Blue chip standouts: Chevron (CVX), PepsiCo (PEP), Morgan Stanley (MS), Lockheed Martin (LMT)

Posted Oct 2nd 2007 12:15PM by Steven Halpern
Filed under: PepsiCo (PEP), Newsletters, Chevron Corp (CVX), Morgan Stanley (MS), Lockheed Martin (LMT), Bargain Stocks, Stocks to Buy

Using a proprietary quantitative system to review 5,000 stocks based on over 100 variables, Chuck Carlson has honed in on a few "standouts" -- citing Morgan Stanley (NYSE: MS), Lockheed Martin (NYSE: LMT), PepsicCo (NYSE: PEP) and Chevron (NYSE: CVX) as top blue chip bets for the current market environment.

The editor of The DRIP Investor explains, "Financials have had some rough sledding in recent months as a result of problems in the sub-prime market and the overall tight credit environment. Within that group, however, Morgan Stanley offers an excellent opportunity."

He notes that earnings in the latest quarter were impacted by problems in the credit markets, and the slowdown in mergers and acquisitions could adversely impact investment banking business going forward.

Nevertheless, he contends, the stock is discounting a lot of the problems in the industry. He says, "I remain a fan of these shares and recommend that investors take advantage of the price pullback to initiate positions."

Carlson adds, "One sector with several quality picks is industrials. Among the top stocks in the group, I especially like Lockheed Martin. I expect defense spending to remain at high levels, which is good news for the company's defense-related operations."

He states, "In some respects, Lockheed Martin's operating results are somewhat immune to a downturn in the overall economy, which gives these shares appeal should worries about the economy intensify." He also notes that the last stock split for the issue was in 1999, so another split, he suggests, would not be a surprise.

Carlson notes, "Another group that is considered a safe haven during volatile market periods is Consumer Staples. In that group, PepsiCo offers an excellent combination of high score in our ranking system." Despite the strength of the stock in recent trading, he believes the shares continue to offer favorable appreciation potential.

Finally, he adds, "One group that continues to score well in our system is Energy, and Chevron recently moved to its highest level ever. Still, he notes, the shares trade at just 11 times the 2007 consensus earnings estimate of $8.28 per share.

And, he suggests, that estimate has risen $0.40 in the last 90 days and could move still higher if oil prices remain above $80. The stock, he forecasts, should outperform the overall market over the next 12 to 24 months.

Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.

Tags: blue chip stocks, Chevron, chuck carlson, CVX, defense stocks, energy stocks, financial stocks, LMT, Lockheed Martin, Morgan Stanley, MorganStanley, MS, PEP, PepsicCo, quantitative stock picks, steven halpern, the drip investor, thestockadvisors.com