Three Stocks to Add to Your Portfolio
Damon is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
These stocks have been chosen from some of the industries most tied to the economic climate, along with another from the volatile fashion sector. They are, however, growth-oriented holdings that may still provide better-than-average returns amid the current market instability. I have touched on competitors of the holdings in the past such as in the following blogs: "Can FedEx Keep Rolling," "Earnings Previews of Two Acquirers," and "Three Specialty Chemical Stocks to Consider."
Swift Transportation (NYSE: SWFT)
The trucking company is expanding capacity in terms of the number of tractors and trailers it owns or leases. Along with this, management is anticipating truckload pricing increases in the 2% to 3% range, supporting a 10% to 15% share-net gain this year.
At the same time, the company is reducing its long-term-debt balance, helping to lower interest expense. Specifically, it will probably surpass its debt paydown goal of between $50 and $100 million this year.
Where Swift has seen the most growth in revenues is in its Intermodal segment. However, excess operating costs are deterring profitability in the division that provides the transport of cargo by rail as a substitute for ground shipping.
The basis for advising investors to consider this stock is thus a turnaround to positive in profit trends from its core Truckload Segment, in tandem with a return to profitability in the Intermodal business. The stock should be considered a growth investment and one of the top selections among its transportation peers.
LyondellBasell Industries (NYSE: LYB)
This specialty chemical maker produces petrochemicals and thermoplastics utilized across a wide array of industries. Customers include makers of consumer products, packaging, housing, autos, and other goods. It also serves the market for rugs and upholstery, as well as numerous other household items. End markets are largely turning upward, a factor that ought to bolster sales.
Moreover, expense reductions are apt to stem from the increased refining and production of natural gas shale deposits in the U.S., and the downward effect on prices, as this is the primary raw material included in its products.
In sum, the market for ethylene-based chemicals, incorporated into many everyday products, is gaining steam. Plus, the cost environment is becoming more favorable, through declining raw material costs. Profit comparisons should turn upward in the September quarter. The shares are trading at a reasonable valuation and should be considered for their potential price appreciation.
Michael Kors Holdings (NYSE: KORS)
The fashion retailer's revenue and earnings have been growing at robust rates, 50% and 127%, respectively, in the fiscal fourth quarter (ended March 31) for example. Rapid earnings expansion is likely to persist, with comparable-store sales climbing 15% to 20% in the current year, allowing share profits to advance around 25%.
How is Michael Kors doing it? The answer can be found in its six key growth strategies that it has set forth. First, it is realizing comp-store sales gains, apparently through an improved product assortment. Second, it is building its store base in North America. Third, it is converting locations to contain accessory shops within shops. Fourth, it is broadening its presence in Europe, both retail and wholesale. Fifth, it is constructing retail units in Japan. Sixth, it is attaining licenses to operate in Far East regions, where it currently has about 66 locations.
Given the favorable effects of these initiatives, I believe the company can meet its profit objective for this year. Plus, it has a highly liquid balance sheet with no debt that should provide the means for further investment in expansion projects.
Barring any unforeseen events, the shares should continue to be bid up.
Finding the Right Stock for Your Portfolio
Those investors seeking exposure to an industry by way of one of the best-situated companies may want to consider shares of Swift Transportation or LyondellBasell. Otherwise, for a growth stock residing in a sector that has experienced a revitalization during 2013, Michael Kors may be a good fit.
Michael Kors is one of today's hottest high-end fashion brands, and that's translated into one of the best-performing stocks in retail. But with all that growth, has the stock finally become too expensive, or is there still room left to run? The Motley Fool's premium report on Michael Kors gives investors all the information they need to make the right decision, covering the must-watch areas, opportunities, and threats to the company that investors need to know. To claim your copy, simply click here now for instant access.
Damon Churchwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!