Investing Long-Term? Start with These 4

01/30/2012 7:30 am EST


Richard Young

Editor, Young's Intelligence Report

The US economy is showing more green shoots, and while a mild winter may be giving us false hope of an early thaw in the markets, there are some worthwhile stocks for long-term investors, writes Richard C. Young of Intelligence Report.

Boeing (BA)
The Obama administration has been approving billions of dollars of arms deals of late, including the sale of 84 Boeing F-15SAs and associated equipment.

The F-15 is an iconic American fighter jet that can carry 23,000 pounds of payload, including devastating JDAMs (joint direct attack munitions), AMRAAMS (advanced medium range air-to-air missiles), and Sidewinder missiles, including the most advanced, the AIM-9X.

The jet, which weighs around 81,000 pounds when fully loaded with gear and fuel, can travel at speeds greater than Mach 2.5. The two-seater aircraft can fly and fight at both low and high altitudes. The 20mm M61A1 Vulcan cannon tucked in under the wing allows the fighter pilot to fire 6,600 rounds per minute through six rotating, Gatling gun style barrels.

The political situation is getting hot in the Middle East and Asia. More and more countries are buying advanced armaments to build up their militaries. Since the F-22 is not being sold, even to America’s closest allies, and the F-35 is approved for only a short list, fourth-generation jets like the F-15 will be the best many air forces can get.

Boeing’s price has broken out above its 200-day moving average, a bullish signal. Buy.

J.M. Smucker (SJM)
Relative strength analysis illustrates well the benefits of a stable business like Smucker during volatile economic times. The stock surged in comparison to the S&P 500 in 2008 when the market began to fail.

But look at Smucker’s performance during the recovery. Savvy management and a good business model pushed Smucker ahead of the S&P 500. Buy Smucker today and lock in a 2.4% yield.

Alliance Resource Partners (ARLP)
The market storyline says coal will soon be run to extinction because of new EPA regulations curtailing pollutants and forcing upgrades to scrubbers on coal plants. But the real losers will be small coal power plants with no scrubbers. They’re simply not worth the cost of upgrading.

But coal isn’t going anywhere. The driver of growth at US coal mining companies may not be domestic demand, but rather rapidly increasing demand for coal exports from Asia. China and India are expected to double their energy consumption by 2035.

Buy ARLP to gain exposure to the fourth-largest coal producer in the eastern US. My relative strength chart shows ARLP’s long record of outperformance compared to the S&P 500.

Hershey (HSY)
The world’s chocoholics are developing a finer palate, eschewing traditional chocolate companions like peanuts, caramel, almonds, and coconut. Instead, they are looking for more far-flung fillings like goji, acai, pomegranate, and blueberry.

To reel in more discerning chocolate buyers, Hershey has purchased Brookside Foods of Abbotsford, British Columbia. Brookside creates unique, chocolate-covered fruit juice pieces that will expand Hershey’s flavor variety, as well as traditional chocolate treats.

My price chart shows Hershey has broken out above recent resistance near $60 a share. Buy.

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