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Strategy Lab is MSN Money's stock-picking challenge. To learn more about the game -- and the contenders -- click here.
Let's open the round with these stocks:
American International Group (AIG, news, msgs): The big boy in the insurance space has been hurt by the subprime fiasco. But it trades at just 1 1/2 times book value with a price-earnings ratio of 10. It gets an A+ quality ranking and has raised its dividend at least 10% per year on average for the last 12 years.
Carnival (CCL, news, msgs): Recession? What recession? This company is growing quickly but still has great fundamentals. It trades at less than two times book value, boasts a modest P/E of 14, gets an A+ for quality and is another fat dividend grower. The yield, at 4%, is nothing to sneeze at either.
General Electric (GE, news, msgs): Loved by everybody, yet it has lagged, probably on concerns about its big financial unit. But there's a recurring theme here, with a nice yield around 3.5%, A+ quality and a dividend growing at least 10% on average each year.
Johnson & Johnson (JNJ, news, msgs): With the Fed coming to the rescue, everyone wants to abandon their defensive positions. This is very shortsighted, especially if this is just a bear-market rally. This one gets an A+ for quality, has little debt, a modest P/E at 17 and grows its dividend every year.
LSI Industries (LYTS, news, msgs): In a world going green, analysts were shortsighted when this company missed its numbers by a couple of pennies. With a new energy bill that calls for the elimination of incandescent bulbs, LSI's LED technology is in a perfect spot. The yield is almost 5% right now, but it won't stay there for long. The company trades for less than 1 1/2 times book value with a low P/E of 13 and grows its dividend every year.
Nike (NKE, news, msgs): Nike is a machine powered by names like Tiger Woods and Michael Jordan. Everybody wears their shoes. Nike gets an A+ for quality and boasts a decent P/E, and while the dividend yield is currently low, it grows that dividend year in and year out.
PepsiCo (PEP, news, msgs): Like JNJ, this is another defensive stock that everyone has taken profits in. Snacks and soft drinks are a pretty safe bet in any environment, but when you can pick up one of the classic brands at historic good value, it really is a no-brainer. A+ quality, a decent current yield and like most of my stocks, a dividend that grows every year.
Pfizer (PFE, news, msgs): OK, so let’s assume one of the Democrats takes the White House. The government is going to get into the pharmaceutical business? Please. This giant has great mid- and long-term pipelines, a historically low P/E for pharma, a fat 5.5% dividend yield and grows that dividend every year.
Rohm and Haas (ROH, news, msgs): A top specialty chemical maker. It plays in a totally different space than my Sigma-Aldrich (SIAL, news, msgs) holding last round, but another outstanding company. A-rated with a nice yield of 3%, and of course, it grows its dividend every year.
Seacoast Banking of Florida (SBCF, news, msgs): Longtime Strategy Lab readers know I love the little banks. The environment for these guys has been just plain tough, but with recent Fed easing and more possible interest-rate cuts on the way, it is hard to pass up a company trading for less than book value with a dividend yield over 6% that raises its dividend at least 10% per year on average.
TCF Financial (TCB, news, msgs): TCF Financial is similar to the story above but a different region of the country, and with an A+ quality ranking to boot.
Teleflex (TFX, news, msgs): Technically an industrial conglomerate, Teleflex is a collection of companies that do everything from making drilling cables for oil rigs to surgical staples. It had a recent acquisition it is still digesting, but when it starts to build on that, look out. An excellent management team, A-rated for quality, less than two times book, a good yield and modest P/E for a value company that's growing.
Wal-Mart Stores (WMT, news, msgs): Wal-Mart is the company everybody loves to hate, but they do what they do better than anyone else. If we do slide into recession, folks still have to buy stuff, and more often than not it is at Wal-Mart. A+ quality, a historically very high yield, a low payout ratio and a growing dividend.
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