DRIP Roadmap for 2015

02/11/2015 9:00 am EST

Focus: STOCKS

Charles Carlson

Editor, DRIP Investor

As a roadmap for building a winning portfolio for 2015 and beyond, I’ve identified what I believe are important industry groups that will do particularly well in 2015, explains Chuck Carlson, editor of DRIP Investor.

And within those sectors I’ve listed my favorite stocks. Please note that I restricted my choices to companies that offer direct-purchase plans, so all of these stocks can be bought directly, the first share and every share, making them readily accessible to virtually any investor.

Financials

I think the climate for financials will improve in 2015. A moderate increase in interest rates should help banks’ net interest margin.

Continued growth in the economy should support loan demand. The contentious relationship between large financial institutions and politicians and regulators should ease a bit with a change in control in Congress.

Finally, quality financials should continue to rebuild their dividend payouts at a decent clip.

Among banks Wells Fargo (WFC) offers a top play among major money center banks. I also like JP Morgan (JPM), which should play some catch up in terms of performance in 2015.

Energy

Yes, you read that correctly. The sector has been beaten up over the last couple of months. But few sectors score as well as energy in our company’s Quadrix® stock-rating system.

And few sectors offer the attractive valuations that are available in the energy group. Still, selectivity is crucial when investing in this area.

For more aggressive investors, Halliburton (HAL), a leading oilfield-services firm, has appeal.

Halliburton stock has been hard hit by the weakness in energy stocks. However, the recent weakness is setting the stock up for what I think might be a pretty nice rebound in early 2015.

Long-term, Halliburton is one of the strongest blue chips in its markets and the pending acquisition of Baker Hughes strengthens its competitive position. The stock is not for the weak-hearted, but these shares are cheap and should do well in 2015 and beyond.

Retail

Lower oil prices. Rising employment. A slight uptick in hourly wages. All of these factors should result in better sales for retailers.

To be sure, retailing will continue to be very competitive and companies without a real niche in retailing—those usually caught in the middle, not having strength in specialty, high-end, or discount retailing markets—will suffer.

I put two drugstore chains—CVS Health (CVS) and Walgreen (WAG)—in the retailing group. These two companies provide an additional healthcare kicker given their services in that sector.

I also like Macy’s (M) among department stores. Macy’s stock does go on sale from time to time, but these shares usually come back strongly. Finally, Home Depot (HD) provides a way to play retailing and the housing market.

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