Zacks Investment Ideas feature highlights: Agrium, TJX, Madison Square Garden
and Chipotle Mexican Grill
CHICAGO, Sept. 26, 2012
CHICAGO, Sept. 26, 2012 /PRNewswire/ --Today, Zacks Investment Ideas feature
highlights Features: Agrium (NYSE:AGU), The TJX Companies, Inc. (NYSE:TJX),
The Madison Square Garden Company (Nasdaq:MSG) and Chipotle Mexican Grill,
Create a Rip Van Winkle Portfolio with These 4 Stocks
There is a difference between trading in stocks and investing in them but too
often they get confused as being the same thing. Trading is usually done in a
short time period, much like the day traders of the dot-com era, whereas
investors are supposed to take a longer term view.
The problem is that too many investors think like traders and get sucked into
thinking about stocks in the short term.
Warren Buffett, one of the great long term investors of all time once said:
"I never attempt to make money on the stock market. I buy on the assumption
that they could close the market the next day and not reopen it for five
years. As far as you are concerned, the stock market does not exist. Ignore
it. Much success can be attributed to inactivity. Most investors cannot resist
the temptation to constantly buy and sell."
Could you buy and hold a stock for 5 years without checking to see what it is
doing? Could you ignore it completely?
Warren Buffett's five year rule reminds me of the Washington Irving story
about Rip Van Winkle. Irving described a man who goes up to the top of a
mountain, falls asleep, and awakes 20 years later to find that life has turned
Rip Van Winkle doesn't recognize anyone. His wife is dead. His small New York
town is no longer controlled by the British but has a new government with
George Washington at its helm.
The Rip Van Winkle Strategy
What if you were to pick stocks as if you were Rip Van Winkle? It would be a
strategy where an investor buys a company with the belief that he could "wake
up" five years later and that investment would still be sound.
I can hear you thinking, "that's impossible to do. Too much can change in
those 5 years."
Sure, Borders is no longer in operation and Best Buy is on the ropes. Neither
of those companies would have been good investments in a Rip Van Winkle
strategy five years ago.
But there are plenty of other companies that have stood the test of time and
are likely to not just survive, but thrive, in the coming years.
4 Stocks For a Rip Van Winkle Portfolio
What do these four stocks have in common? They all are businesses with an
1. Agrium (NYSE:AGU)
If Rip Van Winkle could choose a stock to wake up to years later, Agrium would
be it. We all have to eat, right?
Agrium produces all three of the major fertilizers as well as micronutrients
and plant protection products. It is the largest direct-to-grower retailer in
North and South America, selling seeds and irrigation products.
P/E = 10
2012 EPS Growth: 2.6%
2013 EPS Growth: -0.12%
Zacks #2 Rank (Buy)
2. The TJX Companies, Inc. (NYSE:TJX)
A retailer might seem a strange choice for an investor who is looking out five
years because the sector can be volatile but the TJX Companies have been
growing earnings in the double digits for the last 3 years and has been
operating its low priced model since 1956. It operates TJ Maxx, Marshalls and
home furnishing stores like HomeGoods in the United States, Canada and Europe.
P/E = 18.1
F2013 EPS Growth: 23.9%
F2014 EPS Growth: 11.4%
Zacks #2 Rank (Buy)
3. The Madison Square Garden Company (Nasdaq:MSG)
Do you think Madison Square Garden is going anywhere in the next five years?
The Madison Square Garden Company also operates other famous venues including
Radio City Music Hall, the Forum and the Chicago Theatre. It also owns the New
York Knicks and New York Rangers sports franchises. Additionally, the company
manages a media division which consists of web, digital and television
Owning a piece of the Garden isn't cheap, however.
P/E = 31
F2012 EPS Growth: -4%
F2013 EPS Growth: 24.7%
Zacks Rank #3 (Hold)
4. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Chipotle is in the midst of worldwide expansion. It currently only operates
Mexican casual dining restaurants in the United States, Canada, Great Britain
and France. In five years, its expansion is likely to continue.
Chipotle is an aggressive growth stock with a big P/E but with large double
digit growth projections to match.
P/E = 37
2012 EPS Growth: 33.3%
2013 EPS Growth: 21.2%
Zacks #3 Rank (Hold)
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