In troubled times like these, buying any stock can seem like a megadecision. It takes nerves to part with your money whilescreens are flashing red and markets are hurtling in every direction. But a mega decision can bring mega rewards, if you buy the right stocks.
Morgan Stanley has just issued a full house buy alert on international stock markets for the first time since 2009, claimingthe worst of the slump is over. As panicky investors rush to sell, all five of its key timing indicators (valuation, fundamentals, risk, capitulation, and a combined market indicator) are screamingbuy!. European equity strategist Graham Seckerratesa number of mega-cap stocks that are ripefor the plucking, including five FTSE 100 favourites. Could these stocks reap megarewards for you?
Back In Fashion
Burberry (LSE: BRBY)has been hit hard by the slowdown in the Chinese luxury sales market. Itsshare price is offalmost 30% in just sixmonths, but this is a company I have admired for several years, and today could certainly be styled as a tempting entry point. Strong growth in the US has helped to offset falling sales in China and Hong Kong, suggesting the current sell-off may have been overdone. With net cash of 552m, it is more than equipped to withstand any slowdown. Operating margins of 20%, an instinctive grasp of social media, new flagship stores and continuing profit growth should spare the stock a handbagging.
Turning Up The Heat
British Gas ownerCentrica (LSE: CNA) has been surrounded by abad odour ever since former Labour leader Ed Miliband threatened to freeze prices if he won power in this years election. The stock is down 40% since then, even though the electorate choseto freeze out Miliband instead. Falling gas and oil prices threaten Centricas9bn investment in its upstream business, sparkinga profit warning in February and 30% dividend cut. The decision to slash4,000 jobs was taken asa sign of weakness rather than strong management. Low energy prices may continue to weigh but with management committed to dividend progression today could be a megatime to buy.
Imperial Might
Imperial Tobacco Group (LSE: IMT) has held pretty steady during recent troubles, and is up 18% over the past year. The continuing fall in cigarette volumes worries me, its market share is under pressure in the US, and revenue growth is slowing. But strong brands,cash discipline, a 4% yield and 7% drop in the share price over the last month could make now a good time to lock into a steady long-term income.
Off The Grid
National Grid (LSE: NG) has long been my favourite defensive utility stock. As a virtual monopoly in a heavily regulated industry, it has also avoided the political risk that has plagued Centrica. Its share price is down slightly over the last year, but nobody is complaining giventodays markets, and its solid long-term prospects in both the US and UK make it tempting in troubled times, especially given that5% yield in a deflationary world.
Fone Home
I drifted away fromVodafone (LSE: VOD) after the Verizon sell-off, and was also concernedby its exposure to eurozonewoes, which saw sales plunge in Spain and Italy.BTs purchase of EE and the merger of O and Three alsohit its profile in the UK. European QE may yet spark a jobs revival and reduce youth unemployment, which would be good for revenues. Plus you have the added bonus of strong sales in India and Turkey. Down 8% over the last month, but yielding 5%, Vodafone could still be a good call.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Burberry and Centrica. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.