• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

3 Big but Varied Names to Own in the Second Half of 2019

Amazon, McCormick & Co. and AT&T offer reasons to believe they'll do well in the back half of the year.
By CHRIS VERSACE
Jul 02, 2019 | 09:27 AM EDT
Stocks quotes in this article: AMZN, MKC, T

Last week we ended the first half of 2019 with strong performance put in by all the major domestic stock indices. Results in the March quarter drove the majority of the performance as slowing global economic data weighed on investors during the June quarter, which was buoyed by dovish comments from the Federal Reserve and to a lesser extent the European Central Bank. Those comments, aided by news over the weekend that Presidents Trump and Xi have agreed to resume trade talks after a two-month hiatus, helped the market move higher despite revisions to earnings expectations that now call for year-over-year declines in each of the first three quarters of 2019.

We are now in the early stage of the second half of 2019, and the question we now face is "Where should investors look to invest their capital?" To properly answer that question, we first must take stock of the latest piece of economic data, the June PMI data from IHS Markit.

Across the four key economic horseman of the global economy, which are the U.S., China, Japan and the eurozone, the June data fell compared to May, confirming the global economic slowdown. Even though the U.S. and China have agreed to resume trade talks with no new tariffs put in place, the existing ones remain at least for now and they will have an impact on revenue and earnings.

In looking at the most recent set of earnings expectations for the S&P 500, which is the benchmark for most investors, 2019 earnings are now expected to rise 3.9%, with the second half of the year growing roughly 10% compared to the first half. One factor driving that expected increase is seasonality, with examples including back-to-school and holiday shopping, which historically have resulted in the second half of the year generating 52% of full-year S&P 500 earnings.

Two companies in particular that are well-positioned to capitalize on that second-half seasonality are Amazon.com Inc. (AMZN) and one of my favorite companies, McCormick & Co. (MKC) .

For Amazon, we not only have the increasing shift to digital commerce that will continue to gain ground against brick-and-mortar shopping, we also have its expansion into private-label products spanning from apparel to furniture. Helping goose its business, Amazon strategically has opted to collapse two-day shipping to one day for Prime members, and odds are this is something it will exploit during the coming 2019 Prime Day deal bonanza. Two other upside drivers that could emerge for Amazon shares in the back half of the year are the awarding of a $10 billion government cloud contract and Amazon's entrance into the prescription drug market with its PillPack acquisition.

With McCormick, the company continues to squeeze out integration synergies with recently acquired businesses while its spices business caters to consumers who are looking for healthier eating options.

As I've said before, the very back half of the year is a very good time for MKC shares given two factors. The first I refer to as "season's eatings," owing to the Thanksgiving-to-New Year's holidays that spur demand for its spices, extracts and other core products.

The second factor is that this is the time of year when McCormick traditionally shares its dividend increase plans, and it has been doing this for the past 33 years. I've touched on this when talking about the Dividend Kings or Dividend Aristocrats, of which MKC shares are a member, but it bears repeating - all things being equal, the continued increase in dividend payments tends to result in a step function higher for the company's share price. With McCormick's current quarterly dividend equating to roughly 45% of trailing earnings, there is ample room for further dividend increases.

One other company that is poised to perform solidly in the coming six months is AT&T Inc. (T) . The core mobile business is both sticky with consumers and inelastic, which could allow for price increases, particularly as it rolls out its 5G network and it funds the company's dividend. For those keeping watch, the current dividend yield on AT&T shares is more than 6%, which itself makes the shares desirable in a slowing global economy even if U.S.-China trade anxiety has fallen to the wayside for the moment.

The real catalyst for AT&T shares in the second half is the debut of its streaming video service, WarnerMedia, which leverages all its Time Warner assets combined with its DirecTVNow business. Effectively, it is streaming live TV married with a Netflix-like NFLX library that can be monetized over existing subscribers.

In many respects that service could give AT&T one leg up on Walt Disney Co. DIS, which is new to the subscriber-based businesses, and we saw how details surrounding Disney+ popped DIS shares. Odds are we could see a similar move with T shares once the company formally announces WarnerMedia later this year.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Versace had no positions in the stocks mentioned.

TAGS: Fundamental Analysis | Investing | Stocks | Consumer | Digital Entertainment | Food & Staples Retail | Media | Technology | Telecommunications | Television Production/Distribution | Consumer Staples | E-Commerce | Real Money

More from Stocks

Remember, Overbought and Extended Aren't the Same as Bearish and Broken Down

Bob Byrne
Aug 18, 2022 8:30 AM EDT

There is not sufficient technical evidence to assert that Wednesday's decline in stocks was the beginning of a severe decline.

Sloppy Wednesday, Parsing Retail Sales, Dissecting Fed Minutes, Shiny Apple

Stephen Guilfoyle
Aug 18, 2022 7:36 AM EDT

Plus, we check out how the market is handicapping future rate hikes and the latest GDP guesstimate out of the Atlanta Fed (it's lower again).

Take Advantage of Market Irrationality With This Stock

Paul Price
Aug 18, 2022 7:00 AM EDT

ACCO brands is a hidden gem with a 4.38% yield that you can own at a crazy low valuation. Let me show you how to play it.

Corrective Action Is Developing and Is Putting Bulls to the Test

James "Rev Shark" DePorre
Aug 18, 2022 6:32 AM EDT

We soon will see how much bullish support there really is.

Suddenly, a Fear of Heights on Wall Street

Helene Meisler
Aug 18, 2022 6:00 AM EDT

Sentiment anecdotally shifted on Wednesday. Let's take a look.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:23 PM EDT STEPHEN GUILFOYLE

    We're Cleaning Out This Retailer From the Bullpen

    Check out the latest moves in TheStreet's Stocks U...
  • 10:24 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    To Improve Your Trading and Investing, Spend More ...
  • 08:44 AM EDT PETER TCHIR

    CPI Beats Expectations, But Maybe Not the 'Whisper'?

    Slightly better-than-expected inflation across the...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login