5 Picks That Bring the Market to You

08/15/2011 2:13 pm EST


Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

As these consumer picks show, investing in growth names with a long time horizon will elevate your returns above the fray of this still-volatile market, says Jim Collins of Insight Capital in this exclusive interview with MoneyShow.com.

I don’t think anyone would argue with us that we’re in some pretty volatile times in the markets. How do we play them?

Well, it is very volatile, and it’s going to remain that way, I’m afraid. In this kind of a market, the best approach really is to step aside until the market settles down a little bit.

But if you really want to invest, let the market come to you. Get yourself into good companies that you want to own. If you’re looking at growth stocks, make sure that you’re looking at companies that have very rapid growth in earnings and sales, not just one or the other.

You can take your time in this marketplace. It’s going to stay volatile for some time. So you have to be very careful.

You also want to pick sectors of the market that have a positive outlook going forward, past this market turmoil that we’re in at the moment.

When you say let the market come to you, exactly what do you mean by that?

Well, let’s take a look at a company like McDonald’s (MCD), for example. I mean, McDonald’s is doing great. The outcome for income from McDonald’s is for about 10% per year for the next three years.

You don’t have to go in and pay a high price for it. Take a look at where this company bottomed out let’s say in the last six months, take a look at where it’s trading today, and pick a price that you feel comfortable about owning McDonald’s for the next couple of years, if that’s a company that you’d like to own.

I’m just using that as an example. You don’t have to go out and pay up in this marketplace, because when the Dow is going through a 600-point swing on any given day, that’s huge. You don’t want to go in and chase anything.

I’d say the thing that people have been chasing has been gold, and gold looks like it’s going to go higher. Again, if we get some resolution on the debt situation in this country, you’re going to see a major correction in gold. So again, you have to even be careful there.

Do you have any specific stocks that you would be looking at?

Yes, I would, and since we mentioned McDonald’s, I would mention if you want to get something a little bit faster in the restaurant area, that you look at Chipotle Mexican Grill (CMG) or you take a look at Buffalo Wild Wings (WLD). I like the symbol on that one by the way. It’s WLD like wild (laughter).

These companies are growing earnings at a very, very rapid pace, and they’re also growing revenue at a very rapid pace. You have to remember that 91% of the people are still going to work in this country. So they enjoy going out, they have dinner, and so these types of restaurants doing very well here.

Anything else?

The other thing that we like in this area, since we’re into consumer items a little bit here, is that people still wear shoes.

Our old friend Crocs (CROX) is out there still selling those little rubber-type shoes. They call it some kind of a Croslite cell system or whatever. They’re very soft, you know what I mean?

They’ve gone from being just beach-type shoes to being into fashion- and style-type shoes, and the company continues to grow. The price is right, and so people are buying.

Also another shoe company that we like is Steve Madden (SHOO). Steve Madden is in a different part of the marketplace, but again both of these companies—because of the prices on their products and because of the quality—they’re doing very well in this market.

So Jim, don’t panic, be smart, let the market come to you.

Let the market come to you. Pick your stocks, do a good job on doing that and let the market come to you.

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