Early to Rise-Investors' Edition:Don't Climb The Tree

Don't Climb The Tree

This might be the easiest (and safest) way to make money that's come up in 25
years. It is the low-hanging fruit of the investing world. And it should
generate gains of at least 29%.

Wall Street sure isn't paying attention to it. They are in love with Internet
stocks again. They keep climbing the tree higher and higher, hoping to strike it
rich by putting together the next mega-IPO - Facebook... Groupon... Zynga.

My advice to you is let them. They can take all the risks they want. But
eventually, their greed will make them fall out of the tree. (I think we all
remember how the last dot-com boom ended.) Meanwhile, we will stand on the
ground and grab the easy (and safer) gains.

Today, I am going to show you how a "no-brainer" investment that Wall Street is
completely ignoring could save your portfolio even if the stock market goes
nowhere over the next few months. We talked about it a bit in Friday's
Investor's Edition. Because nobody is sure where the market is headed, the
"smart money" is coming back around to the defensive stocks. Stocks like
healthcare and utilities that do well in both bull and bear markets.

A similar strategy is to invest in the "low-hanging fruit." These are companies
that are so big, so well established, and generally so loaded with cash, that
they survive, and actually thrive, in a sideways or bear market.

They have the ability to raise prices and not lose market share during
inflationary periods. In fact, most can gain market share. And because many of
these companies are multi-national, they provide exposure to overseas markets.
That's another benefit right now. Because of the falling dollar, their products
become "cheaper" overseas. And when they convert those profits back to US
dollars, they make more money.

If it sounds like this is the ideal time to invest in these companies, that's
because it is.

And here's the clincher: According to Merrill Lynch, these companies are at
their cheapest level in 25 years.

While the overall market is trading at 16.4 times forward earnings, this group
is trading only at 12.7 times forward earnings. That means just to trade at
market value, this group, collectively, would have to jump 29%.

These companies are the "mega-caps," with a market cap in excess of $100
billion. They are the biggest, baddest bullies on the block: Apple, Chevron,
Microsoft, GE, etc.

You'd think Wall Street would be aware of the opportunity. After all, the
mega-caps are followed by dozens of analysts. Their every move is dissected. And
many of them have had outstanding performances for the last quarter. (Apple,
Chevron, even the much-maligned Microsoft just reported big profits.)

So, what's the problem?

Aside from their greed in chasing the next IPO, I can only guess that Wall
Street doesn't want to trash their "economic recovery playbook" quite yet. The
book says that energy, financials, and technology firms will outperform the
market.

Wall Street brokers would much rather tout the latest "can't miss" tech stock
than talk about "boring" mega-caps. And you can use this to your advantage.

For a change, you can get a jump on Wall Street's next big move. But you have to
move fast. As the "big boy" investors look to play defense with their
portfolios, you can bet the mega-caps will get a lot of attention. Their sheer
size (and the fact that most pay a dividend) will make them attractive to those
seeking both safety and income.

As an investor, I can't imagine what else you could want - industry-dominating
companies... most pay dividends... the cheapest prices in 25 years... portfolio
"defense"... and not yet on the radar of most investors.

Just take a look at a few examples compared to the S&P 500 and their sector
average:

To gain exposure to the mega-caps, you can do a search on your favorite stock
screener for companies with a market cap over $100 billion. If you are so
inclined, you can then narrow them down to those that pay dividends. Or you can
look at any of the ETFs that cover the mega-cap space. But be sure to act
quickly. The 29% discount won't last much longer.