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April 20, 2019, 7:46 a.m. EDT

Corona and Canopy: A mix of beer and pot that could juice your stock portfolio

Constellation Brands is boosting its U.S. beer business while betting that marijuana products will deliver big sales

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By Philip van Doorn, MarketWatch

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The information reported by the companies varies. Still, Constellation Brands clearly set itself as the only one of the big four increasing beer sales in the U.S.

Other stocks favored by Hare

Hare said he and his team “look more for companies growing revenue and profit margins that have a tendency toward dividends,” and to otherwise “focus on shareholder returns.”


Huntington Private Bank
Randy Hare, director of equity research at Huntington Private Bank.

He named two other examples: Automatic Data Processing /zigman2/quotes/207661132/composite ADP +1.02%  and Lockheed Martin Corp. /zigman2/quotes/200691238/composite LMT +0.04% .

ADP has a dividend yield of 1.93%, which isn’t very high. Then again, the company is included in the S&P 500 Dividend Aristocrats Index /zigman2/quotes/210598428/delayed XX:SP50DIV -2.44% , which means it has increased its regular dividend for at least 25 straight years. (You can read more about the Dividend Aristocrats here.)

Hare likes the company — a dominant player in payroll services — as “a good, safe growing stock tied to employment.” He has been pleased to see the company “hitting its sales goals” as it also executes a restructuring program designed to cut costs and improve profit margins.

Diving further in, Hare pointed to ADP’s “average balance of $25 billion of client funds held for short payroll periods.” That means ADP can profit from overnight interest rates that have risen significantly over the past year.

Of course, this means there is risk to ADP’s bottom line if employment growth slows and the Federal Open Market Committee decides to begin lowering interest rates again. But Hare expects to see “the economy starting to pick up as we go through the year.”

Lockheed Martin is “a little more controversial” as a long-term stock pick, Hare said, because of concerns about downward pressure on the U.S. defense budget. Lockheed is the main contractor for the F-35 Lightning II fighter jet.

In addition to a long sales and profit growth path for the cutting-edge F-35, Hare expects an increased focus on missile and fire control (MFC) systems by the Department of Defense to benefit Lockheed.

“Their biggest growing division has been MFC, with sales [for 2018] up 16% year-over-year,” he said, while sales for the aeronautics division were up 9%, and total sales were up 8%.

Lockheed Martin’s shares have a dividend yield of 2.85%. The company is “steady,” and a “consistently growing dividend payer,” Hare said.

Don’t miss: You can capture a dividend above 5% and still enjoy stock-market growth

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/zigman2/quotes/207661132/composite
US : U.S.: Nasdaq
$ 164.12
+1.66 +1.02%
Volume: 1.36M
Oct. 15, 2019 4:00p
P/E Ratio
31.32
Dividend Yield
1.93%
Market Cap
$70.46 billion
Rev. per Employee
$242,819
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/zigman2/quotes/200691238/composite
US : U.S.: NYSE
$ 382.75
+0.14 +0.04%
Volume: 851,142
Oct. 15, 2019 4:10p
P/E Ratio
18.65
Dividend Yield
2.51%
Market Cap
$108.05 billion
Rev. per Employee
$512,019
loading...
/zigman2/quotes/210598428/delayed
XX : S&P Global Thematic Indices
529.23
-13.23 -2.44%
Volume: 0.00
Aug. 9, 2019 5:04p
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Philip van Doorn covers various investment and industry topics. He has previously worked as a senior analyst at TheStreet.com. He also has experience in community banking and as a credit analyst at the Federal Home Loan Bank of New York.

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