The stock pays a 2.8% dividend yield and trades at a 10.3 earnings multiple. The iPhone 6 product refresh cycle is going to release some pent-up demand for Apple Inc. (NASDAQ:AAPL) products.
Macy’s, Inc. (NYSE:M) is a stable yielder in an environment of economic growth. During the market crash and bottom of 2009, the stock performed slightly worse than the broader stock market. But during periods of economic growth, the company’s stock returns out-perform the stock market.
The stock’s price behavior offers a superb risk to reward during periods of economic expansion. The company carries a whole host of brands like Ralph Lauren Corp (NYSE:RL), Gucci, Calvin Klein, Levi’s, and etc. These luxury brands aren’t going out of style anytime soon. Let’s not forget that kids love Justin Bieber, and in extension love Macy’s (Justin Bieber endorses Macy’s).
Analysts on a consensus basis anticipate Macy’s, Inc. (NYSE:M) to grow earnings by 14.2% in fiscal year 2013, and 13.2% in fiscal year 2014. The high rates of growth are also accompanied by a 2.1% dividend yield. The company trades at a 14.1 earnings multiple, which is reasonable based on the projected growth.
General Electric Company (NYSE:GE) is another compelling investment opportunity. The company is globally diversified in a bunch of different industrial segments. Its growth is generally cyclical, and a large component of that performance is driven by demand in airline travel, which has a high income-elastic rating of 5.8. Using that rating we can assume that when income grows by 10%, demand for airline travel goes up by 58.1%. In an environment of global prosperity and rising incomes, General Electric Company (NYSE:GE)’s aeronautics segment is favorably impacted.
The company plans to divest and spin-off its GE Capital division, which could free-up some capital on the balance sheet for more productive uses than lending. Going forward, the company plans to grow earnings through a mix of acquisitions, share buybacks, emerging market growth, and via the development of industrial business segments. The company is projected to grow earnings by 10.9% on average over the next five years. The company also pays its investors a 3.2% dividend yield.
Conclusion
In an environment of stock and bond market volatility, you want a team of stalwart stocks that will deliver sustainable growth. I believe that Apple Inc. (NASDAQ:AAPL), General Electric Company (NYSE:GE), and Macy’s will generate a reasonable mix of growth and income over the next five to 10 years.
Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and General Electric Company (NYSE:GE). Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article How to Prosper during Market Volatility originally appeared on Fool.com and is written by Alexander Cho.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
