For new investors, picking good stocks is a daunting challenge. There are thousands of companies, countless investing metrics one can track, and then, of course, there's the unpredictability of the future that needs to be factored into the equation.
In an effort to help The Motley Fool's Gaby Lapera choose a handful of stocks to buy, a number of analysts shared with her their favorite stocks right now. Listen in on this week's episode of Industry Focus: Financials to hear which stocks our analysts recommended as well as which ones Gaby decided to add to her portfolio.
A full transcript follows the video.
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*Stock Advisor returns as of February 6, 2017
This podcast was recorded on March 6, 2017.
Gaby Lapera: I don't know if you remember doing this.I don't know if our listeners remember this.We had a stock face-off series of showsa couple weeks ago, whereIndustry Focushosts and analyststalked about some stocks that they liked, andI agreed that at the end of it that I would buy stocks if I liked them, andif they had done a good job selling me on it and I did agood job convincing myself that I actually wanted to buy them. So I wanted to talk a little bit about which stocksI actually ended up buying. I will say that before I decided to buy,I looked at all the fundamentals,and all of them looked very good on every company, whichyou might expect, becauseIndustry Focushosts and analysts were thepeople who had picked the companies. So I'm going to talk to you aboutsome of the qualitative things that helped memake my choice.
As you remember,Maxfield, you and Jordan Wathen,you actually pitchedJPMorgan Chase (NYSE: JPM), and Wathen pitchedMoody's.I ended up picking JPMorgan Chase, and the reasonbasically comes down to the weight that both of these companies behavedduring the financial crisis and the period leading up to the financial crisis.JPMorgan Chase did a great job ofmanaging its risk, and Moody's wasone of the reasons that the financial crisis happened,one could say, and that has made menot trust them very much in the long term. And I'm not really sure that they have fixed the problems that caused them to mislabel certain securities. So, JPMorgan Chase was my winner there. AndI felt like, as theFinancialshost,I have to own at least one bank.I felt like I was cheating listeners by not owning at least one bank.
John Maxfield:Let me saysomething really interesting that I learned the other dayabout the rating agencies. Earlier in the week,I was on the phone with a CEO ofone of our really large banks. And he told me that the ratingsagencies are his single most important constituents. Aboveshareholders, above the board of directors,above regulators, above customers,above analysts. And I thought, "Wow,that's such an interesting point." Sorry,that's just a random thing, but I thought you would find it interesting.
Lapera:Yeah,that's definitely very interesting. And who knows,maybe my opinion about Moody's will change eventually, when I have more money to invest. Butfor now, I could only pick one, and JPMorgan Chasewas my choice.
Then, in theAmerican Outdoor Brands(NASDAQ: AOBC) versus [Anheuser Busch InBev]faceoff,I ended up going with American Outdoor Brands,mostly because I thought their umbrella business model was really interesting, the fact that they were getting into more technical things that they could do, they were buying these companies that had a lot of niche expertise, and they have a lot more room to grow versus the AB InBev of beer, which is basically agiant monolith of beer.
For healthcare, threwa little bit of a curveball, I ended up buying both [Gilead Sciences] (NASDAQ: GILD) andIllumina (NASDAQ: ILMN), becauseI think both of them have a lot of potential. Illumina,I really wish I had one of their machines whenI was doing my master's work,I could have done so many very interesting things. But, alas,I was a lowly gradstudent without access to one in a lab. And Gilead,I think, has a lot of room to grow, and it's a little undervalued at this point.
[8point3 Energy Partners]versus [General Electric] (NYSE: GE), I went with GE because the energy space, frankly, scares me, and I understand what GE does. I'm still not 100% sure what 8point3 does. ForShopifyversusFacebook,unfortunately I couldn't buy either of them. Remember, if you will, that I mentioned that The Motley Fool has a great number oftrading restrictions. We have trading restrictions on both Shopify and Facebookbecause we are using them for some unknown internal purpose, at least to me. Butfor the record, I would have bought Shopify,because I think their story was the more compelling of the two, even if theirfundamentals work, perhaps, not as compelling. But, yeah, that'swhat I ended up picking. If you guys have any questions about why, go ahead and ask me. Idon't know that I'll be able to answer them satisfactorily to you.I hope you guys enjoyed that week,I got a lot of feedback saying that you did, andmaybe we'll be able to do something like that again in the future.
Gaby Lapera owns shares of American Outdoor Brands, General Electric, Gilead Sciences, Illumina, and JPMorgan Chase. John Maxfield owns shares of Facebook. The Motley Fool owns shares of and recommends Anheuser-Busch InBev NV, Facebook, Gilead Sciences, Illumina, Moody's, and Shopify. The Motley Fool owns shares of General Electric. The Motley Fool has a disclosure policy.