Excerpts from Greg Blotnick – Nine Stocks To Buy
HCP, Inc.., a REIT with a 6.4% dividend yield. HCP has 1,200 properties specializing in senior housing, life science and medical offices, with a diversified mix of independent and assisted living. Shareholders have enjoyed a compound annual return of 14.9% since their 1985 IPO, and HCP has increased their dividend for 31 consecutive years. Healthcare expenditures are set to increase with the “graying of America” and HCP is well-positioned to capture this secular growth with their unique, diversified real estate portfolio.
Home Depot (HD) – Boomers entering retirement will spend their free time fixing up their homes, or spending money on second homes to renovate. The stock yields 2.25%, ahead of the S&P 500, and recently hiked their dividend by 17%. Home Depot is the 2nd-best performing stock of the last 30 years, with a cumulative return of nearly 68,000% or ~24% annualized. Revenues should hit $100 billion in 2018 and the industry enjoys long-term secular tailwinds in an aging housing stock and new household formation.
Amazon, Inc. (AMZN) – As boomers age, their preference will shift towards the convenience of ordering online rather than driving to the store. Bezos’ e-commerce monster now captures over 50 cents of each incremental dollar spent online and twenty years of reinvestment are finally showing up in the form of margin expansion and triple-digit growth in free cash flow. Other growth drivers include Prime Video and the firm’s recent entrance into logistics.
“What Traders are Watching”
MONTH END– Last day of the Month today, and a Big Mutual Fund Year-End date. Don’t think we will see any “Window Dressing” (usually occurs into Dec31), but we may see some of these big “Tax Loss” Candidates see relief from recent selling pressure.
The Fed’s preferred measure of inflation is due later[wsj.com] Monday. Rising inflation and rising yields could undermine the relative value case for stocks, with the correlation between bond and equity prices now positive – Economic circumstances and attitudes of policy makers[wsj.com] have shifted in the past year in ways that suggest the likeliest path of inflation is up, not down. Data released Friday showed that core inflation, which excludes food and energy, reached a two-year high of 1.7% in the third quarter, according to the Fed’s preferred measure. Other data found stirrings of wage acceleration – Global Yields are modestly lower this AM
Japan’s industrial output stalled in September in a worrying sign[asia.nikkei.com] that the economy, already struggling to mount a sure-footed recovery, may be losing some momentum due to weak consumer spending and exports – Separate data showed retail sales fell more than expected in September from a year ago, further evidence that private consumption remains a drag on growth. The yen is slowly coming down from its lofty heights as markets grow more conscious of interest rates gaps between Japan and the rest of the world, giving a lift to the Japanese economy. While long-term interest rates are rising in the U.S. and Europe, those in Japan are pegged at zero.