Now, let's hit some stocks with yields north of 3.7% that could get attractive on a plunge to a double-digit average decline (keeping in mind that most stocks are already down 20% from their highs). First, we've got a trio of retailers that are either down on their luck or experiencing secular declines: The Gap (GPS) at 3.9%, Macy's (M) at 3.8% and Kohl's (KSS) at 3.7%. Of these three, I like Kohl's first because it's just gotten too cheap after being too expensive not that long ago. I know it and Macy's has been hurt by Amazon (AMZN), but I think that Kohl's has weathered the storm better.
I simply don't like the progression of Gap and don't see enough of a turn to be tempted. Take a look at Gap's chart below, too:
I don't buy the Macy's real estate argument as a savior, because I can recall when Macy's filed for Chapter 11 not long after Goldman did a huge bond deal to take the company private. Iconic means nothing when it comes to the debt master.
I don't think the models of Kohl's or Macy's are technically broken, just severely challenged.
Here's Kohl's chart:
And here is Macy's:
That said, I think that the cold weather coming so late kyboshed their cash cow quarter, so you may have a long time to wait for something to happen unless the companies do something themselves to effect change.
Pfizer (PFE) and Prudential (PRU) are two you don't expect to see in the list, because they are both among the best of breed in pharma and insurance. But they both yield about 3.9% and I think they are both buys.
Here is what Pfizer's chart looks like:
Pfizer's teaming up with Allergan (AGN) and will then split into three, which is going to create tremendous value. After MetLife (MET) made its value creation move of spinning out its retail operation I know there's plenty that Pru could do to create value. Here is Pru's chart:
OK, I teased you with some that require a little faith, so let me give them to you.
RR Donnelly (RRD) is splitting into three viable companies and I think the stock of the printer concern is a buy at 7.9% and I trust the yield, even as it would seem that most don't. I like the plan that CEO Tom Quinlan's putting forth and it is a real value.
GameStop (GME) is hated and I totally get why because it does seem that it is going the way of Barnes & Noble (BKS), another super-high yielder I worry about. Is GameStop the Borders of this era? It makes a lot of money, but too many believe it can't outrun digital. At a 5.02% yield that might not be protection enough.
Finally, there is Garmin (GRMN), a stock I don't like because of all the competition it gets from so many apps, but it's profitable and yields a handsome 6.27%. I am not interested, but it has been down so long that it might look up to someone.
I know, not a terrific list, not long, not super high. But this has been a silent bear that has taken a ton of stocks down to where they are still expensive and still don't have good yields, which is why it has been so hard to find a bottom.
At least now you have a list of stocks of good companies that I think can be bought into the most anticipated weakness of all time ... or at least that I can remember.