'Bounce back quickly and hard' stocks
Stocks in this group combine solid fundamentals -- they're well run, dedicated to investing for the long term and have built an enviable market presence -- with a strong base of faithful investors who believe that they'll be rewarded if they buy when the stock price dips.
Some of these stocks -- like Cummins (CMI), a member of my Jubak's Picks portfolio -- are what I'd call long-cycle cyclicals. They do indeed ride cycles of sales booms and busts, but these cycles can run for five, six or seven or more years. Cummins, I'd argue, is still riding a cycle that started in late 2008. Other companies are riding trends more than cycles, and any dip is a chance to catch a long-wave.
I suggested Cummins as a member of this group in my last column. Let me suggest three more stocks today:
● Schlumberger (SLB). You want to own shares of this energy technology company, because oil is getting harder to find. Schlumberger's tools make it easier, faster and often cheaper. The stock closed at $74.33 on Aug. 9. You would have done quite well buying on the dip to $59.06 on Sept. 30, 2011, or to $54.29 on Aug. 27, 2010. (Schlumberger is a member of my Jubak's Picks portfolio.)
● Ensco (ESV). This deep-water driller doesn't have the history of Schlumberger, but it's riding the same trend and shows an interestingly similar ability to bounce back from a trouncing. The stock closed at $42.21 on June 25 and at $55.61 on Aug. 9.
● Pioneer Natural Resources (PXD). Every time shares of this oil producer have tumbled, they've picked themselves right up off the floor again. Look at any chart. Lows on Oct. 3, 2011, Dec. 19, 2011, and June 25, 2012, have each been followed by substantial rallies. I think that's because, to many investors, this stock has become the poster child for the revival of oil production in the United States from unconventional shale geologies.
How to use this list
So how would I use the 10 new stocks (15 total, including my previous recommendations) and the three groups that make up this list? It depends on the flavor of the market.
If I'm looking for protection in a shaky market, I'd go with good stocks in the dividend group. If I'm looking at a modest correction with good -- but not great -- sailing ahead, I'd go with the never-sink stocks of my second group. And if the market has taken a licking and I'm looking for a horse to ride in the recovery, I'd go with the stocks in the third group.
Right now, this looks like a shaky market and I'd be looking for the protection of the dividend group. If we get the correction or dip I expect in August and September, I'd take a look at the stocks in groups two and three, depending on the degree and cause of the pullback.
In other words, this isn't a list of stocks to go out and buy all at once or right now. Deploy these good stocks gradually, as a bad market demands, over the next few months. I'll be adding some of them, I'm sure, to Jubak's Picks when the time is right.
Updates to Jubak's Picks
These recent blog posts contain updates to the stocks in Jubak's market-beating portfolios:
- Is Chinese hotel stock heading for a fall?
- Brazil's economy can't break out
- Progress trumps dollars for biotech startup
- Why Abbott Labs fits a defensive portfolio
- Wall Street skeptical about Exxon Mobil
At the time of publication, Jim Jubak did not own or control shares of any company mentioned in this column in his personal portfolio. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not now own positions in any stock mentioned in this column. The fund did own shares of Apple, Cummins, Ensco, McDonald's, Precision Castparts, Pioneer Natural Resources and Schlumberger as of the end of March. Find a full list of the stocks in the fund as of the end of March here.
Jim Jubak's column has run on MSN Money since 1997. He is the author of the book "The Jubak Picks," based on his market-beating Jubak's Picks portfolio; the writer of the Jubak's Picks blog; and the senior markets editor at MoneyShow.com. Get a free 60-day trial subscription to JAM, his premium investment letter, by using this code: MSN60 when you register at the Jubak Asset Management website.
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