My 3 Favorite Stocks Right Now
Earnings are so variable that I've given up using any metric related to earnings per share as a valuation tool. Today I use price-to-sales or, my personal preference, historical dividend yield levels. Basically, when stocks like Hormel Foods (NYSE: HRL), Clorox (NYSE: CLX), or Unilever (NYSE: UL) have historically high yields, I go in for a deep dive. I think all three are worth owning today and here's why.
Inflation is a theme that runs through all three of the consumer staples names on this list. For Hormel, which largely makes protein-focused food items like SPAM, Planters, and Jennie-O Turkey, the impact is just a timing issue. It has lived through inflation before without skipping a beat. The best evidence for that is its status as a Dividend King. However, it also has a great history of keeping the buying power of its dividends strong, noting that the annualized dividend growth rate over the past decade is a hefty 14%. So, if you are worried about inflation, you should probably look to buy Hormel, not sell it.
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Source Fool.com
