Kiplinger recently published an article about what it thinks are the 10 best stocks in the world. Kiplinger is a reliable source of credible and accurate investment and economic information. In this case, it used strict parameters. However, the stocks that made the list did so primarily because of internal factors. I strongly believe that even the best-run companies aren’t capable of holding up to negative global economic forces or negative industry trends. With that in mind, let’s take a look at these 10 stocks to determine which ones might truly be some of the best stocks available at the moment.

No. 1: Apple

It should come as no surprise that Apple Inc. (AAPL) makes this list. After all, it’s the largest company in the world. That said, Apple has some serious headwinds to contend with in coming years. This isn’t one of those “the bigger they are, the bigger they fall” situations. Apple is too well run for it to completely sell off, but the odds of stock appreciation like you have seen in recent years are low. (For more, see: What Makes Apple (AAPL) the Most Valuable Company?)

The biggest positive for Apple is that it knows how to trap consumers into its ecosystem and never let go, which then allows it to charge premium prices for future products and services. It also possesses massive marketing power and has demonstrated consistent innovation. Additionally, the iPhone has dominated its peers, the App Store just delivered record sales, the Apple Watch might have some long-term potential, and Apple is dividend-friendly while also buying back shares.

There’s just one major problem: China. Apple relies on the majority of its growth from China and China is falling apart. Consumer discretionary will perform poorly in China over the next 1-2 years, which will hamper Apple’s top-line potential. And once China’s economy crashes, it will lead to contagion here, where consumers will not be as eager to purchase discretionary items. (For more, see: The Apple Ecosystem.)

Apple is a unique situation because it’s an extremely well-run company in what will soon be operating in a tough economic environment. Unfortunately, the latter is more powerful. If you’re investing for the long haul, hang in there. If you’re considering a new investment in Apple, then this isn’t likely to be the ideal entry point.

1-Year Performance

26.55% (all numbers as of 7/29/15)

3-Month Performance

-5.10%

5-Year Performance

28.11%

Debt-to-Equity Ratio

0.4

Trailing P/E

14

Beta

1.13

Dividend Yield

1.56%

Short Position (% of float)

(1.10%

 

No. 2: Avago

Avago Technologies Ltd. (AVGO) makes semiconductors that are used in smartphones and other products. Approximately 15% of its revenue derives from Apple, which means it has the same concerns.  Avago has been on a buying spree to set up for future success. It acquired LSI Logic last year and it is set to buy Broadcom Corp. (BRCM) for $37 billion in early 2016. According to Barron’s, it’s also eyeing a bid for Marvell Technology Group Ltd. (MRVL), but this is not confirmed. (For more, see: Investments that Have Soared in 2015.)

Avago is another well-run company, but its trading at too high of a valuation for the current economic environment.

1-Year Performance

84.19%

3-Month Performance

9.68%

5-Year Performance

43.44%

Debt-to-Equity Ratio

1.20

Trailing P/E

53

Beta

1.49

Dividend Yield

1.20%

Short Position

5.80%

 

No. 3: Baidu

For Baidu, Inc. (BIDU), it’s a matter of “we will all go down with the ship.” Despite Baidu being the biggest search engine in China, its share price will not be able to hold considering the upcoming economic contraction in China. Baidu will eventually bounce back, but now doesn’t appear to be the right time to invest in this company. (For more, see: 10 Most Influential Chinese Companies.)

1-Year Performance

-25.58%

3-Month Performance

-23.34%

5-Year Performance

16.18%

Debt-to-Equity Ratio

0.45

Trailing P/E

34

Beta

1.57

Dividend Yield

N/A

Short Position

N/A

 

No. 4: Costco

Costco Wholesale Corp. (COST) sells high-quality products at discounted prices while offering superb customer service. All of these factors combined lead to customer loyalty, which then leads to increased revenue with membership fees. It’s a brilliant design that has worked for years and should continue to work in the future. The stock will likely take a hit over the next 1-2 years as we enter a bear market, but this would present an exceptional buying opportunity. (For more, see: Is There Any Upside Left in Costco?)

1-Year Performance

28.64%

3-Month Performance

-1.13%

5-Year Performance

+23.49%

Debt-to-Equity Ratio

0.56

Trailing P/E

28

Beta

0.76

Dividend Yield

1.10%

Short Position

1.10%

 

No. 5: Nexstar Broadcasting

Nexstar Broadcasting Group, Inc. (NXST) owns 107 TV stations in low-cost, small and mid-sized markets, which keeps costs low. Nexstar also likes to grow inorganically, having acquired 36 TV stations and two advertising companies since March 2014 for $750 million. First quarter revenue increased 52% year-over-year while free cash flow jumped 70%. But some of the key metrics below are concerning, and you might want to think twice before jumping in.

1-Year Performance

18.34%

3-Month Performance

-4.73%

5-Year Performance

59.29%

Debt-to-Equity Ratio

21.61

Trailing P/E

26

Beta

2.45

Dividend Yield

1.30%

Short Position

10.50%

 

No. 6: Novo Nordisk

Novo Nordisk (NVO) makes drugs that treat diabetes. There are 347 million people in the world who suffer from diabetes. The company is also expecting $1 billion in sales from its anti-obesity drug, Saxenda. This is a company that might have the potential to weather a bear market due to high demand and its non-discretionary nature. (For more, see: Top 4 Pharma ETFs.)

1-Year Performance

28.80%

3-Month Performance

3.42%

5-Year Performance

29.22%

Debt-to-Equity Ratio

0.02

Trailing P/E

34

Beta

0.46

Dividend Yield

1.30%

Short Position

N/A

 

No. 7: O'Reilly Automotive

O'Reilly Automotive Inc. (ORLY) has gone from 1,300 locations in 2005 to 4,300 locations in 2015. At the same time, it’s a well-run company that manages to keep costs low thanks to its scope and inventory management system. On the other hand, while the stock isn’t likely to be slammed in a bear market, it won’t appreciate either.

1-Year Performance

58.96%

3-Month Performance

6.49%

5-Year Performance

37.30%

Debt-to-Equity Ratio

0.65

Trailing P/E

31

Beta

0.77

Dividend Yield

N/A

Short Position

5.50%

 

No. 8: Priceline

The Priceline Group Inc. (PCLN) owns several online travel brands, and last year it partnered with Ctrip.com International Ltd. (CTRP) so U.S. travelers could view travel deals in China and Chinese travelers could view travel deals in the United States. The was a good move for the long haul, but the travel market could suffer over the next several years as the market pulls back. This means you will likely see a much better entry point for PCLN in the future. (For more, see: Top Travel Industry Stocks in 2015.)

1-Year Performance

-2.52%

3-Month Performance

-2.74%

5-Year Performance

40.07%

Debt-to-Equity Ratio

0.61

Trailing P/E

26

Beta

1.66

Dividend Yield

N/A

Short Position

2.50%

 

No. 9: Sherwin-Williams

Sherwin-Williams Co. (SHW) recently made a great deal by partnering with Lowe's Companies Inc. (LOW) to sell its paint in Lowe’s stores. This will greatly increase the brand’s exposure. Raw material costs will also continue to come down, which is a positive. On the negative side, the real estate market will not continue to improve as many people believe. Sherwin-Williams is a tempting investment, but the risk/reward isn’t strong enough for investment consideration due to current and future economic conditions.

1-Year Performance

29.92%

3-Month Performance

-2.61%

5-Year Performance

32.48%

Debt-to-Equity Ratio

3.02

Trailing P/E

27

Beta

0.78

Dividend Yield

1.00%

Short Position

1.70%

 

No. 10: Tata Motors

Tata Motors Ltd. (TTM) is going to be a long-term winner. India, not China, will be the biggest growth story of the 21st Century thanks to the rise of the middle-income consumer. Unlike China, this will be done in a more fiscally-responsible manner. This doesn’t mean Tata Motors presents a great opportunity at the moment. If we see global deflation, there will be very few places to hide. An auto manufacturer certainly isn’t going to be one of those places. On the other hand, it’s imperative that you keep this stock on your watch list, or consider dollar-cost averaging at some point in the near future. India only has 17 vehicles per 1,000 people. After the global economy deleverages and begins to grow organically again, the growth potential for Tata Motors will be substantial. Just keep in mind that TATA might continue its slide for a considerable amount of time. Wait for the selling to become exhausted. (For more, see: Tata Motors: A Tale of Two Businesses.)

1-Year Performance

-27.71%

3-Month Performance

-32.72%

5-Year Performance

9.62%

Debt-to-Equity Ratio

1.33

Trailing P/E

8.43

Beta

1.85

Dividend Yield

0.50%

Short Position

N/A

 

The Bottom Line

As you can see, there aren’t many opportunities. But if you look carefully and are patient, excellent opportunities do exist. The next 1-2 years will present considerable challenges for longs, but savvy investors will wait for heavily-discounted prices in high-quality companies and buy their stock when they appear to be left for dead. (For more, see: Top Dividend Stocks of 2015.)

Dan Moskowitz does not have any positions in any of the stocks mentioned in this article. 

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