As I explained in my previous article, entitled "On the Trail of the Next Big Bubble," blue chip stocks are the ones that are going to lead the market higher.
And reminiscent of the stocks in the Nifty Fifty from the early 1970s, the household names are the ones that will be pushed to P/E levels that eventually become bubbly.
So with that in mind, I compiled a "New Nifty Fifty" list of buy and hold stocks for the next bull market.
Doing so, I took six key factors into consideration:
Large capitalization
Dominate market position
Strong product offering
Brand name power
Competitive environment
Dividend history
Those criteria delivered the following companies from the energy, materials, health care, consumer products, and technology sectors. I bring you…
Wealth Daily‘s Nifty Fifty Blue Chip Stock Index
1. Johnson & Johnson (NYSE: JNJ) — In a universe of stocks, this one is my favorite; JNJ is one of the largest, most diversified health care companies in the world. It currently trades at P/E of just 13.66 with a 3.0% dividend.
2. Abbott Laboratories (NYSE: ABT) — Much like JNJ, Abbott labs is a leading player in several growing health care markets. The company offers a wide range of prescription pharmaceuticals, nutritionals, diagnostics, and medical devices. It currently trades at a 10.76 forward P/E with a 3.44% dividend.
3. Eli Lilly (NYSE: LLY) — Eli Lilly is a leading producer of prescription drugs offering a wide range of treatments for neurological disorders, diabetes, cancer, and other conditions. The company also sells animal health products. It’s trading at a forward P/E of 7.93 with a 5.5% dividend.
4. Amgen Inc. (NASDAQ: AMGN) — Amgen is a top biotech stock that discovers, develops, and manufactures medicines based on advances in cellular and molecular biology. The company operates with a 31.84% profit margin and carries a forward P/E of 10.75.
5. Gilead Sciences (NASDAQ: GILD) — Gilead focuses on the research, development, and marketing of anti-infective medications with a focus on treatments for HIV. The company has a 38.35% profit margin and a forward P/E of 10.48
6. Celgene Corporation (NASDAQ: CELG) — Celegene is one of the brightest stars among large-cap biotech stocks focusing on treatments for cancer and other inflammatory conditions. It’s trading at PEG ratio of 0.99 and a forward P/E of 18.18.
7. Stryker Corporation (NYSE: SYK) — With 78 million baby boomers headed for old age, Stryker’s specialty surgical and medical products, such as orthopedic implants, will continue to do well. The company is sitting on a ton of cash and carries a forward P/E of 16.04.
8. Baxter International (NYSE: BAX) — Baxter International makes and distributes medical products and equipment; their products focus on the blood and circulatory system. The stock has a forward P/E of 10.07 and a PEG ratio of 0.99.
9. Kimberly-Clark Corporation (NYSE: KMB) — Best known for brands such as Kleenex, Scott, Huggies, and Kotex, KMB sells consumer and other products in more than 150 countries. The company has an 11.68 forward P/E and pays a 4.30% dividend.
10. Thermo Fisher Scientific (NYSE: TMO) — Formed through the November 2006 merger of Thermo Electron and Fisher Scientific, TMO is a leading manufacturer and developer laboratory instruments and supplies for life science, drug discovery, and industrial applications. It carries a forward P/E of 14.27.
11. Potash Corporation (NYSE: POT) — Potash is one of the largest fertilizer companies in the world and is the largest potash producer. The company has a 27% profit margin and a 14.87 forward P/E.
12. Applied Materials Inc. (NASDAQ: AMAT) — AMAT is the world’s largest manufacturer of wafer fabrication equipment for the semiconductor industry. The company carries a forward P/E of 12.83.
13. Apple Inc. (NASDAQ: AAPL) — What would a list like this be without AAPL? Between the Mac, the iPod, the iPhone, and the iPad, Steve Jobs has his hands in one revenue stream after another.
14. Sandisk Corporation (NASDAQ: SNDK) — SanDisk designs, makes, and markets flash storage card products used in digital cameras, mobile phones, laptops, USB, drives, gaming devices, and MP3 players. The company has a PEG ratio of 0.69 with an 11.89 P/E.
15. Google Inc. (NASDAQ: GOOG) — Google Search is the Internet. Enough said. By the way, GOOG has nearly $25 billion and virtually no debt.
16. Microsoft Corporation (NASDAQ: MSFT) — Microsoft is the world’s largest software maker, primarily as a result of its near-monopoly in desktop operating systems and its Office Suite. The company has $37 billion in cash and a forward P/E of 13.70.
17. Adobe Systems (NASDAQ: ADBE) — Founded in 1982, Adobe is one of the world’s largest software 51 companies offering creative business software used by consumers, designers, and developers, and to produce content across multiple media. ADBE carries a 1.16 PEG ratio.
18. Hewlett-Packard (NYSE: HPQ) — And to think it all started in a garage… Hewlett-Packard provides personal computers, printers, enterprise server and storage technology to individual and enterprise customers worldwide. The company has a PEG ratio of 0.97 and a forward P/E of 11.05.
19. Texas Instruments (NYSE: TXN) — Texas Instruments is one of the world’s largest manufacturers of semiconductors; the company also produces handheld graphing and scientific calculator products. They have no debt and a forward P/E of 12.35.
20. Corning Inc. (NYSE: GLW) — Once an old-line housewares company, Corning is now a leading maker of glass substrates used by the electronics industry and fiber optic equipment used by the telecommunications industry. The company has a PEG ratio of 0.91 and a forward P/E of 10.73.
21. Amazon.com (NASDAQ: AMZN) — The Jeff Bezos-led company is a leading online retailer, selling a broad range of items from books to consumer electronics, to home and garden products. In this case, it’s all about the growing market in e-commerce. This is one stock that is already reaching bubble heights.
22. Molson Coors Brewing Company (NYSE: TAP) — The fifth largest brewer in the world, TAP was formed in early 2005 with the combination of Adolph Coors Co. and Molson, Inc. The company has a PEG ratio of 0.89 and a P/E of 11.36.
23. Target Corporation (NYSE: TGT) — Every girl’s best friend, this company runs 1,489 Target locations and 251 SuperTarget stores nationwide. On a forward basis, Target carries a 13.44 P/E.
24. Kraft Foods (NYSE: KFT) — Kraft Foods is one of the world’s largest branded food and beverage companies. Its brands include Kraft cheeses, dinners, and dressings; Oscar Mayer meats; Philadelphia cream cheese; Maxwell House coffee, and Nabisco cookies. The company pays a 3.90% dividend and has a 12.91 forward P/E.
25. Altria Group (NYSE: MO) — Formerly Philip Morris, Altria Group is the largest U.S. cigarette producer. The company has a forward P/E of 10.42 and pays a 6.6% dividend yield.
26. ConAgra Foods (NYSE: CAG) — CAG’s brands include Hunt’s, Healthy Choice, Chef Boyardee, Peter Pan, Wesson, Orville Redenbacher’s, Slim Jim, PAM, Swiss Miss, Banquet, Marie Callender’s, and Hebrew National. The company has a forward P/E of 12.95 and pays a 3.20% dividend yield.
27. CSX Corporation (NYSE: CSX) — Buffett likes the railroads… and so do we. CSX operates the largest rail network in the Eastern United States, with a 21,000-mile rail network linking commercial markets in 23 states and two Canadian provinces. It carries a forward P/E of 13.73.
28. Freeport-McMoRan Copper & Gold (NYSE: FCX) — Freeport-McMoRan Copper & Gold is the world’s second largest copper producer and is a major producer of gold and molybdenum. The company has a PEG ratio of 0.65 and a forward P/E of 8.86
29. Air Products & Chemicals (NYSE: APD) — Air Products & Chemicals is one of the largest global producers of industrial gases and has a large specialty chemicals business. It carries a forward P/E of 14.06.
30. Newmont Mining Corp. ( NYSE: NEM) — Newmont is one of the world’s largest gold producers; the company is also engaged in the production of copper. It has significant assets in the United States, Australia, Peru, Indonesia, Ghana, Canada, Bolivia, New Zealand, and Mexico, along with a forward P/E of 14.25.
31. Diamond Offshore Drilling (NYSE: DO) — Peak oil is real… and drillers stand to benefit. DO provides offshore contract drilling services to the oil and gas industry and owns one of the world’s largest fleets of semi-submersible rigs. It carries a PEG ratio of 0.92 to go with an 8.98 P/E.
32. First Solar Inc. (NYSE: FSLR) — First Solar produces solar modules that employ a thin layer of cadmium telluride semi-conductor material to convert sunlight into electricity. The company sells its products to solar project developers and operators of renewable energy projects in the United States, Germany, France, and internationally. The company carries a 17.41 P/E.
33. Transocean Ltd. (NYSE: RIG) — RIG is a leading provider of contract drilling services for the oil and gas industry and operates the world’s largest fleet of mobile offshore drilling units. A dominate player in the deep water, RIG has a PEG ratio of 0.86 and a P/E of 8.94.
34. Chevron Corporation (NYSE: CVX) — Formerly ChevronTexaco, this global integrated oil company has interests in exploration, production, refining and marketing, and petrochemicals. The company has a forward P/E of 8.28 and pays a 3.30% dividend.
35. BP Global (NYSE: BP) — This London-based super-major integrated oil company is the world’s second largest publicly owned oil company and the fourth largest U.S. refiner. It’s trading at an 11.4 P/E and pays a 5.61% dividend.
36. Oracle Corporation (NASDAQ: ORCL) — This leading supplier of enterprise database management systems and business applications added hardware with the 2010 acquisition of Sun Microsystems. ORCL carries a forward P/E of 13.94.
37. Cisco Systems (NASDAQ: CSCO) — The world’s largest supplier of networking equipment, Cisco offers a complete line of routers and switching products that connect local and wide area computer networks. The company carries a forward P/E of 15.97 to go along with nearly $40 billion in cash.
38. General Mills (NYSE: GIS) — General Mills is the second largest U.S. producer of ready-to-eat breakfast cereals and a leading producer of other well-known packaged consumer foods. The company has a 14.29 P/E and pays a 2.90% dividend.
39. Diageo Plc. (NYSE: DEO) — Diageo is one of the world’s leading producers of premium alcoholic beverages, including Smirnoff vodka, Johnnie, Captain Morgan rum, Baileys Original Irish Cream liqueur, J&B scotch whisky, Tanqueray gin, and Guinness stout. It carries a forward P/E of 14.02.
40. Nike Inc. (NYSE: NKE) — Nike is the world’s leading designer and marketer of high-quality athletic footwear, athletic apparel, and accessories. Over the past three years, NKE has more than doubled its quarterly dividend and repurchased nearly $3.6 billion of its shares.
41. Proctor & Gamble (NYSE: PG) — Another household name, PG markets its products in more than 180 countries. The company pays a 3% dividend as has a 15.23 P/E.
42. Coca-Cola (NYSE: KO) —The real thing, KO is truly a world’s largest soft drink company. KO also has a sizable fruit juice business. It owns or licenses more than 500 brands and has a forward P/E of 14.29.
43. CarMax Inc. (NYSE: KMX) — The best thing to happen to the used car business since the warranty, CarMax carries a 0.99 PEG ratio and a 17.85 forward P/E.
44. Best Buy Co. (NYSE: BBY) — With Circuit City out of the way, BBY is leading retailer of consumer electronics and entertainment software with approximately 4,000 stores in the U.S., Canada, China, and Europe.
45. Colgate-Palmolive Co. (NYSE: CL) — Colgate-Palmolive Co. is a leading global company that markets oral, personal and household care, and pet nutrition products in more than 200 countries and territories. Colgate pays a 2.55% dividend.
46. Costco Wholesale Corporation (NASDAQ: COST) — Costco — pioneer of the "I can get it for you wholesale" membership warehouse concept in 1976 — operates 559 warehouses worldwide, mainly in the U.S. and Canada. COST has a forward P/E of 18.71.
47. Dollar Tree (NASDAQ: DLTR) — This bargain retailer is a leading U.S. operator of discount variety stores, with over 3,800 stores in 48 states, the majority of which offer merchandise at the fixed price of $1.00. DLTR carries a 1.03 PEG ratio and a 13.06 forward P/E.
48. McDonalds Corporation (NYSE: MCD) — MCD is the largest fast-food restaurant company in the world with approximately 32,500 restaurants in 118 countries. This behemoth trades at a 14.46 forward P/E and pays a 3.10% dividend.
49. eBay Inc. (NASDAQ: EBAY) — EBAY owns one of the world’s most popular e-commerce destinations as well as PayPal, 30% of Skype, and other online business interests. The company books 27% profit margins and carries a 13.29 P/E.
50. Intel Corporation (NASDAQ: INTC) — Intel Corp. is the world’s largest semiconductor chipmaker based on revenue and shipments, and is well-known for its dominant market share in microprocessors for personal computers. INTC carries a 12.09 forward P/E along with a 2.60% dividend.
Now if you can’t find a stock in there that looks good to you… well, the next bull market will likely be moving on without you.
Your bargain-hunting analyst,
Steve Christ
Investment Director, The Wealth Advisory
Editor, Wealth Daily
P.S. If you liked these stocks, you will love the five stock dividend portfolio I have put together for Wealth Advisory subscribers. It’s a rock-solid list of high dividend payers with the market solidly on their side. To learn more about these market beating companies, click here.
