The Four Best Stocks We Own: Johnson & Johnson, General Mills, Philip Morris Int'l, Intel

This year has been a tough year. The market has see-sawed back and forth. Many stocks suffered meaningful declines. Most stocks are down from the first of the year. So, it isn't hard to identify your recent winners.

In that category, four stocks stand out for us.

Johnson & Johnson (JNJ)

General Mills (GIS)

Philip Morris International (PM)

Intel (INTC)

All four are up between 10 and 25% for us this year. (Although, it should be pointed out that we did not own Intel and Phillip Morris for the whole year.)

What do they have in common? About the only thing is that they all have substantial overseas sales. Three of the companies sell consumer products, but the products are substantially different, although they may loosely fit into the old lexicon as consumer staples.

Consumer staples should do well in bad times, so I guess that three of the stocks make sense.

All four stocks have a "wide moat." This is a term that was coined by Warren Burffett and refers to a company that is in an industry where there are "high barriers to entry." In other words, it would be extremely expensive for a start-up company to attempt to compete with J&J or Philip Morris.

Other consumer staples companies that we own including Unilever, P&G, Colgate, Kraft, and Coca-Cola, have not done as well. Some are roughly flat or down only a little for the year. But, they are not up as much as the four mentioned above.

We bought J&J and Intel at prices we thought were bargains. That helped!

Philip Morris International was a spin-off from Altria. We sold our Altria shares just after the spin-off. There is an old Wall Street adage that say's spin-off companies are often better to own going forward than the parent.

General Mills is in some ways the hardest to explain. The stock was purchased at a reasonable price at an unpropitious time and it still went up about 10% at a time when other food companies were treading water at best.

I still like all four of these companies, but I would warn about getting caught in the trap of presuming that because something has done well recently it will continue to do well.

In the next day or two, we will post a list of some of our current favorites.