Stingy Investor Contact - Subscribe - Login
  Home | Articles | Screens | Links | SNW | Rothery Report
 
The Top 500 U.S. Stocks for 2009

Warren Buffett famously warned, "unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market." Well, U.S. stocks are down nearly 50% in one of the worst bear markets ever. It's hard not to be a little panicky.

But take a deep breath because there is reason to hope. History is now on the stock buyer's side. There hasn't been a single ten-year period following a big bear market that hasn't been profitable for U.S. stock investors. Yes, that includes the 1929 crash. Even better, Buffett himself recently traded all the cash in his personal account for stocks. You don't get a better bullish indicator than that.

Bargain shopping is the order of the day and, to help out, we're pleased to present our Top 500 ranking of U.S. stocks. Just as with our Top 200 Canadian stocks, we focus on each stock's fundamentals in our quest to uncover the very best investments.

We start by selecting the 500 largest public companies in the U.S. based upon net sales. We then look for bargains by rating each stock for its value appeal. The most undervalued stocks get an A. The next most undervalued group gets a B and so on, all the way down to F for the stocks that we deem to be overvalued. We also grade each stock based on its prospects for growth. Stocks with the best growth drivers are given As; the slow growers are sent home with Fs.

Ideally a stock will get a double-A rating, making it both an outstanding growth and value candidate, but that's rare. Only three stocks picked up a double-A this year, although 19 others managed to nab at least one A and one B.

Should you load up on these high-grade stocks? Only if you can truly follow Buffett's advice. Even our conservatively selected stocks weren't spared from the market crash. Taken as a group, our highest ranked stocks from last year lost 39.6%. That's a painful result. As we and other stock market investors discovered, there just weren't many places to hide - over half of the largest 500 U.S. stocks declined more than 38% during the last 12 months. More than 3 in 10 suffered falls in excess of 50%. Even worse, these figures do not include the sizeable number of stocks that were dumped into the dustbin of history. So far 2008 is shaping up to be one of the worst years ever for stocks. This collapse will hopefully prove to be a once-in-a-lifetime event.

As tough as the last year has been, remember that there is a silver lining in the grim statistics. Stocks are now far less expensive than they once were. Today's low prices should substantially boost your long-term returns. It makes much more sense to be bullish when market sentiment is grim than when the outlook is rosy. We firmly believe it is good policy to buy when others are fearful.

As always, you should view the Top 500 as a starting point for your own research. Carefully consider each stock before diving in and use your own judgement to choose what is best for your portfolio. Even if you decide not to use our grades to guide your stock picking, you'll find a wealth of data in our tables that can help you zero in on investments that are right for you. In fact, our Top 500 U.S. Stock table contains so much information that we had to put it on our website (at the end of this page).

To get a taste of this year's bargains, consider the roster of 22 stocks that earned at least one A and one B for their value and growth appeal. We've listed these elite candidates in Bargains for Bad Times, above.

Some extraordinary qualities are needed to make our list of bargains. On the value front, all of our top selections are profitable and pay dividends. They sell at modest price-to-book-value ratios, and have little debt. On the growth side, they demonstrate strong increases in sales and earnings per-share. In addition, they generate healthy returns on equity, have achieved better than average market performance, and are not expensive on a price-to-sales basis. But keep in mind, these stocks are controversial. After all, strong growth is rarely to be had at rock-bottom prices without some risk.

Only one highly rated stock from last year got the nod again. CVS Caremark (CVS) operates a chain of drug stores and was a strong performer.

Remarkably, many of our new stocks are trading at prices from decades past. AT&T (T), the giant phone company and member of the prestigious Dow Jones Industrial Average, is cheaper than it was in 1996. Specialty metals producer Allegheny Technologies (ATI), is changing hands below its 1990 highs. ConAgra Foods (CAG) sells below its 1991 price. Even Comcast (CMCSA) can be purchased at a discount to its 1993 price.

We could go on because other stocks are suffering from a similar back-to-the-future phenomenon. Because of it, investors now have a rare, perhaps once-in-a-generation, opportunity to buy excellent companies at low prices. The median Top 500 stock is selling for 61% of its sales and below 11 times earnings.

The current panic will pass. It might take a while, perhaps even several years. But the market will make a comeback and stocks bought at today's prices should provide handsome returns.

As always, remember that stock screens have their limitations. Check to make sure that a company's situation hasn't suddenly changed in some important way before you invest. Read the firm's latest press releases, regulatory filings, and scan newspaper stories to make sure that you're up to speed on all of the most recent developments. Then screw up your courage and consider buying a few bargains.

Download the full table of top US stocks for 2009 (a .xls file)

From the December/January 2009 issue

  MoneySense Articles
 Cdn Top 200 2016
 US Top 500 2016
 Retirement 100: 2015
 Cdn Top 200 2015
 US Top 500 2015
 Retirement 100: 2014
 Cdn Top 200 2014
 US Top 500 2014
 Retirement 100: 2013
 Cdn Top 200 2013
 US Top 500 2013
 Retirement 100: 2012
 Buffett Buys
 FB IPO
 Stocks that pay
 Value in the S&P500
 Cdn Top 200 2012
 US Top 500 2012
 Retirement 100: 2011
 Where to invest $100k
 Where to invest $10k
 Summer Simple Way
 A crystal ball for stocks?
 Cheap & safe
 Risky business
 Cdn Top 200 2011
 US Top 500 2011
 Retirement 100
 Dividend investing
 Value investing
 Momentum investing
 Low P/E P/B
 Dividends
 Dividend growers
 Cdn Top 200 2010
 US Top 500 2010
 Graham's prescription
 Income 100: 2009
 The case for optimism
 Cdn Top 200 2009
 U.S. Top 500 2009
 Wicked investments
 Simply spectacular
 Income 2008
 Small stocks, big profits
 Cdn Top 200 2008
 US Top 500 2008
 Value that sizzles
 So simple it works
 Income 100
 No assembly required
 Investing by the book
 Cdn Top 200 2007
 US Top 500 2007
 Invest like the masters
 A simple way to get rich
 Top Trusts 2006
 Stocks for cannibals
 Car bites dogs
 Cdn Top 200 2006
 US Top 1000 2006
 So easy, so profitable
 Top Trusts 2005
 Dogs of the Dow
 Top 200 2005
 Money for nothing
 Yield of dreams
 Return of the master

MoneySaver Articles
 2 Graham Stocks for 2017
 3 Stingy Stocks for 2016
 5 Graham Stocks for 2016
 3 Stingy Stocks for 2015
 3 Graham Stocks for 2015
 3 Stingy Stocks for 2014
 4 Graham Stocks for 2014
 8 Stingy Stocks for 2013
 6 Graham Stocks for 2013
 9 Stingy Stocks for 2012
 8 Graham Stocks for 2012
 Simple Way 2011
 5 Stingy Stocks for 2011
 7 Graham Stocks for 2011
 Simple Way 2010
 5 Stingy Stocks for 2010
 8 Graham Stocks for 2010
 Simple Way 2009
 Timing Temptation
 19 Stingy Stocks for 2009
 4 Graham Stocks for 2009
 Simple Way 2008
 Active at Passive Prices
 Unbundling ETFs 2008
 5 Stingy Stocks for 2008
 5 Graham Stocks for 2008
 Is your index too active?
 Graham's Simple Way
 Canadian Graham Stocks
 5 Stingy Stocks for 2007
 8 Graham Stocks for 2007
 Top SPPs
 The Simple Way
 A hole in your IPO?
 Monkey Business
 8 Stingy Stocks for 2006
 Graham Stock Gainers
 Blue-Chip Blues
 Are Dividends Safe?
 SPPs for 2005
 Graham's Simplest Way
 Selling Graham Stocks
 RRSP Money Market Funds
 Stingy Stocks for 2005
 High Performance Graham
 Intelligent Indexing
 Unbundling Canadian ETFs
 A history of yield
 A Dynamic Duo
 Canadian Graham Stock
 Dividends at Risk
 Thrifty Value Stocks
 Stocks in Short Supply
 The New Dividend
 Hunting Goodwill
 SPPs for 2003
 RRSP: don't panic
 Desirable Dividends
 Stingy Selections 2003
 10 Graham Picks
 Growth Eh?
 Timing Disaster
 Dangerous Diversification
 The Coffee Can Portfolio
 Down with the dogs
 Stingy Selections
 Frugal Funds
 Graham Revisited
 Just Spend It
 Ticker Temptation
 Stock Mortality
 Focus on Fees
 SPPs for the Long Term
 Seeking Solid Stocks
 Relative Strength
 The VR Approach
 The Irrational Investor
 Value Investing

Globe & Mail Articles
 Indexing advice
 Media-shy stocks
 Curse of size
 Market uncertainty
 Be even lazier
 Scary beats safe
 Small, illiquid, value
 Use the numbers
 What value is good value?
 Sculpt for value
 Value vs CAPE
 Graham Rules
 CAPE vs PeakE
 Top value ratio
 Low Beta
 Value and dividends
 Walter Schloss
 Try unloved AIG
 Why I'm a value investor
 New world of ETFs
 Low P/Es possible
 10 yielders
 Be happier
 Long-Short
 Dividend Downside
 Shiller's P/E
 Copycat investing
 Cashing in on class
 Index roulette
 Theory collides
 Diving too deep
 3 retirement villains
 Scourge of inflation
 Economic omens
 Analyst Expectations
 Value stock scarcity
 It's all in the index
 How to pick good funds
 Low Beta Wins
 Hunt for dividend stocks
 Think garage sale

Advisor's Edge Articles
 Passive Rebundling
 Doing the math

Norm Speaks
Flip Books

Tools:
 Asset Mixer
 Periodic Table
 ETF Fee Calculator



 
About Us | Legal | Contact Us
Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, financial advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...