3 Top Health and Hygiene Stocks for Investors: CL, KMB, PG

If you thought the economy was headed for recession, what kind of stocks would you want to own?

Picking the right sector is only half the battle when it comes to building an investment portfolio. In addition to picking the stocks from the right sector, active investors need to make sure that the stocks they are picking represent the best opportunities available from that sector.

For example, if we were at a moment when technology-oriented growth stocks were expected to outperform (say, for example, there were a number of technology sectors with high, Long Term PowerRatings), would it not make more sense to invest in the best stock in that group rather than a mediocre one, or worse, one of the underperformers?

True, a stock can move a great deal based largely (if not solely) on the strength of its industry group. One of the reasons we publish PowerRatings for Industries is so that investors can see just how strong a stock's industry group is. A strong industry group can actually make a good stock perform like a great one, and can even help a mediocre stock look and act like a good one.

But the temptation to buy the worst stock in the best industry is a temptation to be avoided, in our opinion. Regardless of industry group, bad stocks are bad stocks and while few things may be worse for an active trader than to miss on a strong move in a given industry group, mistakenly picking the worst stock in that industry as a way of attempting to get more bang for your buck, is probably among them.

Instead, we encourage investors and long-term traders to stick with the highest Long Term PowerRatings stocks in any industry group--whether or not that industry group has a high PowerRating or not. When investors put their money into the higher Long Term PowerRatings stocks, they can be confident that they are investing in the kinds of stocks that our research has indicated are likely to outperform the average stock in a year's time--sometimes by wide margins.

Consider this: all three of the stocks in today's report have Long Term PowerRatings of 9. We have been able to conclude from our research involving thousands and thousands of simulated trades between 1995 and 2007 that stocks with Long Term PowerRatings of 9 have been higher one year later more than 79% of the time. Compare this to the reliability of the average stock, which according to our research has been higher one year later less than 68% of the time.

Not only have high Long Term PowerRatings stocks been more reliable than the average stock, but also they have been better performers--and by a significant margin. We found that 9-rated stocks provided investors with an average annual gain of approximately 18.05% between 1995 and 2007. The average stock, on the other hand, gains an average of between 12-13% over the same time period.

And when you consider the industry group all three of these stocks come from--Personal Products--there is perhaps even more reason for investors to take notice. The Personal Products industry group has an industry PowerRating of 10--the highest possible rating in our methodology. Industry groups with PowerRatings of 10 have been powerful performers since 1995, bringing investors an average annualized return of more than 35%. By contrast, the average industry group over the same time period has produced average annualized returns of approximately 14.61%--less than half of that of the top rated industry.

So if you are looking for a stock that is both likely to withstand the pressures of a potential recession, and a stock that is likely to outperform its peers over the next year, then any one of these three stocks should be under consideration. Note also that Kimberly Clark was recently the subject of our Featured Stock Spotlight back in mid-March.

Colgate-Palmolive (CL@CL | Quote | Chart | News | PowerRating)

Kimberly Clark (KMB@KMB | Quote | Chart | News | PowerRating)

Procter & Gamble (PG@PG | Quote | Chart | News | PowerRating)

Looking for more long-term solutions to your investing problems? Don't let the volatility of this market cause you to miss out on stocks you'll be glad to have bought a year from now. Click here to get a copy of our special, Free Report on the "5 Secrets to Successful Stock Investing," and learn what you need to know as an active investor looking to invest in companies with a history of financial strength and a track record for growth. Call us at 888-484-8220 to get your copy of the "5 Secrets to Successful Stock Investing" today.

David Penn is Senior Editor at PowerRatings.net.