In the reader mailbag yesterday, I alluded to the idea that I would only buy individual stocks from companies that I was strongly familiar with and whose products I used myself and not only trusted, but that I found enough value in that I would laud them to others. In other words, I’m a big believer in “buy what you know.”
Unsurprisingly, several people wrote to me asking what stocks I was referring to, and so I’ve decided to list out the seven-stock portfolio I’ve been keeping my eye on for the last several months. These are the seven stocks I would invest my money in if I were going to invest in individual stocks. At some point, I will pull the trigger and do this, likely using a buy and hold strategy and allowing all of the stocks together to comprise about 10% of my overall investments, but I’m going to assemble a strong index fund portfolio first.
Here are the seven single stocks I’d buy, likely in equal amounts. I’d buy and hold each of these unless something dramatically changed about the company – in particular, if I lost confidence in the company’s products. Together, the companies are a diverse portfolio (all are in different industries) with a few traits in common – all of them have strong products that provide value to me personally, all are financially stable and have clear plans for the future, and most of them are among the most ethical companies – three appear on Ethisphere’s list of the world’s most ethical companies in 2008.
This is not investing advice. I’m merely listing the companies I would invest in and why, in hopes that you might understand my decision-making process and perhaps add something to your own decision-making process when it comes to stock investing. I’m also not looking to day trade – I want to buy and hold over a long period of time. I also tend to lean more towards companies who behave ethically while producing products I believe in instead of the investment that will quickly maximize my buck.
Herman Miller (MLHR)
If I were to invest my stock in one company, it would be Herman Miller. Herman Miller is a furniture manufacturer that focuses on office chairs, and they do superb and environmentally friendly work. I own one of their Aeron chairs, and it’s simply one of the most elegantly and superbly constructed items I’ve ever owned. I was introduced to their chairs in the workplace and was so genuinely impressed that I eventually purchased one of my own – and I began carefully following the company as well. Their chairs are ecologically sound as is their factory and they’re one of the most admired companies in America, placing at the top of Fortune’s list of admired furniture companies for the past eighteen years. Their business model is stable and the business is steadily expanding, so I’m on board for the long haul.
ING Groep (ING)
For those of you who have heard me talk positively about both ING Direct and Sharebuilder on this site, this shouldn’t come as a surprise. I’ve used many different online banks and found ING Direct to be by far the most usable, and aside from Vanguard, I’ve had the easiest time with Sharebuilder for brokerage needs. The business is growing rapidly while their stock price has held largely steady, indicating to me that the company is on very solid ground financially for the long haul. A happy customer plus a solid financial standing equals a company I’ll bet on for the long haul.
If there’s a “bet” on this list, it’s on Apple, who produce computer products that I rely on every day. As I type this, I’m using a Mac and I’d hesitate to say that I’d ever want to go back to using a PC ever again. It’s stable, incredibly user friendly, and reliable. Their product design all around is impeccable and their sales are growing like gangbusters. The biggest reason this feels like a bet to me is that I feel like more than almost every other company, the strength of Apple is tied to its leader, Steve Jobs. I follow Apple pretty closely and I just don’t see anyone waiting in the wings, which is worrisome because of the “cult of personality” leadership at Apple. If Steve goes, I fear Apple may stumble, which is a worry over the long haul. But for now, I’m incredibly pleased with their product and their company is clearly on the right track.
I have a lot of faith in both Honda and Toyota as car manufacturers, and all of my research has pointed me towards them as the source for my next car purchase and my experience with both companies as a driver has been very positive. I give Honda the nod over Toyota (since I don’t want to invest in two car manufacturers) because I generally believe they’re thinking more long term and their product lines are more diverse. Honda’s revenue is heading upwards and they’re recognized for their business ethics.
If there were a Costco fairly close to me (the nearest one is in West Des Moines, simply too far away), I would happily be a regular customer. I am a frequent customer of Sam’s Club in my area and I prefer Costco for product selection and employee treatment reasons. Warehouse shopping is a concept I strongly support, especially when it’s paired with ethical treatment of employees and strong prices. As with the other companies on this list, their profits and revenues are steadily marching upwards while maintaining the ethical standards they’ve become known for.
I like UPS because they work. I’ve had dozens of packages delivered to my home without a missed delivery (as compared to FedEx, which has an atrocious 0-for-2 record since my move) and occasional earlier than expected deliveries, plus I’ve never had any issues with shipping with them, either. Given their role as a large-scale delivery company, they’re heavily involved in improving fuel economy and moving towards green solutions with their GreenFleet, plus they’re committed to high ethical standards as part of their business model. Couple that with their steadily improving financial success and it’s clear why I’d buy and hold this company.
General Mills (GIS)
My final pick is probably surprising to some given my commitment to fresh foods, but their commitment to health-conscious food production in that they’ve switched to whole grains for all of their cereals (plus my son’s incessant love for Cheerios) has slowly won me over, as has their commitment to ethical business practices. I’ve been satisfied with their products as a customer, and their financial record is strong, which all adds up to a strong picture of the company as a whole, strong enough for me to pick the stock for buying and holding.