The economic events of the last few years have shed a light on the need for diversification in your financial portfolio. Whether it was the Enron scandal, or a portfolio that was overweight housing and financial stocks, too many people learned the hard way that diversification is the key to mitigating risk and maintaining a balanced portfolio.
When managing your own portfolio, it is recommended that you own between five and ten different stocks. Less than five and you risk overweighting a sector and exposing yourself to undue risk levels. More than ten stocks would be unmanageable for a retail investor, as the amount of work to run a private portfolio of that size would be overwhelming.
While many people managing their own portfolio prefer to deal with exchange traded funds, there is a vast majority of investors who like pick their own stocks. Either approach is correct as long as you have analyzed your financial situation thoroughly, and have assessed the risks involved in both strategies.
If you have decided to chose your own stocks for your portfolio, and have decided to diversify between 5 stocks you might be wondering, what are the best 5 stocks to invest in?
While every investment strategy is different, for example, a day trader looking for penny stocks will have a vastly different strategy that a long term value investor, here are some suggestions for individual stocks to incorporate into your value and growth oriented portfolio.
What Are The Top 5 Stocks To Invest In? Take A Bite Out Of Apple (AAPL)
Apple has enjoyed enormous growth over the last five years as the stock is up 377.54% for the time period. Apple has paved the way for new technology, revolutionizing computers, MP3 players, as well as cell phones and enjoys massive market share.
With no debt (no kidding), the addition of Apple’s wildly successful iPhone to the Verizon network, as well as 52% sales growth for 2010, Apple seems poised to continue growth into the future.
Apple’s biggest worry is the failing health of its founder and CEO, Steve Jobs. While news of Jobs’ illness has caused fluctuations in the stock prices, analysts maintain a buy rating on Apple, and many believe that this stock has room to run.
Buying Apple on a dip would give your portfolio the capital appreciation aspect you need in your investment strategy, while mitigating risk by investing in a high quality company.
Always perform your own analysis on every potential investment to assess its suitability for your portfolio.
What Are The Top 5 Stocks To Invest In? We Hear You Now Verizon Communications (VZ)
Verizon Communications INC, is the second largest US telecom service provider after AT&T. Verizon enjoys the top spot ahead of AT&T Mobility for wireless services. The company services around 90 million customers, while also holding around 30 million landline accounts. Verizon’s wireless units supplies digital TV, internet access, long-distance, and local telephone to wholesale, corporate, and residential customers.
Verizon’s acquisition of Apple’s iPhone will boost its marketshare, and could put it in position to overtake AT&T. Shareholders enjoy a 6% dividend, plus enormous growth potential making this stock well suited for capital appreciation as well as capitol preservation.
What Are The Top 5 Stocks To Invest In? Invest In Style With Coach (COH)
Founded in 1941, Coach has been synonymous with fine leather goods and savvy business deals. Coach designs and produces high end leather goods such as purses, wallets, and luggage, as well as licenses its name for footwear, scarves, fragrances, eye-wear, and watches.
Coach operates in North America, China, and Japan with 660 retail and outlet stores. The company also sells products through some 940 outlet and department stores world wide, as well as catalog and internet sales.
With strong sales, a loyal customer base, and a commitment to quality, Coach is prepared to continue to grow moving forward. The company also pays a .97% dividend making it pay to be patient.
Even well run, fashionable companies have their moments with volatility, so please analyze every potential investment to see if it fits into your investment strategy.
What Are The Top 5 Stocks To Invest In? Bank On New York Community Bancorp (NYB)
While major US banks have been loudly floundering in the wake of a US economic recovery, small community based financial institutions have been quietly moving forward, positing profits, and continuing to expand. One such community bank is New York Community Bancorp (NYB).
In 2009, New York Community Bancorp purchased the failing AmTrust Bank of Cleveland, boosting its fourth-quarter pre-provision net revenue 41% year-over-year to $266.3 million. New York Community share have enjoyed a 52% increase over last year, and a 5.37% dividend payout that is well supported by earnings.
With a healthy dividend, shrewd management, and a significant upside earnings potential, NYB is a quality play in the financial sector.
What Are The Top 5 Stocks To Invest In? Ship Out With UPS (UPS)
This shipping giant is a perennial favorite of super-star investor Warren Buffet, as this stock comprises 2% of Buffets portfolio. UPS transports around 15 million packages and documents per day to the United States and over 200 countries.
In 2010, UPS increased its dividend to 2.6% (0.47 a share) and has stated that it may increase its dividend again in the coming months. Analysts maintain a buy rating on UPS, and predict an increase in EPS in the coming quarter.
With an attractive dividend, large marketshare, and future growth potential, UPS could make an excellent addition to your growing portfolio.
As always, preform due diligence when researching and selecting stocks for your portfolio. What works for some may not work for everyone, so make sure each and every stock fits your investment objective.
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