This is a difficult year to invest in stocks, with the stock market experiencing a seemingly endless cycle of spin. Major US indexes fell last week, with the Dow Jones Industrial Average ending the week at 29,888.78 – just a day after falling below a key level of 30,000 for the first time since January 2021. Meanwhile, the S&P 500 published its worst week since 2020 and the Nasdaq Composite ended the week 4.8 percent lower. And because the Fed is willing to pursue a more aggressive policy of raising interest rates, this could lead to even greater volatility for stocks. Venture capitalist Kevin O’Leary thinks it’s useless to try to determine market time. “I can’t determine the time on the market. I just can not. I’ve tried so many times, but you just can’t, “O’Leary, chairman of O’Leary Ventures, told CNBC’s Squawk Box Asia on Thursday. Instead, he prefers to own companies that he believes are sustainable. “What I like to own are companies that are not going to be zero. Moderna is not going to be zero, Pfizer is not going to be zero and Nestle is not going to be zero. They have businesses that are very sustainable,” he said. O’Leary. Both Moderna and Pfizer are pharmaceutical companies, a sector that often has significant cash flow and stable dividends, and as such is seen as more resilient during downturns. Both companies are at the forefront of global efforts to vaccinate against Covid-19. The U.S. Food and Drug Administration on Friday approved the three-dose Pfizer vaccine for children 6 months to 4 years of age and the two-dose Moderna vaccine for children 6 months to 5 years of age. Biopharma shares currently make up about 4.5% of O’Leary’s portfolio, while the broader healthcare sector accounts for about 20%. Investors also like consumer goods such as Nestle, as they are less affected by economic cycles and enjoy relatively stable profit growth and dividend payments. “I own companies with strong balance sheets that make money. Now their stock prices are rising and falling based on people’s perceptions of what the price / earnings ratio should be. And even health care has not escaped the downturn. But the companies are strong, “he added. In addition to their strong balance sheets, O’Leary likes these companies because of their good cash flows – some of which are distributed back to investors as dividends. All three stocks are in the red this year, but Nestle and Pfizer continue to pay dividends. Nestlé has a dividend yield of 2.6%, while Pfizer has a dividend yield of 3.4%. Moderna is not currently paying a dividend. “Never more than 20% in any sector” The huge market correction this year has undoubtedly frightened some investors, but O’Leary is not worried about short-term price declines. In fact, he doubles the names he believes in. “We are not ready and we have had a difficult few months like everyone else, but I am thinking about this in the long run… What I do is try to find re-entry points because I am always trying to raise capital. If I believe in the history of the company, I invest more money to work on corrections, “he said. O’Leary said he recently bought undisclosed stakes in Walt Disney, Adobe and DocuSign. He admitted that the shares have fallen “a lot”, but is adamant that at some point they will return. He is also careful about how he manages the risk in his portfolio. “You have to have diversification,” he said. His golden rule? “Never more than 20% in any sector and never more than 5% in any share,” he said, describing it as a strategy that has worked for him for decades.
Buy these stocks with strong balance sheets, cash flow
