The Essentials for Your Portfolio

When a storm is on the way, we always stock up on the essentials: bread, milk, crackers, bottled water, etc. And even though there may not be a blizzard or a hurricane in the weather forecast right now, there’s certainly been a storm in the stock market over the past two months.

So I’ve been looking into what stocks we should consider our essentials in this market, and it’s fitting that food and consumer staples are one of the places investors are turning. Let’s take a look at three of them.

Costco Wholesale Corp. (COST) is the largest wholesale club operator in the U.S. It’s famous for its bulk packaging and food samples, and members can buy everything from grapes to dress shirts on a Costco run. The wholesaler also offers car and home insurance, mortgage and real estate services and travel packages. Consumers have responded well to this wide variety of services, and Costco now operates about 670 stores in the U.S., Australia, the U.K., Canada, Japan, Mexico, Puerto Rico, South Korea and Taiwan.

Costco was also a big winner over the holiday season, and though its share price has declined for the better part of 2016 so far, it’s been rallying over the past few weeks. Analysts expect the company to post a 2.4% earnings increase from the year ago quarter, along with a 3.8% increase in sales. And for those of you who are looking for dividends, Costco offers a 1.08% yield. COST is currently ranked as a Buy in Portfolio Grader.

Kroger Co. (KR) is one of the country’s largest grocery store chains, with 2,631 stores in 34 states. However, its products are hardly limited to food. The company also owns more than 1,200 gas stations, 800 convenience stores, 300 jewelry stores and 37 food processing facilities.

Kroger has been playing to consumer trends by offering a large selection of organic and specialty items in many stores (such as tofu, sushi and specialty cheeses), and it’s been paying off. The grocery store has posted earnings surprises for the past four quarters, and I wouldn’t be surprised if it happened again when the company releases earnings next week. At current prices, KR offers a 1.11% dividend yield and is a Buy in Portfolio Grader.

CVS Health Corp. (CVS) may not be the traditional place we’d shop for groceries–though it does sell some food items–but it does provide another major essential: medicine. CVS is best known for operating more than 7,700 pharmacies that provide over-the-counter drugs, beauty products, seasonal merchandise, greeting cards and more. However, the company also has three additional businesses: CVS Caremark, CVS MinuteClinic and CVS Specialty Pharmacy.

The company has been in the news this week as it announced that it’s managed to limit drug price increases for its customers. If it can continue to keep customer costs at bay, it could certainly attract a good amount of additional business. I’m confident in this stock, as are analysts, who expect CVS to end this quarter with $42.99 billion in revenue–an 18.3% increase from Q1 2015. CVS pays a 1.74% dividend yield at current prices and is a Buy in Portfolio Grader.

These three stocks are a great place to start. For more stock rankings, I encourage you to try my free Portfolio Grader.


Louis Navellier

Louis Navellier

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