JPMorgan’s Jamie Baker and Nishant Mani argue that “downside risk appears diminutive” in airlines like Delta Air Lines (DAL), Southwest Airlines (LUV), and American Airlines (AAL)–even if there’s a recession. They explain why:
Were over a year into fuels decline, and investor fears concerning a breakdown in discipline havent materialized. Planned capacity is tighter. Buybacks have been more aggressive than modeled. Dividends have grown. The march towards investment grade continues. Granted, fuel retention metrics vary by airline, labor rates are being reset, and RASM is uninspiring. But we can identify no structural reason for selected stocks to be trading at 6-8x P/E, other than the market disagreeing with the heft and/or persistence of our (and consensus) forecasts, which rise again today. Put differently, we believe the main concern standing between investors and heady potential gains in U.S. airline equities is uncertainty around a recession. For those believing neither the U.S. nor the world slips into recession this year, we strongly urge you to consider our Overweight-rated names. Alternatively, for those leaning towards a recessionary outcome, we similarly urge you to ponder the industrys expected earnings power, given the abundance of evidence supporting a downturn with margins that actually should rival those of prior, cyclical peaks.
Top Net Payout Yield Stocks To Invest In 2017: Synta Pharmaceuticals Corp.(SNTA)
Synta Pharmaceuticals Corp. focuses on the research, development, and commercialization of novel oncology medicines for cancer patients. Its clinical stage drug candidate in oncology is ganetespib, an Hsp90 inhibitor, which is in Phase II clinical trials to evaluate the combination of ganetespib and paclitaxel versus paclitaxel in patients with platinum-resistant ovarian cancer; and in Phase I/II trial in combination with the mTOR inhibitor sirolimus in patients with refractory sarcoma, including malignant peripheral nerve sheath tumors. The companys drug candidate in its Hsp90-inhibitor Drug Conjugate program is STA-12-8666, which is in preclinical trials for chemotherapy irinotecan. Synta Pharmaceuticals Corp. was incorporated in 2000 and is based in Lexington, Massachusetts.
- [By Lisa Levin]
Synta Pharmaceuticals Corp. (NASDAQ: SNTA) shares were also up, gaining 61 percent to $0.393. Synta Pharmaceuticals announced plans to merge with privately-held Madrigal Pharmaceuticals.
Top Net Payout Yield Stocks To Invest In 2017: Prudential Financial Inc.(PRU)
Prudential Financial, Inc., through its subsidiaries, offers various financial products and services in the United States, Asia, Europe, and Latin America. The company operates through three divisions: The U.S. Retirement Solutions and Investment Management, The U.S. Individual Life and Group Insurance, and The International Insurance and Investments. The U.S. Retirement Solutions and Investment Management division provides individual variable and fixed annuity products, as well as offers retirement investment and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors. This division also provides investment management and advisory services to the public and private marketplace. The U.S. Individual Life and Group Insurance division offers individual variable life, term life, and universal life insurance products; and group life, long-term and short-term group disability, long-term care, and group corporate-, bank-and trus t-owned life insurance products to institutional clients. This division also sells accidental death and dismemberment, and other ancillary coverages, as well as provides plan administrative services; and offers preferred provider and indemnity dental coverage plans to clients. The International Insurance and Investments division provides international individual life insurance products in Japan, Korea, and other foreign countries; and offers proprietary and non-proprietary asset management, investment advice, and services to retail and institutional clients internationally. In addition, the company engages in real estate brokerage franchise business, which involves marketing its franchises to the real estate companies. Further, it provides institutional clients and government agencies with various services in connection with the relocation of their employees. Prudential Financial, Inc. was founded in 1875 and is headquartered in Newark, New Jersey.
- [By Ben Levisohn]
Clinton 15 stock basket (DBUSCLNT): UnitedHealth Group (UNH), Humana (HUM), McKesson (MCK), Aecom (ACM), Quanta Services (PWR), ExxonMobil (XOM), Alcoa (AA), NextEra Energy (NEE), Cree (CREE), First Solar (FSLR), Facebook (FB), Netflix (NFLX), Prudential Financial (PRU), Citigroup (C), Union Pacific (UNP).
10 Best Regional Bank Stocks To Own For 2017: Wendy’s/Arby’s Group Inc.(WEN)
The Wendy’s Company operates as a quick-service hamburger company in the United States. The company, through its subsidiary, Wendy’s International, Inc., operates as a franchisor of the Wendy’s restaurant system. As of December 26, 2011, the Wendy’s system comprised approximately 6,500 franchise and company restaurants in the United States and the United States territories, as well as in 26 other countries worldwide. The company was formerly known as Wendy’s/Arby’s Group, Inc. and changed its name to The Wendy’s Company in July 2011. The Wendy’s Company was founded in 1884 and is headquartered in Dublin, Ohio.
- [By Monica Gerson]
Wendys Co (NASDAQ: WEN) is expected to report its quarterly earnings at $0.06 per share on revenue of $352.08 million.
Canadian Solar Inc. (NASDAQ: CSIQ) is estimated to report its quarterly earnings at $0.14 per share on revenue of $663.74 million.
Top Net Payout Yield Stocks To Invest In 2017: Deutsche Bank AG(DB)
Deutsche Bank Aktiengesellschaft provides investment, financial, and related products and services. The company?s Corporate and Investment Bank division engages in the origination, sale, structuring, and trading of bonds, equities and equity-linked products, exchange-traded and over-the-counter derivatives, foreign exchange, money market instruments, securitized instruments, and commodities to sovereign countries and multinational organizations; and medium-sized companies and multinational corporations. It also offers mergers and acquisitions advisory, corporate finance, and transaction banking, as well as trade finance, cash management, and trust and securities services for financial institutions and other companies. The company?s Private Clients and Asset Management division provides mutual funds and alternative investment products; manages real estate and infrastructure investments and private equity funds; offers advisory and portfolio management services to insurance companies; and provides investment solutions to institutional customers, high net worth individuals, and families. This division also offers a range of banking products and services, including current accounts, deposits and loans, and investment management and pension products to private and self-employed individuals, and small to medium-sized businesses. Its Corporate Investments division?s principal investment activities comprise private equity and venture capital investments, corporate real estate investments, a minority stake in Deutsche Postbank AG, credit exposures, and other non-strategic investments. As of December 31, 2010, the company operated 3,083 branches in approximately 74 countries worldwide, including 2,087 in Germany. Deutsche Bank Aktiengesellschaft was founded in 1870 and is headquartered in Frankfurt am Main, Germany.
- [By Rupert Hargreaves]
Even so, thanks to its checkered past, many companies such as Visa (NYSE: V ) andMasterCard (NYSE: MA ) have been late to the party.However, astute companies, such asDeutsche Bank (NYSE: DB ) have been active in the market since the mid 1970s.
- [By Reuters]
Justin Sullivan/Getty Images RICHMOND, Calif. — Richmond, Calif.’s leaders approved Wednesday morning a plan for the city to become the first in the nation to acquire mortgages with negative equity in a bid to keep local residents in their homes. The power of ’eminent domain’ allows governments to seize private property for a public purpose. Critics say the plan threatens the market for private-label mortgage-backed securities. Richmond’s city council voted 4 to 3 for Mayor Gayle McLaughlin’s proposal for city staff to work more closely with Mortgage Resolution Partners to put the plan crafted by the investor group for the city to work. Richmond can now invoke eminent domain if trusts for more than 620 delinquent and performing “underwater” mortgages reject offers made by the city to buy the loans at deep discount pegged to their properties’ current appraised prices to refinance them and reduce their principal. A mortgage is under water when its unpaid balance is greater than its property’s market value. Mortgage Resolution Partners has failed to get similar plans approved by local governments elsewhere — most recently in North Las Vegas, Nev., and earlier this year in San Bernardino County in Southern California — as the mortgage industry and local real estate businesses rallied against them. But in Richmond, Mortgage Resolution Partners found an ally in a Wall Street-bashing Green Party mayor of one of the San Francisco region’s poorest cities who sees working with the investor group to acquire mortgages as a public purpose if it makes the loans more affordable, averts foreclosures and alleviates blight. Richmond’s residents have been “badly harmed by this housing crisis,” McLaughlin said, defending the plan and partnership with Mortgage Resolution Partners during an often contentious city council meeting that began Tuesday evening and ended early Wednesday morning. “Too many have already lost their homes.” City council members opposed to the pl
Top Net Payout Yield Stocks To Invest In 2017: S&P GSCI(GD)
General Dynamics Corporation, an aerospace and defense company, provides business aviation; combat vehicles, weapons systems, and munitions; military and commercial shipbuilding; and communications and information technology products and services worldwide. Its Aerospace group designs, manufactures, and outfits various large and mid-cabin business-jet aircraft; provides maintenance, repair work, fixed-based operations, and aircraft management services; and performs aircraft completions for aircraft. The company?s Combat Systems group offers tracked and wheeled military vehicles, weapons systems, and munitions. Its product lines include wheeled combat and tactical vehicles; battle tanks and infantry vehicles; munitions and propellant; rockets and gun systems; and axle and drivetrain components and aftermarket parts. This group also manufactures and supplies engineered axles, suspensions, and brakes for heavy-load vehicles for military and commercial customers. The company Advisors’ Opinion:
- [By Ben Levisohn]
Deutsche Bank’s Myles Walton and Louis Raffetto explain why the cut General Dynamics (GD) to Hold from Buy:
[Gulfstream] G650 inventory and price trends quickly becoming a problem: With the bizjet malaise & the unique contribution that the G650 has to General Dynamics, weve kept a particular eye on that product as downside risk. Over the last five months, weve seen the available for sale G650s move from 9 to 22 currently (vs. 4 in Mar 15). Additionally, the continued downward asking price will start to impede on new G650 ordersif not cancellation activity (average ask ~$66M with negotiating flexibility of about $5M). With realized prices for new aircraft at $67M, we havent seen much cancellation activity and perhaps wont given sizable customer deposits; however, the inventory climb implies OEM production may be 20-30% above actual demand over the medium-term…
We remain positive onGeneral Dynamics’ defense biz (60% of ’16E seg EBIT) & while we’ve historically seen Gulfstream as a plus despite softening bizjet trends, the alarming G650 available-for-sale trends in the last few months has moved our opinion. While risks related to the G450/550 transition to the G500/600 are well known, it is the G650 that drives 2/3rds of the unit’s profit and with 2-3 G650/mo hitting the market for every 5/mo delivered, we struggle with sustainability and accordingly lower ourGeneral Dynamics EPS estimates 5% and 10% for 2017 & 2018, respectively. Downgrade to Hold on preference for select peers.
Of the 21 stocks Walton covers, he Buy ratings on eight, including Boeing (BA), Northrop Grumman (NOC), and Rockwell Collins (COL).
Shares of General Dynamics have dropped 4% to $129 at 2:34 p.m. today, while Boeing has fallen 1.1% to $131.43, Northrop Grumman has declined 0.6% to $193.89, and Rockwell Collins has 0.9% $90.83.
- [By Chad Tracy]
Let's take a look at three stocks in the aerospace and defense sector that look more attractive at today's prices.
General Dynamics (NYSE: GD) General Dynamics is currently trading around $86 per share, which is close to its 52-week high of $87.85. Yet earnings support this valuation, and the company's forward price-to-earnings (P/E) ratio is only 11, compared with an industry average of 18. The current price to book value is 2.5. The company also carries very little debt, with a debt-to-equity ratio of 0.3.
General Dynamics generates huge revenue through its contracts with the U.S. government. Its marine systems division owns three of the six submarine shipyards in the U.S. Long-term contracts with the U.S. government are estimated to be worth $78 billion for attack submarines and $140 billion for ballistic missile submarines.