Happy Friday folks! Lets talk stocks! In planning my recommendation for this month, I was a bit torn between two fantastic companies that I felt were great buys after some recent hits to their stock price that I don’t believe to be long-term. So, in the spirit of giving, I’m just going to recommend both! Bon appetite!
An Aviation Behemoth!
First is a company that likely everyone has heard of, Boeing (BA). This is certainly a conservative stock pick and, in my opinion, Boeing is a stock that you can buy and hold for the rest of your life. This aeronautical behemoth is involved in so much beyond just commercial aviation with its other main business arms in defense, space and services. Some recent negative press along with a marketwide reset has Boeing about 10% below it’s recent high and it’s currently trading right around $340 per share. Boeing will pay you to hold it’s stock as well as it’s currently paying just over a 2% annual dividend…not bad for a company that’s still growing like crazy even after over 100 years in business. Incoming contracts, such as the new US tanker aircraft, the KC-46, will ensure that Boeing’s business continues to thrive into the future.
Like any individual stock, Boeing is not without risk. The increase in global commercial aviation and defense spending fuel Boeing’s revenue. If either of these start to go away, this would have a significant negative impact on Boeing’s stock. While these things are always possible, I view them as extremely unlikely. If you like the defense sector but prefer not to buy individual stocks, check out the iShares US Aerospace and Defense ETF (ITA) which has Boeing as it’s largest holding at just over 10% weighting. Again, I love this stock and company and, if the risk of this stock is something you can manage, I believe that now is a great time to add Boeing to your stock portfolio.
An E-Commerce Giant
Nope, I’m not talking about Amazon (though they are a fantastic company as well)! This e-commerce giant dominates that Latin and South American markets and is a company called Mercado Libre (MELI). Recent chatter about Amazon trying to enter this market along with a big hit in shipping costs in it’s Brazil market has hit MELI’s stock price and it is down about 25% from its recent high. Reading blogs and articles on this topic has lead me to the conclusion that while this is certainly a possibility, Amazon has failed to get much traction in Latin and South America in the past and “experts” predict Amazon will decide that the juice isn’t worth the squeeze as MELI has pretty well entrenched itself as the Amazon of the region. Therefore, I view the recent dip in MELI’s stock as a great buying opportunity for a person with an appetite for volatility and a long time horizon.
MELI is very much early on in it’s growth phase as the company and the Latin and South American market it serves continue to develop economically. A growth stock like MELI is going to be prone to price fluctuations in the short term and I can’t predict what MELI stock will do in the next 6-12 months. But, it is my belief that in 10 years we will be looking at MELI as a global e-commerce giant right up there with the likes of Amazon and Alibaba and that many people will be kicking themselves for not jumping aboard the MELI-train. Make no mistake, if Amazon decides to go full throttle into MELI’s markets and succeeds, MELI will end up getting crushed, as will it’s stock price. But, if Amazon more or less leaves these markets alone due to the steep cost of entry into this market, MELI will continue to grow along with the economies that it serves. Certainly, this is a high risk, high reward stock with at minimum a 5 year time horizon.
Before purchasing any stocks or ETFs, you should do your own research and consult a financial professional because, disclaimer, I’m not a paid finance professional. You can research stocks like Boeing and Mercado Libre for free on websites like Seeking Alpha and MarketWatch amongst other free online sources. Check out how my previous picks have done if you’d like. You can look forward to another ETF pick in May!