- Cree (CREE) and Rubicon Technology (RBCN) to buy from neutral at Merriman.
- Children's Place (PLCE) to outperform from market perform at BMO Capital.
- Lockheed Martin (LMT) to neutral from underperform at BofA/Merrill.
- Copano Energy (CPNO) to outperform from market perform at Morgan Keegan.
- Motorola Mobility (MMI) to neutral from reduce at Nomura.
- Parker-Hannifin (PH) to buy from hold at KeyBanc.
- Akamai (AKAM), ShoreTel (SHOR), AMB Property (AMB) and ProLogis (PLD) to buy from hold at Stifel Nicolaus.
"I've put together a retirement blue print that will allow anyone who is 20 years old or younger to retire a multi-millionaire," says Steve Christ.
The editor of The Wealth Advisory explains, "This diversified portfolio, contains a transport, a utility, a tech company, a health care giant, and a defense contractor, all of which pay nice steady dividends with room for growth.
"All you need to start is $15,000 initial investment to go along with an additional $100 bucks a week in total contributions divided among the five stocks.
The list of stocks has been whittled down to four. Chevron Corporation (CVX) made the cut to become the oil company stock. Three defense sector powerhouses are competing for one spot in Chasing Value: 2011 Stock Picks -- The Journey Begin.
Today we take a more comprehensive view returning to earlier metrics, and adding some other criteria in order to reach a conclusion. This series began with the contention that making specific predictions was a fools errand with the danger to your portfolio coming from "black swans". To try and add some general counter measures to this possibility I decided that the defense and oil sectors might provide protection against the greatest of threats, war and terrorism. On that basis I posted Chasing Value: You Must Own Defense and Oil for Safety.
The list of stocks under consideration has been reduced from eleven to ten, to seven and now in today's story four. Starting with five major defense contractors and six major oil companies (see Chasing Value: You Must Own Defense and Oil for Safety), I began a search to find one stock in each sector that might be suitable for inclusion in my list of 2011 stock picks posted last week Chasing Value: 2011 Stock Picks -- The Journey Begin.
Today we continue our analysis by examining return on equity (ROE), return on invested capital (ROIC), and price-to-earnings-to-growth (PEG). Each stock is ranked by sector and metric from best to worst. Sometimes there are clear winners and others there is little to separate one stock from the next. However, in total, a picture can be drawn that does portray a superior opportunity.
This series started with five major defense contractors and six major oil companies that are worthy considerations to help your portfolio survive a global crisis (see Chasing Value: You Must Own Defense and Oil for Safety). After the first review, one stock was eliminated from consideration: Petroleo Brasileiro (PBR). The reason is in the first story.
Today we continue our analysis by examining price-to-book (P/B), price-to-cash-flow (P/CF), and dividend yield. Each stock is ranked by sector and metric from best to worst. In the end we hope to narrow down our choices for candidates that might be added to Chasing Value: 2011 Stock Picks -- The Journey Begins.
All of this has its limits, but, if you are a fan of Professor Nassim NicholasTaleb and his best seller The Black Swan then you already have been warned that the events that have the greatest impact on our lives and our investments are most often unpredictable. We cannot predict the future nor can we anticipate the tragedies that will tank our portfolio's.
While I do believe predicting the future is, how should I say, futile, there are general clues as to which way the wind blows.
The editor of Leeb's Income Performance Letter explains, "Investors are concerned about the impact cutbacks in defense spending will have on profits. Still, the company arguably is the best positioned of the major defense contractors to weather a smaller defense budget.
"The company is bracing for leaner times and has taken cost-savings measures, such as offering early retirement incentives to executives. And its share price appears to have more than discounted any cuts that may come down the pike.
Today I continue the exercise, hoping to find a stock worthy of placing a bet.
- Lockheed Martin: 3.77%
- Raytheon Company: 3.16%
- Northrop, Grumman: 2.89%
- General Dynamics: 2.59%
Equally important is that unlike many other industries, this is one tech sector that keeps most of its jobs at home and well-distributed through the country. This, too, preserves defense spending.
The major players in the industry after 20 years of consolidation are General Dynamics Corp (GD), Lockheed Martin (LMT), Boeing Co (BA), Northrop, Grumman (NOC), and Raytheon Company (RTN). In addition there are hundreds more making specialized parts in support of the majors and more still supplying basic elements like tires, wiring, computer processors, steel, aluminum, specialty glass, and ammunition. Then there are suppliers of manpower and smaller manufacturers producing unmanned aircraft drones and robots.
- Goldman upgraded Costco (COST) to buy from neutral based on valuation, improving fundamentals and potential catalysts. The firm raised its price target to $68 from $62.
- Soleil upgraded MGM Resorts (MGM) to buy from hold, citing valuation, easing balance sheet concerns and a multiyear convention recovery. The firm upped its target for shares to $14 from $13. Note, Soleil also downgraded Las Vegas Sands (LVS) to hold from buy.
- Piper Jaffray upgraded Phillips-Van Heusen (PVH) to overweight from neutral with a $59 price target following the company's better-than-expected Q2 results.
- Dell (DELL) was upgraded to buy from outperform at CLSA.
- CommScope (CTV) was upgraded to buy from neutral at UBS.
- EnCana (ECA) was upgraded to sector outperformer from sector performer at CIBC.
- BMO Capital upgraded Noble Energy (NE) to outperform from market perform and raised its target to $85 from $78. The firm upgraded Noble based on Niobrara field potential and record-breaking reserve potential at the Leviathan prospect.
- Wells Fargo upgraded Raytheon (RTN) to outperform from market perform based on relative valuation, strong balance sheet and International sales exposure.
- ThinkEquity upgraded Cerner (CERN) to buy from hold based on valuation and EMR momentum. The firm raised its price target on shares to $86 from $80.
- Sanofi-Aventis (SNY) was upgraded to buy from hold at Societe Generale.
- Cavium Networks (CAVM) was upgraded to outperform from market perform at JMP Securities.
- CSG Systems (CSGS) was upgraded to outperform from perform at Oppenheimer.
- Citigroup assumed coverage of Boeing (BA) and upgraded the stock to Buy from Hold due to its positive view on the aerospace cycle and valuation. The firm raised its target for shares to $80 from $73.
- Morgan Stanley upgraded Motorola (MOT) to Overweight from Underweight citing expectations for higher handset margins driven by Android. The analyst raised Android unit shipping estimates and earnings estimates. The firm raised its price target on shares to $9.75 from $8.75.
- Susquehanna upgraded SINA Corporation (SINA) to Positive from Neutral and has a $50 target on the stock. The firm said Sina'a Twitter like service called 'Sina Weibo' has seen exponential growth and will crate huge value for the company.
- AOL (AOL) was upgraded to Neutral from Underperform at Credit Suisse.
- Frontier Communications (FTR) was upgraded to Sector Perform from Underperform at RBC Capital and to Buy from Hold at Hudson Square.
- Canadian Solar (CSIQ) was upgraded to Outperform from Market Perform at Wells Fargo.
- Collins Stewart upgraded BP (BP) to buy from hold after the company canceled its dividend payments and agreed to put $20 billion in a claims escrow fund.
- Credit Suisse upgraded First Solar (FSLR) to outperform from neutral and raised its target to $150 from $110.20. The firm raised estimates given expectations for strong demand and lower costs and believes pricing upside for Q2/Q3 is not reflected in valuation.
- Argus upgraded EMC (EMC) to buy from hold, citing valuation and notes that the company's VMware (VMW) stake is undervalued.
- Rio Tinto (RTP) was upgraded to buy from hold at Societe Generale.
- Sunoco (SUN) was upgraded to overweight from equal weight at Barclays.
- UBS (UBS) was upgraded to outperform from underperform at Macquarie.
- Bernstein upgraded Corning (GLW) to outperform from market perform based on Gorilla glass prospects and valuation. The firm raised its price target to $22 from $21.
- RBC Capital upgraded Beckman Coulter (BEC) two rating levels to outperform from underperform, citing valuation and customer checks that indicate high retention rates. The firm upped its target for shares to $65 from $55.
- Credit Suisse upgraded Canadian Pacific (CP) to outperform from underperform. The firm expects Canadian Pacific to have stronger-than-average Q2 volume growth, improved productivity and notes leverage to growth in Asia, among other reasons for the upgrade. The firm raised its target to $75 from $59.
- Freeport McMoRan (FRX) was upgraded to overweight from neutral at HSBC.
- Solera (SLH) was upgraded to strong buy from buy at Needham.
- Jefferies upgraded IPC The Hospitalist Co. (IPCM) to buy from hold.
Here are some highlights from this past week's earnings coverage on BloggingStocks:
- Lockheed Martin Corp. (LMT) lower Q1 earnings were better than expected but it lowered its full-year outlook.
- McDonald's Corp. (MCD) solid Q1 numbers were driven by its value menu, McCafe, and strength overseas.
- Microsoft Corp. (MSFT) topped Q1 earnings expectations and cash from operations rose, but shares declined.
- Netflix Inc. (NFLX) shares were lifted after its strong Q1 earnings beat consensus estimates.
- PepsiCo Inc. (PEP) fell short of Q1 revenue estimates but beat earnings per share expectations by a penny.