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Traditionally, the best stocks in any portfolio (growth, income, retirement) are stocks that you can buy and leave alone for at least a few months, if not a few years, without having to worry about rushing to your brokerage account to sell out before you’re caught in an epic collapse.
And summertime is typically one of the hottest months for investors to seek out these “set it and forget it” stock picks.
That’s because summer, which is just a few weeks out, is when the stock market tends to underperform. The famous admonition to “sell in May and go away” refers to the fact that equity markets underperform between May and October. The reasons for that underperformance aren’t known, and it’s not a 100% accurate phenomenon, but it has largely persisted for decades.
Most investors don’t want to actually sell in May — but many do want to “go away.” Between barbecues, boats and beaches, there are many more interesting pastimes in the summer than following one’s stock portfolio.
With that in mind, here are 10 “set it and forget it” stocks to buy for this summer. They’re the best kinds of stocks for a few months of peace because, no matter what happens, investors can confidently own them and enjoy the summer with far less worry about what the market might be doing.
Best “Set It And Forget It” Stocks: McCormick (MKC)
McCormick & Company, Incorporated (NYSE:MKC) isn’t the sexiest stock in the market. But in this case, that’s a good thing.
The well-known manufacturer of spices and seasonings has posted years of steady earnings growth, and MKC stock has benefited as a result. Gains in McCormick haven’t been torrid, but they’ve been consistent, as MKC has easily outperformed the S&P 500 over the past three- and 10-year periods.
McCormick did get a bit stretched last summer, when shares hit $105 in July. But a modest pullback and steady growth have left McCormick stock much more reasonably valued. A multiple just under 25 times the midpoint of 2017 EPS guidance sounds spicy itself — but it’s only two turns above that of The Coca-Cola Co (NYSE:KO). And McCormick has a much stronger long-term outlook — the spice category is growing nicely, unlike sodas — so a larger premium is deserved.
Add in potential dividend growth benefits, and MKC seems a safe way to drive returns — even if the summer doldrums hit the market.
Best “Set It And Forget It” Stocks: Facebook (FB)
Where are all those pictures of summertime fun going? Onto the Facebook Inc (NASDAQ:FB) platform, no doubt.
The fact is that even though Facebook stock still seems risky, it’s as consistent as any blue-chip grower in this market, and one of the best stocks you can own period. It’s already clear from the first-quarter results at Snap Inc (NYSE:SNAP) and the struggles at Twitter Inc (NYSE:TWTR) that there’s no real contender to Facebook’s social media throne.
Meanwhile, Facebook already has over a billion users and posted 18% user growth last quarter. It and Alphabet Inc (NASDAQ:GOOGL) drove 99% of U.S. online advertising growth last year — and Facebook looks better-positioned in that space than its rival.
FB stock still isn’t that expensive at 25 times next year’s earnings, and Facebook doesn’t report earnings until late July. Investors can put this one into cruise control.
Best “Set It And Forget It” Stocks: Craft Brew Alliance (BREW)
In any market, a stock like Craft Brew Alliance Inc (NASDAQ:BREW) is best to be bought, and then somewhat ignored.
BREW stock has seen a significant amount of volatility over the past year, in particular. A distribution agreement with Anheuser Busch InBev NV (ADR) (NYSE:BUD) spiked shares last summer. Fears of a potential bubble — and ensuing price wars — in craft beer undercut the stock, before a strong Q1 report led to a rebound in BREW shares.
But this summer should be particularly good for Craft Brew Alliance.
The company’s flagship, Hawaiian-themed Kona brand, is perfect for summertime enjoyment. While legacy brands such as Redhook and Widmer Brothers struggle, Kona continues to gain customers and grow shipments in the double digits. Weakness there is the biggest risk to BREW stock — but it seems unlikely that weakness will come during the summer months.
Longer-term, Anheuser Busch still is incentivized to buy BREW out by 2019 — at a price well above the current $16-plus.
Generally, investors need to tune out the noise surrounding BREW stock. This summer, that advice seems both more true and less likely to be needed.
Best “Set It And Forget It” Stocks: Wendy’s (WEN)
Wendy’s Co (NASDAQ:WEN) trades at its highest levels in nearly a decade, but there should be still more room to run.
A long-running turnaround plan is near an end, and the fruits of those efforts are being harvested. A strong first-quarter report last week showed impressive year-over-year growth. Wendy’s even contributed to a record-setting tweet, further strengthening its brand.
And it does look like the fast-food space is set for a strong summer. Grocery store deflation — which has pressured pricing for away-for-home operators — has to reverse at some point. The “price wars” in the space seem to be abating. But McDonald’s Corporation (NYSE:MCD) is too expensive, and Restaurant Brands International Inc (NYSE:QSR), which owns Burger King, doesn’t look much better.
With Wendy’s outgrowing its larger rivals, and its stock not yet in the stratosphere, it looks like an interesting play for the summer — and a good reason to buy an extra Frosty or two.
Best “Set It And Forget It” Stocks: Bank of America (BAC)
In this political environment, any financial stock — let alone a mega-bank like Bank of America Corp (NYSE:BAC) — would seem an odd choice for a “set it and forget it” play.
With questions still surrounding President Donald Trump’s sentiment toward Glass-Steagall and Dodd-Frank, among other financial regulations, BAC stock seemingly could be moved at any time by political news — in either direction.
But the summer typically is a slow time in D.C. — a place which moves at a snail’s pace the rest of the year. Financial regulation almost certainly is on the back burner anyhow. Meanwhile, BofA’s diversified nature gives it more options in any regulatory environment. And with Wells Fargo & Co (NYSE:WFC) still dealing the fallout from its “fake accounts” scandal, and other financials more exposed to potential legal changes, BAC seems the most stable choice in the sector.
That may change. But at the moment, it certainly seems like any real news will have to wait until after Labor Day — at least.
Best “Set It And Forget It” Stocks: Lowe’s (LOW)
Lowe’s Companies, Inc. (NYSE:LOW) traditionally has underperformed its larger rival Home Depot Inc (NYSE:HD). As a result, investors have valued LOW stock more cheaply than HD in terms of earnings and cash flow multiples.
That’s starting to change.
Lowe’s stock continues to rise off the back of a strong Q4 report in early March. Homebuilding levels look solid, as does the key remodel market for Lowe’s. One more strong earnings report later this month should give LOW momentum to last throughout the summer.
There’s still room for LOW stock to close the valuation gap with HD stock. The continuing disaster at Sears Holdings Corp (NASDAQ:SHLD) continues to provide incremental sales to both companies. And Lowe’s is running on all cylinders for the first time in quite some time.
Summer traditionally is a strong period for Lowe’s stores. It seems likely to be the same for Lowe’s stock.
Best “Set It And Forget It” Stocks: J2 Global (JCOM)
J2 Global Inc (NASDAQ:JCOM) isn’t a summer stock, to be sure. But in terms of looking for a stable, consistent grower, investors could do much worse than JCOM.
J2 operates a stable of IT-related businesses and media outlets, ranging from its eFax business for small- and medium-sized businesses to online properties like PCMag.com and IGN.com. Even as the overall IT industry has sputtered somewhat, JCOM has continued to rise, and a recent ~7% pullback offers an intriguing entry piece.
Meanwhile, J2 Global shares are trading at just 13 times 2018 EPS estimates, which potentially could limit downside in the stock. Organic and inorganic growth opportunities abound. And a normalization in U.S. information technology spending, in particular, could add a near-term tailwind.
J2 isn’t the most memorable stock out there — but in this case, that’s not a bad thing.
Best “Set It And Forget It” Stocks: Blue Buffalo Pet Products (BUFF)
Blue Buffalo Pet Products Inc (NASDAQ:BUFF) has been stuck in a relatively tight range for over a year now, despite rather solid performance.
The natural pet food manufacturer has had two recalls, which dented the brand. But sales growth has been steady, and earnings growth has followed: the company is guiding for 17% adjusted EPS growth this year after a 27% increase in 2016.
The pet food space is tough, with discounting by “superstores” like PetSmart and Petco pressuring margins. But new manufacturing facilities have helped Blue Buffalo’s margin growth. Meanwhile, a focus on grain-free and “natural” products has helped the company take market share.
So far, the good news hasn’t done anything for investors. Blue Buffalo stock actually trades below its closing price on the day of its July 2015 IPO. But steady demand should protect the downside here, and there’s room for BUFF to gain a bit more respect from investors as 2017 rolls on.
When that comes, Blue Buffalo shares should benefit.
Best “Set It And Forget It” Stocks: Nike (NKE)
I did think Nike Inc (NYSE:NKE) stock had gotten a bit ahead of itself back in 2015. NKE stock cleared $65, and a 30-plus earnings multiple in retrospect was too aggressive.
But it also looks like the pendulum has swung too far the other way.
Nike stock now trades at just 22 times FY17 analyst EPS estimates. That’s a multiple that assumes little, if anything, in the way of profit growth. Yet Nike is growing both sales and margins, and that’s not going to end soon.
China represents a huge market for the company — one with years, if not decades, of growth potential. Under Armour Inc (NYSE:UAA) is providing competition, as is a resurgent Adidas AG (ADR) (OTCMKTS:ADDYY). But neither is the global force that Nike is, and overall market growth means there’s room for more than one competitor in the space.
Nike stock even offers a 2.2% dividend yield — a nice sweetener for the low price. And while investors may worry about competition or sneaker sales, the fact remains that Nike isn’t going anywhere. At some point, its share price should reflect that.
In the meantime, the low price should portend a low-stress summer.
Best “Set It And Forget It” Stocks: FirstEnergy (FE)
Few stocks can put an investor to sleep faster than utility stocks. Boring — but generally safe — utilities are among the most defensive stocks in the market.
And if utility stocks are among the best stocks for investors seeking out a nice summertime nap, you can’t do much better than Northeastern provider FirstEnergy Corp. (NYSE:FE).
FirstEnergy does have a political battle brewing in Ohio over regulatory subsidies and a potential price hike. But modest pressure in one market isn’t enough to support the 52-week low at which FE stock is trading. Meanwhile, a 5% dividend yield and a sub-12 forward P/E multiple both imply that trouble in that state already is priced in.
All told, FirstEnergy stock looks like a perfect “set it and forget it” play. Downside protection? Check. Stable business. Check check.
FE isn’t going to return 100% and be the talk of the barbecue. But it will let you talk about more important — and enjoyable — things than money, and even provide some extra cash to spend.
As of this writing, Vince Martin was long BREW.