This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Stocks That Are a Better Buy Than Bonds

BOSTON ( TheStreet) -- Cisco (CSCO - Get Report), Johnson & Johnson (JNJ - Get Report) and Lowe's (LOW - Get Report) are stocks that offer investors a triple treat -- they're the best in their industry, carry little debt compared with cash and are trading at discounts, says Russell Croft, a fund manager at Croft Leominster.

"We've been really warming to the quality of the old blue-chip companies where you're not paying any premium for the company in this market," Croft says. "A lot of these companies will be able to increase dividends, buy back stock, and many times buy growth through mergers and acquisitions."
Russell Croft, manager of the Croft Value Fund

Based in Baltimore, Croft Leominster has $800 million in assets under management, with $325 million in the Croft Value Fund (CLVFX). Croft has been a co-portfolio manager of the Croft Value Fund since he joined the firm in 1997.

The Croft Value Fund has low turnover. Croft prefers to buy and hold companies for three to five years, sometimes longer.

"We just want to find a good company and a good investment and hold it for the long term," he says. "We're seeing more of the high-quality growth at a discounted price. The multiples are down with the overall market, and you can get some great companies with a good discount."

That style of contrarian investing has paid off for investors. The Croft Value Fund has an annualized return of 4% over 10 years and 4.1% over five. That has earned the fund a four-star rating, the second-highest, from Morningstar.

To make money over the next three to five years, investors don't need to take on elevated risk. "You can build a good long-term portfolio right now with a lot of good-quality companies out of favor," he says.

As bond yields have sunk to record lows, blue-chip stocks have become even more attractive because of their fat dividends, Croft says.

"I'd take a risk buying good-quality stocks right now than reaching to find yield in the bond market," Croft says.

Croft says the following five stocks are trading at a discount and have the potential to rebound along with the economy.
1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BDX $136.53 -0.14%
CSCO $25.90 0.97%
JNJ $92.64 -0.76%
LOW $69.10 0.09%
UTX $91.91 0.73%

Markets

Chart of I:DJI
DOW 16,374.76 +23.38 0.14%
S&P 500 1,951.13 +2.27 0.12%
NASDAQ 4,733.4970 -16.4820 -0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs