BALTIMORE ( Stockpickr) — Which stocks should I buy? It’s the eternal question that most investors spend most of their time wondering. But is it the wrong question?
Must Read: Warren Buffett’s Top 10 Dividend Stocks
More so than any other year since 2008’s market crash, 2014 has been a year for stock pickers. That’s because, as the end of the calendar year creeps closer, one in three S&P 500 components is actually down since January. And considering the fact that the big index is up more than 10% year-to-date, those underperformers are missing the mark by a big margin. In a big way, knowing which stocks not to buy has almost been more important for your ability to book gains in 2014 than knowing which ones you should.
That’s why we’re taking a closer technical look at five “toxic stocks” to sell this week.
Just to be clear, the companies I’m talking about today aren’t exactly junk. By that, I mean they’re not next up in line at bankruptcy court. But that’s frankly irrelevant; from a technical analysis standpoint, sellers are shoving around these toxic stocks right now. For that reason, fundamental investors need to decide how long they’re willing to take the pain if they want to hold onto these firms in the weeks and months ahead. And for investors looking to buy one of these positions, it makes sense to wait for more favorable technical conditions (and a lower share price) before piling in.
Top Dividend Stocks For 2016: ConocoPhillips(COP)
ConocoPhillips operates as an integrated energy company worldwide. The company?s Exploration and Production (E&P) segment explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids. Its Midstream segment gathers, processes, and markets natural gas; and fractionates and markets natural gas liquids in the United States and Trinidad. The company?s Refining and Marketing (R&M) segment purchases, refines, markets, and transports crude oil and petroleum products, such as gasolines, distillates, and aviation fuels. Its Chemicals segment manufactures and markets petrochemicals and plastics. This segment offers olefins and polyolefins, including ethylene, propylene, and other olefin products; aromatics products, such as benzene, styrene, paraxylene, and cyclohexane, as well as polystyrene and styrene-butadiene copolymers; and various specialty chemical products comprising organosulfur chemicals, solvents, catalyst s, drilling chemicals, mining chemicals, and engineering plastics and compounds. The company?s Emerging Businesses segment develops new technologies and businesses. It focuses on power generation; and technologies related to conventional and nonconventional hydrocarbon recovery, refining, alternative energy, biofuels, and the environment. This segment also offers E-Gas, a gasification technology producing high-value synthetic gas. ConocoPhillips was founded in 1917 and is based in Houston, Texas.
- [By Ben Levisohn]
Goldman Sachs strategist David Kostin and team note that stocks with high operating leverage–Amazon.com (AMZN), Whole Foods Market (WFM), ConocoPhillips (COP), Yahoo! (YHOO), and FedEx (FDX) among them–will outperform if the U.S. economy strengthens:
Top Dividend Stocks For 2016: S&P Smallcap 600(PH)
Parker Hannifin Corporation manufactures fluid power systems, electromechanical controls, and related components worldwide. Its Industrial segment offers pneumatic and electromechanical components, and systems; filters, systems, and instruments to monitor and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors that control, transmit, and contain fluid; hydraulic components and systems for builders and users of industrial and mobile machinery and equipment; critical flow components for process instrumentation, healthcare, and ultra-high-purity applications; and static and dynamic sealing devices. This segment sells its products to original equipment manufacturers (OEMs) and their replacement markets in the manufacturing, transportation, and processing industries. The company?s Aerospace segment provides flight control systems and components, including hydraulic, electrohydraulic, electric backup hydraulic, electrohydrostatic, and electro -mechanical components for precise control of aircraft rudders, elevators, ailerons, and other aerodynamic control surfaces. It also provides electronics thermal management heat rejection systems, and single-phase and two-phase heat collection systems for radar, ISAR, and power electronics. This segment markets its products primarily to OEMs in the commercial, military, and general aviation markets, as well as to end users. Its Climate and Industrial Controls segment offers systems and components primarily for use in the mobile and stationary refrigeration, and air conditioning industry; and in fluid control applications in various industries, such as processing, fuel dispensing, beverage dispensing, and mobile emissions. This segment serves OEMs and their replacement markets. Parker-Hannifin Corporation markets its products through direct-sales employees, independent distributors, wholesalers, and sales representatives. The company was founded in 1918 and is headquartered i n Cleveland, Ohio.
- [By Charles Mizrahi, President and CEO, Hampton Investors, Inc.]
Parker Hannifin (PH) generates strong revenue from its aerospace division, while its primary industrial segment is lagging.
Overall, we like the company’s balanced portfolio. PH had solid order rates this past year with backlog of $3.6 billion between its industrial and aerospace segments.
Top 10 Shipping Stocks For 2016: United Parcel Service Inc.(UPS)
United Parcel Service, Inc., a package delivery company, provides transportation, logistics, and financial services in the United States and internationally. It operates in three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. Domestic Package segment engages in the time-definite delivery of letters, documents, and packages in the United States. The International Package segment offers air and ground delivery of small packages and letters to approximately 220 countries and territories, including shipments outside the United States, as well as shipments with either origin or distribution outside the United States; export services; and domestic services move shipments within a country?s borders. The Supply Chain & Freight segment provides forwarding and logistics services, such as supply chain design and management, freight distribution, customs brokerage, mail, and consulting services in approximately 195 countries and territorie s; and less-than-truckload and truckload services to customers in North America. In addition, the company offers various technology solutions for automated shipping, visibility, and billing; information technology systems and distribution facilities to various industries comprising healthcare, technology, and consumer/retail; and a portfolio of financial services that provides customers with short-term working capital, government guaranteed lending, global trade financing, credit cards, and export financing. It operates a fleet of approximately 99,800 package cars, vans, tractors, and motorcycles; an air fleet of 527 aircraft; and 33,800 containers used to transport cargo in its aircraft. The company was founded in 1907 and is headquartered in Atlanta, Georgia.
- [By Ben Levisohn]
Retain Peer Perform.FedEx is trading at 12.5x forward P/E on our EPS, below its 10-year avg. of 15x and United Parcel Service (UPS) currently at 17x. So valuation is clearly attractive. However, we see EPS risk in F17 and few near-term catalysts outside of an improving macro environment. Our visibility to a rebound in Ground margins also remains low. Accordingly, we remain on the sidelines with a Peer Perform rating. Longer term, we see potential tailwinds in F18 from ramping TNT accretion and share gains ahead of UPSs Teamster labor negotiations.
- [By Ben Levisohn]
Shares of UPS (UPS) haven’t responded favorably to its earnings release–but at least one set of analysts sees UPS making life tough for FedEx (FDX) in the future.
UPS reported a profit of $1.43 a share, meeting analyst forecasts, on sales of 14.629 billion. Cowen’s Helane Becker and team reiterate their Market Perform rating but see opportunities for UPS to make life difficult for FedEx:
We are reiterating our Market Perform rating and maintaining our $110 price target on the common shares of UPS. Our price target is based on 10.4x our 2016E EV/EBITDA (or 19.0x 2016E EPS). UPS will need to continue to invest in their European operations as competition will become fierce following FedEx’s acquisition of TNT. UPS management will also try to continue to lower their costs to serve the B2C market. B2C currently accounts for 45% of UPS’ package deliveries, and growth is 5x the B2B growth rate. This growth rate will increase the importance of consumer deliveries on overall results.
UPS Increasing its European Capabilities to Stay Ahead of Competition: UPS continues to see strength in its International Package business as they have already built a large and profitable European delivery network. The strong dollar is helping to increase exports to the United States. UPS believes they are 25% of the way through the projects associated with their $2Bn capital investment plan to enhance their European operations. This plan automates facilities in Europe and increases capacity and speed throughout the network. Management believes this network has allowed them to outperform other competitors in the market. We believe these investments will help them maintain market share following the FedEx acquisition of TNT. FedEx is also intending to invest heavily in their TNT network to increase their service capabilities. We believe UPS is correctly investing in their European network to continue to stay ahead of their
- [By David Sterman]
Cardboard boxes? Why should anyone care about such a low-tech old-line industry? The answer: e-commerce. That UPS (NYSE: UPS) package at your doorstep explains why this industry isn't going anywhere.
- [By Chad Tracy]
Unlike transportation industry titans FedEx (NYSE: FDX) or UPS (NYSE: UPS), C.H. Robinson does not own a fleet of trucks that transport goods. Instead, it specializes in logistics. Other companies hire C.H. Robinson to make their transportation services more efficient.
Top Dividend Stocks For 2016: Cellcom Israel Ltd.(CEL)
Cellcom Israel Ltd. provides cellular communications services in Israel. It offers basic and advanced cellular telephone services, text and multimedia messaging services, and advanced cellular content and data services. The company?s basic cellular telephony services include voice mail, cellular fax, call waiting, call forwarding, caller identification, collect call, conference calling, ?Talk 2?, additional number services, and collect call services; and outbound and inbound roaming services. It also provides value-added services comprising Cellcom volume that includes downloadable content, such as music, games, on-net-reality programs, drama series, and video games; SMS and MMS services to send and receive text, photos, multimedia, and animation messages; access to third party application providers for notification of roadway speed detectors, mange vehicle fleets, and enable subscribers to manage and operate time clocks and various controllers for industrial, agricultural , and commercial purposes; video calls to communicate with each other through video applications; zone services for calls initiated from a specific location; location-based services; voice-based information services; text-based information services and interactive information services, including news headlines, sports results, and traffic and weather reports; and data services to access handsets, cellular modems, laptops, tablets, and cellular routers, as well as Internet based payment services. In addition, the company sells handsets, modems, routers, tablets, and laptops, as well as provides repair and replacement services; and offers landline telephony, transmission, and data services through its approximately 1,500 kilometers of inland fiber-optic infrastructure and complementary microwave links to selected business customers. As of March 31, 2011, it provided its services to approximately 3.395 million subscribers. The company was founded in 1994 and is headquartered i n Netanya, Israel.
- [By Monica Gerson]
Cellcom Israel Ltd. (NYSE: CEL) is estimated to post its earnings for the latest quarter.
Quotient Ltd (NASDAQ: QTNT) is projected to post a quarterly loss at $0.59 per share on revenue of $4.75 million.