The Prudent Speculator newsletter, published by Al Frank Asset Management, has compiled an excellent long-term record by emphasizing stocks that offer sound value with a strong growth kicker. Here are six stocks that the newsletter is recommending and some of the thinking behind the selections.
Freeport-McMoRan Copper & Gold (FCX). The large mining company - copper, gold and molybdenum - has operations scattered across the globe.
"Offers way to play longer-term global demand growth in precious metals. Company generates strong free cash flow, which it is using to strengthen its balance sheet as well as pay regular quarterly dividends and repurchase shares. Management has a generous special dividend policy."
Archer Daniels Midland (ADM). Another way to gain exposure to commodities, the company converts grain into forms usable by commercial food producers.
"Value investment opportunity within the global agriculture space. Demand for food ingredients should rise with an increasing global population, and an increasing global middle class will drive demand for animal feed as meat consumption increases. Management working to balance strategic international expansion with shareholder-friendly activities, such as share repurchases. . . . It is worth noting that historically ADM has been able to deliver good results in both high and low grain-price environments."Whirlpool (WHR). The appliance manufacturer owns such brands as Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul and Bauknecht, along with Whirlpool, of course.
"Increased international presence, especially in rapidly growing emerging markets, is the key driver of future top- and bottom-line growth. International sales currently account for 47 percent of total revenue and are projected to quickly surpass 60 percent. Company continues to demonstrate its ability to repeatedly introduce innovative, premium-priced products. Recently, the company's improving balance sheet and strong free cash flow generation allowed management to increase the dividend by more than 16 percent."
Prudential Financial (PRU). This large provider of insurance and asset management services is another enterprise that the Prudent Speculator likes for its growth prospects abroad.
"Company has operations in more than 30 countries, including the attractive Korean and Japanese markets, and it continues to aggressively expand within Asia. In support of its international expansion initiatives, the company acquired AIG's sought-after Star Life and Edison Life Insurance businesses. Prudential's scale, financial flexibility and group of high-growth divisions should afford it ample opportunity to cultivate business over the long term."Thermo Fisher (TMO). This is a large, diversified provider of medical products and equipment.
"Company's one-stop-shop strategy is appealing to many of its customers looking to simplify procurement functions. Enjoys leading positions throughout an $80 billion market. Has accelerated emerging market investments, including plans to build a new manufacturing facility in China to serve local life-science customers. Board has authorized $750 million for share repurchases. Generates solid free cash flow."
United Online (UNTD). This provider of consumer products and services over the Internet owns the FTD flower delivery business, among others.
"Company has appealing cash flows that allow it to pay a 10-cents-per-share quarterly dividend [producing an annual yield of more than 6 percent at recent share prices]. Continues to make meaningful strides in strengthening the balance sheet, as debt has been reduced by more than 20 percent since late 2009 while maintaining the generous dividend and investing in the businesses."