My Sex, Drugs and Rock & Roll Portfolio

By AnnaLisa Kraft - June 21, 2012 | Tickers: AAPL, CHD, PFE | 0 Comments

AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

Sex, drugs and rock and roll are never going away. The baby boomers are certainly playing the stocks that I will cover and the younger demographics are certainly using the products made by these companies. The choices may be obvious but they are also profitable..very profitable and notas risky as this headline would lead you to believe. These stocks put the Fun back in Fundamentals.

Good Clean Fun

For the sex component my choice is Church & Dwight (NYSE: CHD) a venerable company known for Arm & Hammer baking soda products now comprising toothpastes, kitty litter, detergent, air freshener, deodorant and of course, baking soda and many more household cleaning products. Many investors however may not know that it also manufactures Trojan condoms, home pregnancy and ovulation test kitsand other pleasure enhancing products. There is also a specialty chemicals division.

Church & Dwight, founded in 1846, has had this fuddy-duddy image but savvy investors have seen the stock move from $36.78 to $54.59 this last yearand it has been steadily keeping close to this 52 week high lately.The company is really giving Procter & Gamble a run for its money recently by coming up with new product lines like Simply Saline for nasal irritation andever more interesting Trojan products. Procter & Gamble lowered next quarter forecasts just today on European woes, commodity costs and currency. Church & Dwight has been taking a competitive advantage by not passing so many of its costs onto the consumer and is gaining share as well assupermarket shelf space. They report again on July 29.

Let's get our minds out of the gutter and go to the meat of the matter. Their P/E is 24.47 with a market cap of 7.47 billion. Church & Dwight owns much of the space in kitty litter and home cleaning products, especially for those who prefer more natural products and certainly the baking soda and Trojans have brand recognition internationally. Personally, I like the way this company has performed this last year with revenues increasing and a 1.8% dividend yield.This is just a classic All-American company that quietly innovates anddelivers.

NOW FOR THE DRUGS

As for drugslook no further than Pfizer (NYSE: PFE), another All-American classic defensive stock famous for what else, Viagra. Its P/E is 18.35, higher than one would expect but it still has a pleasing 3.9% yield. It, too, has been flirting with 52 week highs, from its low of$16.63 to $23.30. The company is only three years younger than Church & Dwight, and has an impressive line of well known pharmaceutical and over-the-counter medications and even has aline of animal products, although it is planning to spin off the animal health business by July 2013. It recently sold its infant nutrition business to Nestle. This shows Pfizer's determination to stick to its knitting and concentrate on the core business: great drugs. It reports July 30.

For years Pfizer had been in the doldrums; it wasa favorite whipping boy of the Wall Street crowd but now the tide has turned and defensives, especially big pharmas with yield, are all the rage again. Pfizer has always been mentioned as havinga patent cliff problem, but they are constantly innovating and if one druggoes out the window another comes in throughthe lab door.Almost every day a new drug use is recommended or there is good news about another study in Phase 2 or 3 trials. Most recently, Pfizer's Prevnar, a vaccination, was recommended for doctors to give with the pneumococcal vaccine to people with weakened immune systems. Pfizer will continue to acquire, spin off or do whatever it takes to please its shareholders.

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My Sex, Drugs and Rock & Roll Portfolio