Stock and fund ideas poised for growth

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Carolyn Bigda

We’ll start with eight companies that will grow no matter what happens to the economy. Then, we offer funds and fund portfolios you can invest in starting with a mere $1,000.

Stocks to consider

Abbott Laboratories (symbol ABT, $44). The drug and medical-device maker has said it will sell part of its overseas generic-drug business for $5.3 billion. The deal will allow Abbott to focus on emerging markets, where sales in the third quarter of 2014 helped boost overall profits by 13 percent.

American Express (AXP, $92). In 2014, Amex launched OptBlue, which allows third-party processors to manage card transactions for small retailers. Execs believe the number of mom-and-pop stores newly accepting Amex could rise by 50 percent annually for several years.

Apple (AAPL, $115). In the quarter that ended in September, during which the latest iPhone models were released, Apple saw its strongest revenue growth rate in seven quarters. Its new mobile-payment system, Apple Pay, faces competition, but adoption by retailers is growing. And a high-tech wristwatch, Apple Watch, should start shipping in early 2015.

Gilead Sciences (GILD, $101). Gilead won approval from U.S. regulators in October to sell Harvoni, which could become a blockbuster hepatitis C drug. Gilead also has treatments for HIV. Analysts say profits could increase by 25 percent in 2015.

Macy’s (M, $63). Macy’s shoppers can now check online to see if an item is in a nearby store. If an improving economy boosts consumer spending, Macy’s will be ready. Among other things, Macy’s, which also owns the Bloomingdale’s chain, has started testing same-day delivery from stores. Analysts see earnings rising 13 percent in the January 2016 fiscal year.

Precision Castparts (PCP, $236). The firm makes complex molds and other components used to build jet engines. For three of the past four quarters, the company has fallen short of earnings forecasts as clients used up inventory, and the stock has dropped 13 percent over the past year. But Stephen Levenson, an analyst at investment bank Stifel, said the de-stocking should end in early 2015. Meanwhile, production of the high-tech Airbus A350 XWB and Boeing 787 Dreamliner will boost profits.

Charles Schwab (SCHW, $28). Low interest rates have pressured profits at Charles Schwab. But the broker is making up for it with volume. According to a report by the William Blair firm, Schwab was on track to gather more than $100 billion in net new assets for the third straight year in 2014.

Stanley Black & Decker (SWK, $94). The power-tool maker is benefiting from a housing rebound. In the third quarter, sales in Stanley’s do-it-yourself segment rose 9 percent. Ron Sloan, senior manager of the Invesco Charter Fund, said the company’s profit margins could climb by as much as three percentage points in 2015.

Portfolios for $1,000

Build a high-yield ETF portfolio. Start with three shares of junk-bond fund iShares iBoxx $ High Yield Corporate Bond (symbol HYG, $90, 5.2-percent yield). Add 10 shares of iShares US Preferred Stock ETF (PFF, $39, 5.6 percent. Finally, buy four shares of Vanguard REIT ETF (VNQ, $81, 2.5 percent).

(Money-saving hint: If you have a brokerage account at Fidelity, you can buy the two iShares ETFs commission-free. Likewise for Vanguard brokerage clients and the Vanguard ETF.)

Buy a top-notch fund. These five funds have performed better than their category average over the past 10 years, and each requires $1,000 or less to get started:

Both Oakmark Fund (OAKMX) and Oakmark Select (OAKLX) invest mainly in large U.S. companies selling at bargain prices. Homestead Small-Company Stock (HSCSX) is a member of the Kiplinger 25. Artisan International (ARTIX) invests mainly in large, growing foreign companies. For an all-in-one option, try Vanguard STAR (VGSTX).

Other investment options

Be a lender. At peer-to-peer lending sites such as Lending Club and Prosper, you can invest in personal loans and receive monthly payments and interest as borrowers repay the loans.

To mitigate risk, create a portfolio of loans with a range of credit ratings. Prosper lists average investor returns of 5.5 percent to 11.4 percent, and Lending Club’s historical returns range from 4.7 percent to 9 percent.

Take a flier on a low-priced stock. You can buy 100 shares of any of the seven stocks listed below for less than $1,000. They all carry a fair amount of risk, but if things go right, you could make a bundle. (For more details on each stock, visit kiplinger.com/links/low.)

Aptose Biosciences (APTO, $7.08)

Aurinia Pharmaceuticals (AUPH, $3.82)

Groupon (GRPN, $7.27)

Kratos Defense & Security Solutions (KTOS, $5.10)

ParkerVision (PRKR, $0.91)

Rite Aid (RAD, $5.69)

Sirius XM Holdings (SIRI, $3.49)

Grab 10 shares of a blue chip. Prefer more-established companies? You could buy 10 shares of any one of these five stocks for roughly a grand. The reward: healthy dividends now and the likelihood of share-price gains as earnings grow.

CVS Health (CVS, $91, 1.2-percent yield). The drugstore chain is getting a boost from its rapidly growing pharmacy-services segment.

Danaher Corp. (DHR, $85, 0.5 percent). Danaher makes everything from medical devices to measuring systems. It has $12 billion in the till for making acquisitions.

Walt Disney (DIS, $94, 1.2 percent). The smashing success of the movie Frozen proves that we are all kids at heart.

MasterCard (MA, $89, 0.7 percent). The credit card company boosted its dividend by a stunning 45 percent in December.

Pepsico (PEP, $98, 2.7 percent). Besides its namesake soft drinks, Pepsi owns Frito-Lay, Quaker and other great brands.

Carolyn Bigda is a contributing editor to Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. For more on this and similar money topics, visit Kiplinger.com.

© 2015 Kiplinger’s Personal Finance; Distributed by Tribune Content Agency, LLC.