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Editor's Choice

Jim Jubak

Jubak's Journal3/10/2009 12:01 AM ET

20 stocks worth watching

The companies you should keep an eye on probably aren't making headlines now, but they'll come out of this recession and financial crisis stronger than they were before.

By Jim Jubak
MSN Money

I'm tired of the same old companies bringing us the same old bad news.

You know who I mean.

General Motors (GM, news, msgs) threatening bankruptcy to extract a few billion more out of taxpayers here and in Europe. American International Group (AIG, news, msgs) announcing a quarterly loss -- $62 billion -- even bigger than its last staggering loss. Bank of America (BAC, news, msgs) saying that taking government money, rather than paying inflated prices for Merrill Lynch and Countrywide Financial, was a big mistake.

But what about the other companies -- and there are more than a few -- that aren't in the headlines? They've managed their businesses so well that the current deep, deep recession and global financial crisis, while painful, aren't about to drive them into bankruptcy or set them pleading for a taxpayer bailout. Some of these companies are so well-managed that they're going to emerge from this crisis stronger than they went in, if only because so many competitors have been so badly damaged.

They aren't news. But they are the companies you'll want in your portfolio when this bear market is over.

Tell me which you'd rather own once this crisis is over:

  • Citigroup (C, news, msgs), which has had to auction off key businesses to competitors, has seen much of its best talent jump ship and has been so busy struggling to survive that it has underinvested in its own future, or . . .

  • Intel (INTC, news, msgs), which has continued to lower costs by investing in cutting-edge chip factories and has consequently extended its manufacturing edge over competitors, even in the midst of one of the worst downturns the PC industry has ever suffered.

If you have any doubts, look at the stocks of companies that had near-death experiences in the 2000-02 technology bear market. Nortel Networks (NRTLQ, news, msgs), which traded at a split-adjusted $870 a share in July 2000 before crashing, is back in bankruptcy today. The stock, even after a 1-10 split in 2006, traded at 8 cents a share on March 5, 2009.

Finding good companies

In my most recent column, I said the best way to profit from the eventual end of this bear market is to own shares in good companies. Recessions and bear markets test companies so severely that they clearly separate the good from the bad, and wise investors, rather than obsessing over the day's price volatility, use the time to figure out which good companies will be profitable to own in the future. And because we aren't buying now, while we wait for signs that the market might be near a bottom, investors stick those good companies in their watch lists.

And I promised that in today's column I'd use the existing Jubak's Journal watch list (at the end of the column) to show you how to figure out which companies on your watch list make the cut and to identify a few others that you might want to consider.

Video on MSN Money

Citigroup © Tim Ireland/PA Photos/Landov
Should Citigroup fail?
If the government decides to let Citigroup fail, every company that does business with the bank will suffer. Jim Jubak says this isn't the time to teach banks a lesson. (March 9, 2009)

Well, now it's time to name names. Here are the 15 from the existing watch list that pass the test, in alphabetical order:

And five additions to the list:

I don't have the time or room (my editor frowns on 20,000-word columns) to tell you why each of those good companies makes this list. Instead, let me explain a few of these watch-list picks that illustrate the kinds of things you're looking for in a good company. (As always, I'd be much happier if you came up with your own list -- even if it differs from mine -- after your own research rather than slavishly following mine.)

Continued: A competitive strategy that works

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