Quality at a Discount

12/22/2016 9:00 am EST


Charles Carlson

Editor, DRIP Investor

The rising tide has not lifted all boats. Indeed, the stocks below are quality, industry leaders that still trade at big discounts, well below their 52-week highs, suggests dividend expert Chuck Carlson, editor of DRIP Investor.

Bristol-Myers Squibb (BMY) was beaten up after the company reported disappointing clinical trials for its Opdivo oncology drug.

The selling in the stock was overdone, in my opinion, and Bristol-Myers came through with a fairly strong third quarter.

Drug stocks have been especially volatile in light of industry-wide pricing concerns and the Trump election, which provided a near-term boost to a lot of drug stocks.

The stock seems to have found a footing in the mid-$50s and should provide decent total returns for investors from current depressed levels.

Walt Disney (DIS) has bounced slightly in recent trading but is still trading at a 19% discount to its 52-week high.

The firm faces tough comparisons in 2017 in its theme park and movie business as well as continued struggles in its cable properties, notably ESPN.

However, the firm did say it looks for a nice snap-back in 2018 and remains bullish on ESPN. The stock also may be getting a lift from expectations that Disney is plotting an aggressive takeover move to enhance its ability to distribute content.

I remain a big fan of the company’s assets and management and like the long-term potential of the stock. I would feel comfortable buying these shares in the $90s.

Nike (NKE) had had periods throughout its history when the stock has fallen out of favor with Wall Street, but history also shows that those setbacks were good buying opportunities.

I expect Nike to put up 7%-9% revenue growth and double-digit earnings growth in 2017, numbers that most companies would love to achieve.

Consumer sentiment appears to be improving, which is a plus for the firm. I would feel very comfortable buying Nike at this level.

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