Goldman Sachs : Undervalued Stocks Part 3

Ticker: APC

Rating: Buy

Current Price: $74.31

Upside to Target: 34.6%

Anadarko, an oil & gas exploration and production company, is currently engaged in deepwater drilling in the Gulf of Mexico.

Prudential Financial

Ticker: PRU

Rating: Buy

Current Price: $53.33

Upside to Target: 36.9%

This financial services and insurance firm offers life insurance, annuities, mutual funds, and long term care insurance.

Schlumberger Ltd.

Ticker: SLB

Rating: Buy

Current Price: $69.30

Upside to Target: 37.1%

This firm supplies technology, integrated project management, and information solutions to its customers in the oil and gas industry.

Williams Companies Inc.

Williams Companies Inc.

imantsu / Shutterstock.com

Ticker: WMB

Rating: Buy

Current Price: $32.74

Upside to Target: 37.4%

This energy infrastructure company specializes in the development of interstate natural gas pipelines

Marathon Petroleum

Ticker: MPC

Rating: Buy

Current Price: $63.00

Upside to Target: 38.1%

This firm is the largest fuel refiner in the Midwest U.S. and owns, operates, or leases over 8,300 miles of pipeline.

Apollo Group

Ticker: APOL

Rating: Neutral

Current Price: $20.92

Upside to Target: 38.6%

Apollo offers higher educational programs and services both online and on-campus at the undergraduate, graduate and doctoral levels through its wholly-owned subsidiaries, which include the University of Phoenix.

GOLDMAN: These Are The 40 Most Undervalued Stocks In The Market

 

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National Oilwell Varco

National Oilwell Varco

Ticker: NOV

Rating: Buy

Current Price: $68.35

Upside to Target: 39.0%

This oil & gas equipment manufacturer provides major mechanical components for land and offshore drilling rigs

Apple Inc.

Apple Inc.

Ap Image of Tim Cook, Photo illustration by Jay Yarow

Ticker: AAPL

Rating: Buy

Current Price: $532.17

Upside to Target: 44.1%

The largest company in the world by market cap, Apple, is currently working on developing televisions

Halliburton

Halliburton

Ticker: HAL

Rating: Buy

Current Price: $34.69

Upside to Target: 44.1%

Halliburton provides services and manufactures products for the exploration, development, and production of oil and natural gas.

Goldman Sachs : Undervalued Stocks Part 2

 The Most Undervalued Stocks In The Market

Cabot Oil & Gas

Cabot Oil & Gas

Ticker: COG

Rating: Buy

Current Price: $49.74

Upside to Target: 28.7%

This oil & gas production company has its reserves located exclusively in the U.S., about 95 percent of which is natural gas.

Teradata Corp.

Teradata Corp.

Mike Koehler, CEO, Teradata

Teradata

Ticker: TDC

Rating: Buy

Current Price: $61.89

Upside to Target: 29.3%

Teradata provides enterprise data warehousing, including enterprise analytic technologies and services

Assurant Inc.

Ticker: AIZ

Rating: Buy

Current Price: $34.70

Upside to Target: 29.7%

Assurant offers specialty insurance products, including homeowner insurance, health insurance, life insurance, and solar project insurance

Ticker: SWN

Rating: Buy

Current Price: $33.41

Upside to Target: 31.7%

This energy company is primarily engaged in the exploration and production of unconventional oil and natural gas.

Ticker: GPS

Rating: Buy

Current Price: $31.04

Upside to Target: 32.1%

Gap is a clothing and accessories retailer which offers an extensive array of casual wear.

Devon Energy Corp.

Ticker: DVN

Rating: Buy

Current Price: $52.04

Upside to Target: 32.6%

Devon produces 2.6 billion cubic feet of natural gas each day, and also is engaged in oil exploration and production.

Dean Foods Co.

Ticker: DF

Rating: Buy

Current Price: $16.51

Upside to Target: 33.3%

Dean Foods is primarily engaged in the processing and distribution of dairy products and includes over 50 brands.

Stocks That Everyone Is Shorting

DR Horton

Percent short: 12.19

TickerDHI

Industry: Housing

Comment: Some analysts remain unconvinced the housing sector has turned around.

1-Year Return: +60%

Source: Bloomberg

Salesforce.com

Percent short: 12.48

Ticker: CRM

Industry: Tech

Comment:  Salesforce.com  recently reported Q3 losses of $220 million.

1-Year Return: +66%

Staples

Percent short: 12.59

Ticker: SPLS

Industry: Retail

Comment: Staples recently reported a net loss of $596.3 million.

1-Year Return: -15%

Percent short: 12.95

Ticker: DNB

Industry: Data

Comment: Dun & Bradstreet recently abandoned plans to sell itself.

1-Year Return: +7%

Percent short: 13.09

Ticker: ANF

Industry: Retail

Comment: Among 14 retailers, Abercrombie was the only one to receive an outright “sell” rating from a fall Citi report.

1-Year Return: 0%

Chipotle

Percent short: 13.22

Ticker: CMG

Industry: Food

Comment: David Einhorn‘s recent comments about competition Chipotle will face from Taco bell continue to spook investors.

1-Year Return: -12%

Eaton Corp

Eaton Corp

AP Photo/Mike Derer

Percent short: 13.27

Ticker: ETN

Industry: Manufacturing

Comment: Eaton just saw its quarterly revenue decline as expenses rose.

1-Year Return: +29%

Seagate

Percent short: 13.75

Ticker: STX

Industry: Tech

Comment: Seagate’s rating was cut recently to underweight by JPMorgan over “macroeconomic and secular factors.”

1-Year Return: +95%

Hasbro

Percent short: 13.78

Ticker: HAS

Industry: Retail

Comment: Hasbro recently reported earnings of $164.9 million off from $171 million from Q3 2011.

1-Year Return: +18%

GOLDMAN: The Most Undervalued Stocks In The Market

The firm’s recently released “US Monthly Chartbook” includes a list of stocks with the most upside opportunity relative to Goldman analysts’ price targets.

Many of these companies highlighted are either in energy production or energy equipment.

The stocks listed offer 24 to 44 percent upside relative to their current prices.

ONEOK Inc.

Ticker: OKE

Rating: Neutral

Current Price: $42.75

Upside to Target: 24.0%

This oil & gas company is primarily involved with the transmission and distribution of natural gas to over 2 million customers. ONEOK also owns one of the nation’s premier natural gas liquids systems.

Stryker Corp.

Ticker: SYK

Rating: Buy

Current Price: $54.82

Upside to Target: 24.0%

This medical device and equipment manufacturer specializes in orthopedic medical technology.

Priceline.com

Priceline.com

Ticker: PCLN

Rating: Buy

Current Price: $620.39

Upside to Target: 24.1%

Priceline offers exclusive deals on hotels, flights, rental cars, vacations, and cruises.

Range Resources

Ticker: RRC

Rating: Neutral

Current Price: $62.83

Upside to Target: 24.1%

This oil & gas production company has a significant portion of its drilling inventory in unconventional reserves.

Edwards Lifesciences

Ticker: EW

Rating: Buy

Current Price: $90.17

Upside to Target: 24.2%

This company designs, manufactures, and markets tissue heart valves and hemodynamic monitoring devices

Waste Management

Waste Management

AP/David J. Phillip

Ticker: WM

Rating: Buy

Current Price: $33.74

Upside to Target: 24.5%

Waste Management disposes of garbage and provides recycling services which produce green energy.

American International Group

American International Group

Ticker: AIG

Rating: Buy

Current Price: $35.30

Upside to Target: 24.6%

This multinational company offers a variety of insurance plans in approximately 130 countries.

Noble Energy

Noble Energy

AP

Ticker: NBL

Rating: Buy

Current Price: $101.74

Upside to Target: 24.8%

Noble Energy is engaged in the acquisition, exploration, development, production and marketing of crude oil, natural gas and natural gas liquids, including a deepwater drilling rig in Santiago.

Baker Hughes

Ticker: BHI

Rating: Neutral

Current Price: $40.85

Upside to Target: 24.9%

This firm manufactures products for oil & gas production companies, including drill bits and pipelines

EOG Resources

Ticker: EOG

Rating: Buy

Current Price: $120.79

Upside to Target: 25.0%

This oil & gas production company has 84 percent of its reserves located in the United States

Textron Inc.

Textron Inc.

Ticker: TXT

Rating: Buy

Current Price: $24.79

Upside to Target: 25.1%

Textron has numerous subsidiaries and business units, and owns brands such as Bell Helicopter, Cessna Aircraft, Kautex, Lycoming, E-Z-GO and Greenlee.

Mondelez International

Ticker: MDLZ

Rating: Buy

Current Price: $25.45

Upside to Target: 25.7%

Formerly Kraft Foods, Mondelez manufactures a variety of food products including Oreo cookies and Trident gum.

Dollar Tree

Dollar Tree

Wikimedia Commons

Ticker: DLTR

Rating: Buy

Current Price: $40.56

Upside to Target: 25.7%

Dollar Tree is a discount variety store chain which offers general merchandise at extremely low prices.

PerkinElmer

PerkinElmer

Business Insider

Ticker: PKI

Rating: Buy

Current Price: $31.74

Upside to Target: 26.0%

PerkinElmer is a leader in human and environmental health which offers critical therapeutic and disease research, prenatal screening, environmental testing, and industrial monitoring.

GOLDMAN: These Are The 40 Most Undervalued Stocks In The Market

 

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Republic Services

Ticker: RSG

Rating: Buy

Current Price: $29.33

Upside to Target: 26.2%

Republic Services collects and disposes of waste and offers recycling services to customers across the United States.

Owens-Illinois

Owens-Illinois

AP Photo

Ticker: OI

Rating: Buy

Current Price: $21.27

Upside to Target: 26.9%

Owens-Illinois manufactures packaging products, specializing in glass containers.

Wynn Resorts Ltd.

Wynn Resorts Ltd.

AP

Ticker: WYNN

Rating: Buy

Current Price: $112.49

Upside to Target: 27.1%

Wynn owns, develops, and operates luxury hotels, casinos, and resorts

Marathon Oil Corp.

Ticker: MRO

Rating: Buy

Current Price: $30.66

Upside to Target: 27.2%

This international energy company is primarily engaged in the exploration and production of oil and gas

Cisco Systems

Cisco Systems

Ticker: CSCO

Rating: Buy

Current Price: $19.65

Upside to Target: 27.2%

Cisco manufactures and sells networking equipment, including routers, modules, and software.

GOLDMAN: These Are The 40 Most Undervalued Stocks In The Market

 

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Alexion Pharmaceuticals

Ticker: ALXN

Rating: Buy

Current Price: $93.74

Upside to Target: 28.0%

This pharmaceutical company seeks to develop cures for severe, life-threatening, and rare diseases.

Dell Inc.

Dell Inc.

AP

Ticker: DELL

Rating: Buy

Current Price: $10.14

Upside to Target: 28.2%

Dell manufactures computers and provides other technology solutions for businesses as well as individual consumers.

Source: Goldman Sachs

Pioneer Natural Resources

Pioneer Natural Resources

Getty Images

Ticker: PXD

Rating: Buy

Current Price: $106.59

Upside to Target: 28.5%

This oil & gas exploration and production company is actively drilling in Texas and Alaska

GOLDMAN SACHS : The 12 Cheapest Stocks In America

Image representing Goldman Sachs as depicted i...

Image via CrunchBase

Goldman Sachs
sees a strong year ahead for U.S. stocks, with the S&P 500 closing 2013 at 1,575.

 

The team led by David Kostin isn’t alarmed by market’s recent increased volatility, stating that “the market has traded in a wide range reflecting investor uncertainty,” which they expect will dissipate once a solution to the Fiscal Cliff is reached.

In his new US Monthly Chartbook, Kostin identifies the stocks with the “most upside to Goldman Sachs target price.”

We pulled the top 12 stocks on the list, which offer 33 percent to 50 percent upside relative to their current prices.

  

Goodyear Tire & Rubber

Ticker: GT

Rating: Buy

Current Price: $12.77

Price Target: $17.00

Upside to Target: 33.1 percent

Goodyear manufactures and distributes tires for automobiles, commercial trucks, light trucks, SUVs, race cars, and more.

Source: Goldman Sachs

Devon Energy Corp.

Ticker: DVN

Rating: Buy

Current Price: $53.12

Price Target: $73.00

Upside to Target: 37.4 percent

Devon Energy engages in oil & gas exploration, production, and property acquisition.

Source: Goldman Sachs

GOLDMAN: These Are The 12 Cheapest Stocks In America

Ticker: NOV

Rating: Buy

Current Price: $68.14

Price Target: $95.00

Upside to Target: 39.4 percent

National Oilwell Varco manufactures mechanical components an assortment of drilling rigs.

Prudential Financial Inc.

Ticker: PRU

Rating: Buy

Current Price:  $52.22

Price Target: $73.00

Upside to Target: 39.8 percent

Prudential offers retirement, insurance, and investment solutions for individual and institutional customers.

 

Williams Companies Inc.

Ticker: WMB

Rating: Buy

Current Price: $32.09

Price Target: $45.00

Upside to Target: 40.2 percent

Williams Companies primarily engages in the transmission of natural gas, and operates pipelines from the Gulf of Mexico to Alberta’s oil sands.

Apollo Group

Apollo Group

Ticker: APOL

Rating: Neutral

Current Price: $20.48

Price Target: $29.00

Upside to Target: 41.6 percent

The Apollo Group owns multiple for-profit educational institutions, including the University

 

Jabil Circuit Inc.

Ticker: JBL

Rating: Buy

Current Price: $18.67

Price Target: $27.00

Upside to Target: 44.6 percent

Jabil provides electronic engineering and manufacturing services

Ticker: OI

Rating: Buy

Current Price: $19.21

Price Target: $28.00

Upside to Target: 45.8 percent

Owens-Illinois manufactures packaging products and specializes in the production of glass containers

Teradata Corp.

Teradata Corp.

Mike Koehler, CEO, Teradata

Teradata

Ticker: TDC

Rating: Buy

Current Price: $58.05

Price Target: $85.00

Upside to Target: 46.4 percent

Teradata sells database software to many industries, including retail, communications, and

Joy Global Inc.

Joy Global Inc.

YouTube via TheStreetTV

Ticker: JOY

Rating: Buy

Current Price: $55.93

Price Target: $82.00

Upside to Target: 46.6 percent

Joy Global manufactures equipment for the mining industry.

Newfield Exploration Co.

Ticker: NFX

Rating: Neutral

Current Price: $24.77

Price Target: $37.00

Upside to Target: 49.4 percent

Newfield is an oil & gas exploration company

Goldman Sachs Top Trends For 2013

Nov 29.

1. “Global growth: A ‘hump’ to get over, then a clear road ahead”

Growth will be weak in early 2013 with increased fiscal restraint.  Spanish economic risks and Italian political risks will ease in the second half of the year.  And there will be “room to grow” thanks to output gaps.  Looser energy supplies will also help.

“The biggest challenge from a markets perspective is that we see risks to growth concentrated early in the year, with Q1 likely to show a step-down in growth globally.”

    

2. “More unconventional easing in the G4″

Interest rates will stay ultra-low in the world’s largest economies.  “Fed to move towards macro-based criteria; ECB to conduct private asset purchases.”

“However, the most hotly debated shift currently is whether the BoJ will make a more convincing attempt at easing. … And while we do expect incremental progress, our central case is not for a quantum leap in BoJ policy, particularly in the near term.”

 

3/11

   

3. “Termites eat away at the foundations of the ‘search for yield’”

US Treasury yields will rise modestly. But investors will be driven toward corporate bonds as they look for yield.

“Increased risk that easy credit will lead to corporate re-leveraging … [E]xcluding peripheral Europe, corporate credit quality (as measured by debt-to-earnings measures) remains good in most markets, and this should continue to support the fundamental risk profile of most credit portfolios.”

4. “Housing stabilisation and private-sector healing in the US”

US housing activity will continue to increase, as mortgage rates remain record low and lending conditions loosen.

“On that front, two kinds of assets come to mind. The first is select vintages of the ABX index on subprime mortgages. … The second is US domestic banks, which could benefit further from a gradual normalisation of housing credit finance if home prices continue to drift higher.”

 

5/11

   

5. “Euro area a smaller driver of global risk, but still a source of tails”

5.

AP

European growth will be weak, with Spanish economic risks and Italian political risks intensifying early in the year.

“With risk premia still wider than elsewhere, and larger than warranted by fundamentals alone, further policy progress – and an absence of fresh stresses – could see incremental gains in Euro area assets

   

6. “Continued divergence between core and periphery in the Euro area”

“The divergence in growth between the Euro area core (Germany in particular) and the periphery (Spain in particular) is set to continue. Periphery weakness is already well-known, but the potential for German overheating is a more distinctive theme

7. “Emerging Market growth pick-up revisits capacity constraints”

7.

AP

Emerging Markets will see growth accelerate but they will also have “less room to grow” than developed markets.  Inflation will increase the risk of tighter monetary policy.

“We think EM equities should have a better year, but the upside potential may be limited by the fact that inflationary pressure and a potential shift towards tightening could come earlier than the market expects in places

HERE IT IS: Goldman Presents The 10 Stories That Will Dominate Markets In 2013

 

8/11

   

8. “Emerging Market differentiation continues”

Responses to inflation and current account imbalances will differentiate the emerging markets.

“[T]he differences across EM are at least as striking as their similarities… The market may be underestimating the scope for rate hikes (in some ASEAN markets, such as Indonesia or Malaysia) or overestimating the scope for easing in places (Poland), especially if global yields drift higher as well.”

9. “Commodity constraint to loosen in the medium term”

9.

ExxonMobil

“US energy supply story gradually loosens global oil constraint.”

“Most importantly, we expect oil markets to return to a more structurally stable position, where the ability to bring on new supply in the $80-90/bbl range is rapidly increasing. The relaxation of the energy supply constraint globally reduces one major obstacle to a global recovery as we look to above-trend global growth into 2014 and beyond.”

 

10/11

   

10. “Stable China growth, but not like the old days”

“Although we expect Chinese growth to stabilise next year, the pace of growth we envisage is still only a touch above 8%.”

“Our Commodity Research team’s analysis of the Chinese construction cycle suggests that iron ore demand is likely to remain soft as core building demand falls, and that copper will receive a boost from the completion of new buildings in the next 6-9 months, but is likely to peak thereafter.”

CITI: Commodity Forecasts

Nov 27

 

Citi is bearish on Brent prices and thinks the oil market is in the process of normalizing

Citi is bearish on Brent prices and thinks the oil market is in the process of normalizing

 

2012 average year price:
$110.00/barrel

2013 average year price:
$99.00/barrel

2014 average year price:
$93.00/barrel

We’re seeing a “supply cornucopia” at a time of heightened geopolitical tensions.  The American energy revolution also heightens geopolitical tensions, since it reduces dependence on West Africa, Middle East, Venezuela, Mexico and oil prices decrease. OPEC and other oil producing countries  will see their fiscal breakevens – price at which oil contributes to balancing budget – rise.

WTI Crude oil prices should decline as demand for oil is subdued

2012 average year price:
$92.00/barrel

2013 average year price:
$85.00/barrel

2014 average year price:
$83.00/barrel

Commodities indices are expected to add to Brent positions put less weight in NYMEX WTI. But WTI prices are also likely to be impacted by subdued demand for oil.

Natural Gas prices are expected to rise because of lower inventory levels, lower expected imports from Canada, and higher exports to Mexico.

Natural Gas prices are expected to rise because of lower inventory levels, lower expected imports from Canada, and higher exports to Mexico.

Natural gas compressor station

Aluminum is expected to see modest consumption growth in 2013

2012 average year price:
$2,057.00/tonne

2013 average year price:
$2,100.00/tonne

2014 average year price:
$2,175.00/tonne

Aluminum has seen rising production and inventory, but demand has kept it from having an overly negative impact on prices.

Aluminum consumption growth is expected to be a modest 1.3 percent in 2013 because of the slowdown in China and Europe’s sovereign debt crisis.

Read more: http://www.businessinsider.com/citi-2013-commodities-outlook-2012-11?op=1#ixzz2DNmiAcLS

 

2012 average year price:
$2.75/ million BTUs

2013 average year price:
$3.55/ million BTUs

2014 average year price:
$4.10/ million BTUs

Natural gas prices will are subject to seasonality. As winter approaches prices could increase on lower inventory levels at the end of October, lower imports from Canada, and higher exports to Mexico.

Domestic production could fall but not by much. The fiscal cliff could however have a huge impact on natural gas prices.

Copper prices are projected to decline as supply increases and demand slides

2012 average year price:
$7,970.00/tonne

2013 average year price:
$7,965.00/tonne

2014 average year price:
$7,775.00/tonne

2013 is a “year of transition for copper” in terms of supply and demand. 2013 signals the next wave in terms of copper supply according to Citi analysts who think that mine supply growth will be up 6.7 percent.

On the demand side, China isn’t expected to have a major stimulus in early 2013, and with many markets in Europe expected to be in a recession, demand from the region is also expected to be weak.

Nickel prices are expected to rise because supply is tighter than everyone thinks

2012 average year price:
$17,833.00/tonne

2013 average year price:
$21,770.00/tonne

2014 average year price:
$24,400.00/tonne

Nickel suffers from a “reputational deficit amongst many in the analytical community” because of certain assumptions made about its over supply.

“In the short term, the combination of low consumer stainless inventories , particularly in Europe and China, and low nickel inventories with stainless mills, makes the nickel market is indeed increasingly vulnerable to a technical short covering rally perhaps prompted by index fund rebasing. However, unlike a similar rally in January 2012, it is likely that such a move in early 2013 is likely to spark consumer restocking, helping push prices towards $21,000/t during the first quarter.”

Demand for zinc is expected to rise modestly pushing prices higher

2012 average year price:
$1,956.00/tonne

2013 average year price:
$2,040.00/tonne

2014 average year price:
$2,125.00/tonne

The market faces weak fundamentals since LME inventory has jumped since the start of 2012. Demand for zinc is slowing especially viz-a-viz China but is expected to improve modestly in 2013. Mine supply is healthy

Gold prices will rise in 2013, before declining again in 2014

2012 average year price:
$1,679.00/ounce

2013 average year price:
$1,749.00/ounce

2014 average year price:
$1,655.00/ounce

Despite investors turning less bullish on gold, Citi continues to be bullish on gold. President Obama’s victory was expected to be positive for gold since it would benefit from “a continuation of dovish monetary policy”. Gold prices have also been supported by central bank gold purchases. Moreover muted gold demand in India is expected to have picked up during Diwali.

Morningstar Top Ten List

Conviction (novel)

Conviction (novel) (Photo credit: Wikipedia)

Nov. 20

Ten New-Money Purchases by the  Ultimate Stock Pickers

Research In Motion ( RIMM)

Annaly Capital ( NLY)

Tronox( TROX)

Conoco Phillips ( COP)

CME Group (CME)

JPMorgan ( JPM)

Apple (APPL)

CH Rbnsn ( CHRW)

J&J ( JNJ)

 

Looking at the purchases that our Ultimate Stock-Pickers make in any given period, we tend to hone in on both high-conviction purchases and new-money buys. We believe that managers send signals about the level of conviction they have in a position by how much of their portfolio (on a percentage basis) they’re willing to commit to a given name at any point in time. For example, we can generally assume that the managers at  FMI Large Cap(FMIHX), which had 5.8% of its stock portfolio invested in  3M Company(MMM) at the end of the September quarter, compared to just 2.3% in Willis Group Holdings(WSH), have a higher degree of conviction in 3M than they do in Willis Group. That said, position size can sometimes be influenced by how much a portfolio manager wants to commit to a particular sector (especially when there are only a few truly investable ideas in that sector). It can also be influenced by large legacy positions that have become difficult to unwind.

We define high-conviction purchases as instances where managers make meaningful additions to their existing holdings, or make significant new-money purchases in names that were not in their portfolio at the end of the previous quarter, with a focus on the impact these transactions have on the overall portfolio. We believe that new-money purchases provide us with the most insight into what our top managers think are the most attractive buying opportunities, as portfolio managers tend to only put money to work in new names when their purchase decision carries a very high degree of conviction. This is based on the belief that it is far easier for investment managers to put money to work in holdings that they are already comfortable with than it is for them to make a bet on a name that would represent a new addition to the portfolio.

T

When looking at all of these different stock purchases, though, it pays to remember that the decision to buy these securities was made during a prior period. This means that the prices our top managers paid will likely be different from today’s trading levels. As such, a stock that had our managers excited in the latest period might end up being less (or more) attractive, depending on the direction that the markets or the news flow for a particular firm has taken. With the S&P 500 trading in a range of 1,335 to 1,465 during the third quarter, and closing out last week at around 1,360, it is highly likely that some of the prices our managers paid during the most recent period were slightly higher than the prices investors are seeing today. This once again exemplifies our ongoing belief that it is extremely important for investors to assess the current attractiveness of any security they are considering by looking at some of the measures that our stock analysts’ research regularly provides us with, like the Morningstar Rating for Stocks, and the price/fair value estimate ratio.

Like the first quarter of this year (and the fourth quarter of last year), the third quarter was exemplified by a dearth of buying activity (in aggregate) by our Ultimate Stock-Pickers. The list of top 10 high-conviction purchases highlights this fact, as most of the securities purchased during the period had just one or two managers buying shares, compared to prior periods (like the second quarter) when it has taken as many as four managers buying a security to push a name up to the top of the list. This doesn’t surprise us too much, given that global equity markets put in a solid showing during the third quarter, and the fact that investors continued to pull money out of actively managed U.S. and international stock funds during the period. This also helps to explain why we were seeing a bit more selling activity during the third quarter, exemplified by a lot of position-trimming and a few truly meaningful sales, as our managers were likely anticipating a downturn in the markets–given slowing growth in both developed and developing economies, the ongoing European debt crisis, and the upcoming U.S. elections and pending “fiscal cliff”–and were building up cash to meet redemption requests, as well as for future purchases (in a more reasonably priced market).

Looking over the list of top 10 high-conviction purchases we’ve seen so far from the most recent period, one name– Apple(AAPL)–clearly stands out among the rest. This is not only because three of our top managers– Alleghany(Y),  Columbia Dividend Income(LBSAX) , and RS Capital Appreciation(RCAPX)–were making meaningful purchases in the name (with Columbia Dividend Income actually making a new-money purchases in the security), but because it is the only stock on the list that is still trading below the $539 per share Consider Buy price our analyst Brian Colello has attached to his fair value estimate. Apple may be the most valuable company (by market cap) that the world has ever seen, but Colello believes that there are still plenty of avenues for growth in the years ahead. He expects tremendous iPhone growth, not only as the smartphone market doubles between 2011 and 2014, but as the iPhone gains share as a result of the ongoing struggles at  Nokia(NOK) and  Research in Motion(RIMM). Colello feels that iPad revenue should also grow at an outstanding rate, as consumers continue to adopt tablets over, or in addition to, PCs, and the company generates additional sales with the launch of the iPad mini. He thinks that adoption of these devices will raise the switching costs associated with moving to alternative phones and tablets, and Apple’s lock-in via iOS and iCloud could spur market share gains in Mac and potentially any future Apple TV products. With the company looking at a strong iPhone 5 launch into the holiday season, Colello feels that the current share price is not fully reflecting the value that Apple should be able to generate for shareholders in the near- to medium-term.

While not quite making the list of top 10 high-conviction purchases, it is interesting to note that one other company– American International Group(AIG)–had three of our top managers– Diamond Hill Large Cap(DHLAX),  Hartford Capital Appreciation (ITHAX), and  Oakmark (OAKMX)–making meaningful purchases in the name. As we had noted last quarter, up until this year, only Bruce Berkowitz at  Fairholme(FAIRX), Saul Pannell at Hartford Capital Appreciation, and the managers at  Mutual Shares(TESIX), were willing to commit capital to the firm, which has been mired in controversy ever since the U.S. government had to bail it out at the height of the financial crisis. With two other managers–Oakmark and  FPA Crescent (FPACX)–making new-money purchases in the name during the second quarter, and Diamond Hill Large Cap joining them with a new-money purchase of their own during the third quarter, the number of Ultimate Stock-Pickers holding stakes in AIG has now risen to six.

Goldman Sachs’ Best Stocks With Dividends and BuyBacks

October 16

Goldman Sachs‘ Robert D. Boroujerdi and his team recently published the firm’s Income Book, which includes dividend and buyback investment strategies. Their favorite strategy involves buying stocks with a combination of high dividend yields and rich share buybackplans.

 

TE Connectivity Ltd.

Ticker: TEL

Price Target
$45

Dividend Yield
2.3%

EPS Accretion From Buybacks
2.7%

Accretion + Yield
5%

Description: TE supplies connectors for the telecommunications industry. It’s hiring 3,000 new employees in Bangalore.

Source: Goldman Sachs

Cummins Inc.

Ticker: CMI

Price Target
$116

Dividend Yield
2%

EPS Accretion From Buybacks
3%

Accretion + Yield
5%

Description: Cummins manufactures engines and motor vehicle parts. It just signed a partnership with Hyundai to build mid-range engines

INVESCO

Ticker: GLW

Price Target
$28.50

Dividend Yield
2.7%

EPS Accretion From Buybacks
2.6%

Accretion + Yield
5.3%

Description: Invesco is an investment management service company. It recently announced it’s expanding into India

Corning Inc.

Corning’s architectural display glass

Corning

Ticker: GLW

Price Target
$16

Dividend Yield
2.4%

EPS Accretion From Buybacks
3.2%

Accretion + Yield
5.5%

Description: Corning makes specialty glass and ceramic products. Goldman just upgraded the stock.

Ticker: STJ

Price Target
$48

Dividend Yield
2.1%

EPS Accretion From Buybacks
3.5%

Accretion + Yield
5.6%

Description: St. Jude develops medical technology. Wells Fargo recently reaffirmed the stock’s “outperform” rating.

JP Morgan

JP Morgan

Dimon in 1998

AP Images

Ticker: JPM

Price Target
$42

Dividend Yield
2.9%

EPS Accretion From Buybacks
2.7%

Accretion + Yield
5.7%

Description: JPMorgan is an investment bank. Seeking Alpha says the stock is “deeply discounted and ready to soar long term.”

Baxter

Baxter

Baxter

Ticker: BAX

Price Target
$68

Dividend Yield
2.5%

EPS Accretion From Buybacks
3.5%

Accretion + Yield
6%

Description: Baxter develops pharmaceutical products. It just set an annual sales-growth target of 5 percent.

Republic

Ticker: RSG

Price Target
$32

Dividend Yield
3.3%

EPS Accretion From Buybacks
2.9%

Accretion + Yield
6.2%

Description: Republic is a waste management company. It saw huge YOY Q2 gains.

Read more: http://www.businessinsider.com/goldman-the-best-stocks-with-dividends-and-buyback-plans-2012-10?op=1#ixzz29RzE1gSf

John Bogle’s 10 Rules of Investing

Stock Market

Stock Market (Photo credit: Tax Credits)

1. Remember reversion to the mean. What’s hot today isn’t likely to be hot tomorrow. The stock market reverts to fundamental returns over the long run. Don’t follow the herd. This is highlighted in The Apprentice Millionaire Portfolio available from amazon.com

2. Time is your friend, impulse is your enemy. Take advantage of compound interest and don’t be captivated by the siren song of the market. That only seduces you into buying after stocks have soared and selling after they plunge.

3. Buy right and hold tight. Once you set your asset allocation, stick to it no matter how greedy or scared you become.

4. Have realistic expectations. You are unlikely to get rich quickly. Bogle thinks a 7.5 percent annual return for stocks and a 3.5 percent annual return for bonds is reasonable in the long-run.

5. Forget the needle, buy the haystack. Buy the whole market and you can eliminate stock risk, style risk, and manager risk. Your odds of finding the next Apple (AAPL) are low.

6. Minimize the “croupier’s” take. Beating the stock market and the casino are both zero-sum games, before costs. You get what you don’t pay for.

7. There’s no escaping risk. I’ve long searched for high returns without risk; despite the many claims that such investments exist, however, I haven’t found it. And a money market may be the ultimate risk because it will likely lag inflation.

8. Beware of fighting the last war. What worked in the recent past is not likely to work going forward. Investments that worked well in the first market plunge of the century failed miserably in the second plunge.

9. Hedgehog beats the fox. Foxes represent the financial institutions that charge far too much for their artful, complicated advice. The hedgehog, which when threatened simply curls up into an impregnable spiny ball, represents the index fund with its “price-less” concept.

10. Stay the course. The secret to investing is there is no secret. When you own the entire stock market through a broad stock index fund with an appropriate allocation to an all bond-market index fund, you have the optimal investment strategy. Discipline is best summed up by staying the course.”

6 RULES BY MICHAEL STEINHARDT

Charles Kirk of the very excellent Kirk Report has posted this periodically on his site.  Steinhardt is a hedge fund legend for those of you who aren’t familiar with him.  Attached are his 6 rules of investing:

  • Make all your mistakes early in life. He says the more tough lessons you learn early on, the fewer errors you make later. A common mistake of all young investors is to be too trusting with brokers, analysts, and newsletters who are trying to sell you bad stocks.
  • Always make your living doing something you enjoy. This way, you devote your full intensity to it which is required for success over the long-term.
  • Be intellectually competitive. This involves doing constant research on subjects that make you money. The trick, he says, in plowing through such data is to be able to sense a major change coming in a situation before anyone else.
  • Make good decisions even with incomplete information. In the real world, he argues, investors never have all the data they need before they put their money at risk. You will never have all the information you need. What matters is what you do with the information you have. Do your homework and focus on the facts that matter most in any investing situation.
  • Always trust your intuition. For him, intuition is more than just a hunch. He says intuition resembles a hidden supercomputer in the mind that you’re not even aware is there. It can help you do the right thing at the right time if you give it a chance. In fact, over time your own trading experience will help develop your intuition so that major pitfalls can be avoided.
  • Don’t make small investments. You only have so much time and energy so when you put your money in play. So, if you’re going to put money at risk, make sure the reward is high enough to justify it.

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