Familiarity can serve as a great starting point when searching for stocks. Products we use on a daily basis -- like now during the dog days of summer -- can provide inspiration for identifying possible investment opportunities. In fact, investing greats Peter Lynch and Warren Buffett have made tons of money in the market by buying what they know.
Let's look at three summertime stocks that are worth a closer look.
Lowe's (NYSE: LOW )
Source: Wikimedia Commons.
We all want to spruce up our lawns, get that new barbecue grill, and have the pool looking good. For any home and garden need you might have this summer, Lowe's is there to help. Without a doubt, Lowe's is enjoying a housing recovery tailwind. But Lowe's pending acquisition of Orchard Supply Hardware (NASDAQ: OSH ) may unlock even more value for shareholders. Lowe's anticipates operating the West Coast chain as a standalone business and might offer Sears b (NASDAQ: SHLD ) rands, such as Craftsman and Kenmore, at Orchard Supply stores (as OSH stores currently do).
Energizer Holdings (NYSE: ENR )
Source: Wikimedia Commons.
Yes, you probably think of the bunny and batteries. But that's not all Energizer does. In fact, it's also the company behind Hawaiian Tropic and Banana Boat sunscreens and Schick razors, products we tend to use more frequently in the summer. Energizer has recently been on a stock buyback spree, an action often taken if a company thinks its stock is undervalued. It currently trades at a forward price-to-earnings ratio of 13.
Disney (NYSE: DIS )
Source: Wikimedia Commons.
I'd like a show of hands. Does anyone with small children have plans to visit a Disney park, see a Disney movie, or occupy their bundles of joy with a Disney show on a summertime road trip? If you're childless or have grown kids, will you spend any time cooling off on the couch this summer watching an ESPN-televised sporting event? That's what I'm talking about. The ubiquitous Disney empire is everywhere, especially in the summer.
Regarding Disney as an investment, the company's acquisitions -- Pixar, Marvel, and Lucasfilm -- are proving successful and yielding powerful franchises and assets that'll create value for decades to come. And don't forget about its cable networks, which include ESPN and account for about 45% of Disney's revenues and two-thirds of the company's annual operating profit.
Foolish bottom line
Of course, buying a stock solely because you use its company's products often is silly. But familiarity can provide inspiration for identifying a potential investment opportunity and making an investing thesis. Evaluate important company attributes before investing. For example, does the company operate in a growing industry? Are revenues increasing and are margins expanding? Is management making decisions based on what's in the best interest of all company stakeholders? Answer questions like these before parting with your money.
Warren Buffett has become a billionaire by buying what he knows. But the price of becoming the world's greatest investor is that Buffett can no longer make many of types of investments that made him rich in the first place. Find out about one such opportunity in "The Stock Buffett Wishes He Could Buy." The free report details a sector of the economy Buffett's heavily invested in right now and exactly why he can't buy one attractive company in that sector. Click here to keep reading.
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