with a bunch of shares and you can still make the money along the way.

I like growth with income! My newest purchase ABV has appreciated more than APPL on a one year basis, with a nice dividend to boot. Holding up well this month too.


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## Abha (Jun 26, 2011)

Argonaut said:


> I'm not saying I don't believe you, I'm saying the best way to play a high-growth no-dividend stock is with earnings announcement options. When the growth is finished, you won't be left holding the bag with a bunch of shares and you can still make the money along the way.
> 
> I like growth with income! My newest purchase ABV has appreciated more than APPL on a one year basis, with a nice dividend to boot. Holding up well this month too.


Options are far too complicated for most of the investors on this forum. Unless someone really wants to dip their toe into advanced investing, I would say option strategies are fruitless. 

Even if Apple starts to stagger, it will take many quarters for someone or something to knock it from its throne.

My money is on a Samsung/Google combination but I still like the momentum Apple has.

I read a research report that quoted high level ex employees saying that Apple already has a product pipeline execution plan mapped out until 2017.


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## Argonaut (Dec 7, 2010)

2015: The iApple is announced. You can use it as a phone, a TV, the internet, and you can eat it too!

When I was in Italy two years ago, I met a girl on the train who spoke English, and the first thing she asked me was how much the iPhone cost in Canada. I didn't know of course, because I loathe Apple. But apparently it cost 500 Euros over there.


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## KaeJS (Sep 28, 2010)

Argonaut said:


> But apparently it cost 500 Euros over there.


Thats basically what it costs over here. (for a brand new one)

No difference.

And I sold my original AAPL share at 264, then bought more and sold at $350, and I just bought another 10 at $368 a week ago.

Like Abha, I see a $500 stock.

AAPL could make the "iSuck" and people would still buy it, just because it is apple.


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