Top Picks for Growth & Value

09/16/2016 9:00 am EST

Focus: STOCKS

Kelley Wright

Managing Editor, Investment Quality Trends

Whether you are building a portfolio from scratch, or seeking new positions, our The Timely Ten list represents our top ten recommendations as of each issue, explains Kelley Wright, editor of Investment Quality Trends.

To be clear, The Timely Ten is not just another “best of, right now” list. Rather, it is our reasoned expectation based on our methodology and experience that these ten currently Undervalued stocks offer the greatest real total-return potential over the next five years.

Traditionally we recommend that all investment considerations begin with the following criteria: Stocks from the “Undervalued” category; an S&P Quality Ranking of A- or better; exemplary long-term dividend growth; and a P/E ratio of 15 or less

We add these metrics to our investment considerations: A Return on Invested Capital (ROIC) of 10% or greater; a Free Cash Flow Yield (FCFY) of 5% or greater; a proprietary Price to Value Ratio (PVR) between 0 and 1.6 where the lower the number the better.

The latest Timely Ten stocks are:

Franklin Resources (BEN)
Eaton Vance (EV)
American Express (AXP)
Wal-Mart Stores (WMT)
Gap Inc. (GPS)
Target Corp. (TGT)
Nordstrom (JWN)
Cummins (CMI)
Omnicom Group (OMC)
Trinity Industries (TRN)

Do we believe that all 10 will appreciate simultaneously or immediately? Of course not.

However, our five-plus decades of research and experience, however, leads us to believe that these stocks, purchased at current Undervalued levels, are well positioned for both growth of capital and income.

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By Kelley Wright, Editor of Investment Quality Trends

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