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With the U.S./global economies recovering, and increased confidence in equity market gains, moving forward, the landscape for money managers is improving, and that's a major reason I'm reiterating my buy rating for Franklin Resources (BEN), first recommended on July 20, 2009 at a price of $73.88. If you bought BEN in July, you're up about 50%. Franklin's double-digit asset growth should continue in FY2010, aided by an improved asset mix, better fund performance across asset classes, and increased flows from money market funds. BEN's relatively strong balance sheet, and prudent cost cuts rounds-out the positive story. The First Call FY2010/FY2011 EPS estimates for BEN are $6.08 to $7.03.
Technically, Franklin's stock chart is strong -- an uptrend. True, shares, did recently dip below the key, 50-day moving average recently, but view that as mostly profit-taking by short-term institutional investors (IIs): BEN had risen from below $40 to near $120 in 2009. Hence, view the pull-back as a buy opportunity. Franklin's shares are headed north.
2010 Outlook: Franklin is a long-term play, but if you're looking to sell BEN within the year, take your profits after it rises to $128-129, if it fails to move above $130.
Stock Analysis: Franklin Resources is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in BEN now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your BEN position before March 2010. Sell/Stop Loss if you were to buy shares in this company: $72.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
2010 Outlook: Franklin is a long-term play, but if you're looking to sell BEN within the year, take your profits after it rises to $128-129, if it fails to move above $130.
Stock Analysis: Franklin Resources is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in BEN now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your BEN position before March 2010. Sell/Stop Loss if you were to buy shares in this company: $72.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
1-11-2010 @ 9:43PM
SouthernMan said...
Would like to agree with the author, however no stock in American companies is a "long term" investment any longer and especially right now. This is due to an ever increasing government involvement in the business of business. Other wise Franklin probably is a stock worthy of consideration...but then as the recent pull back in it suggest, you are better off trading it as opposed to long term holding it.