MILLBURN, N.J. (
Stockpickr) -- In a perfect world, we would seek the maximum amount of return with the least amount of risk. In the real world, many might see that as a fool's errand. I believe, though, that we can put together a
portfolio of stocks that will give us excellent potential return, at a cheap valuation with a minimum amount of risk.
With that in mind, I scanned for stocks that met two criteria. First, I sought out stocks with historical volatilities below that of the
S&P 500 over the course of the last year; the one-year realized or actual volatility for the S&P 500 is 23.25%. Second, I sought out stocks with PEG ratios that were below 1.3. I used 1.3 as a reasonable measure of good value. As you might know, stocks with a PEG of below 1 are extremely cheap, and those over 2 are too risky or overpriced.
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From the resulting stocks, I eliminated those companies that I believed did not meet my normal fundamental criteria for an investment. What was left were
five low-volatility, low-PEG stocks suitable for investment.
(AMGN - Get Report)
is one of the largest biotechnology companies in the world, sporting a market capitalization of around $56 billion. The company has many well-known products that treat a variety of diseases and conditions, including Arenesp, Embrel, Epogen, Neupogen and Neulasta.
The company, which was founded in 1980, does not have the same type of patent expiration risk that many of the ethical pharmaceutical companies such as
are facing. On top of that, Amgen has a fine pipeline of new products in various stages of testing and clinical trials.
Earnings are expected to grow 16% in 2012 and 11% in 2013, although that could change for the better if any new products are approved and launched. The stock sells at about 11.5 times current year's earnings. The one-year historical volatility is 21.5%
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The average car on the roads in the U.S. stood at 10.8 years as of the end of 2011. While new-car sales are picking up and that average age of the consumer fleet may be headed lower, there is no doubt that there are a lot of old cars on the road. Consumers who are still repairing their balance sheets or struggling to make ends meet as gas prices are increasing are choosing to become do-it-yourselfers when it comes to auto repairs. Others may not prefer to do-it-yourself but seek out reputable national chains to perform minor repairs or oil changes.