Last week, engineering giant, ITT Corp. (NYSE: ITT) announced a $317 million order from the U.S. Naval Systems Command for the company’s vehicle receiver jammers–vehicle-mounted systems that prevent the detonation of improvised explosive devices, or IEDs.
According to a recent news release, the contract has the potential to swell to $1.7 billion.
In addition to its work with the armed forces, ITT has a great foothold in the infrastructure market, particularly in water treatment.
ITT’s vice president of business development, Colin Sabol recently stated: “Communities around the country, from major metropolitan cities to rural small towns, are now working to secure funds to launch much-needed infrastructure projects, such as drinking water and wastewater projects,” said Colin Sabol, vice president of business development for ITT’s Fluid Technology business. “ITT has extensive experience with the planning and creation of such projects, and measuring how project success produces benefits to the health and economy of a community.”
ITT Corp.’s stock has outperformed the S&P 500 over the last 52 weeks. With a trailing p/e of 9 (which is in line with many of the company’s competitors), operating cash flow of about $1 billion (ttm), quarterly revenue growth (yoy) of more than 16 percent, and shares trading near their 52-week low, this could be a good time to consider ITT Corp. for your portfolio.
Last month, Sterne, Agee & Leach analyst Michael Coleman raised his price target to $23, from $20 for the Minneapolis-based Pentair, Inc. (NYSE: PNR).
Coleman stated in a note to investors that Pentair, which manufactures water treatment and storage systems for customers around the world, “is better positioned than many industrial companies to achieve relative earnings outperformance in 2009 due to significant (and early) restructuring actions taken year-to-date and in (the fourth quarter).” Management expects its cost-cutting measures from workforce reductions alone to produce annual savings of $85 million starting this year, growing to $95 million to $100 million in 2010.
Pentair has a trailing P/E of 8.7, which is below the industry average of 9.1–a possible indication that shares may be undervalued at current levels. The company’s stock outperformed S&P 500 over the last year. Pentair has an operating margin of 11.6 percent, which is in line with several of the company’s competitors’ operating margins. Pentair also pays a dividend, which it has regularly increased for more than three decades. The company’s full-year guidance calls for earnings between $1.70 and $2.00 per share.
We love movie trailers, so here’s one for our Buzz Stock of the day:
Jacobs Engineering Group (NYSE: JEC) provides technical, professional, and construction services to industrial, commercial, and governmental customers around the world. The $5 billion company has an operating margin of about 5.6%, and operating cash flow of $539 million.
The Motley Fool listed Jacobs as a stock for the next Great Depression. A key characteristic for these companies to have is the ability to stay out of the debt crisis that’s bringing sectors like finance, automotive, and homebuilding to their knees, according to the Fool.
Jacobs is in a sweet spot of the market–infrastructure–has a definite tailwind, and could be one of the big winners from the new administration’s stimulus plan.
Jacobs reported earnings of $116.4 million, or $0.94 a share in Q1 2009, up more than 18 percent compared with the same quarter last year. The company also increased its backlog by more than $1 billion from a year ago. Jacobs was listed as one of our Top 10 stocks to own in 2009, and we stand by our claim. Expect Jacobs to be one of the big winners of President Barack Obama’s stimulus plan, and out perform the S&P 500 this year.
The Dow Jones Industrial Average fell below 7,000 for the first time since October 1997 today, and all eyes are on a jobs report due out Friday which could be a “shocker,” according to David Dietze, chief investment strategist at Point View Financial Services. Some economists are predicting unemployment to hit 8 percent.
It all sounds very dismal, and for the most part, it is. But there are still opportunities out there–especially for investors that take a long-term approach to investing. These days, it seems like that’s the only way to go.
“With today’s declines, the long-term price-earnings ratio of the Standard & Poor 500-stock index is down to about 12.3. Over the past century, this ratio has averaged about 16. So relative to corporate profits, the stock market now appears to be undervalued by about 30 percent.” But if you look back on history, stocks may have a way to go before they truly hit bottom.
Stated Leonhardt:
“In the other two great bear markets of the past century, in the 1930s and the 1980s, the p-e ratio ultimately dropped to about 6 or 7. To get to that level now, the S&P 500 would have to drop below 400, from the current 701, and the Dow Jones industrial average would need to be below 4,000.”
Here are a few Bargain Buzz Stocks that we think are worth looking at: Burlington Northern Santa Fe Corp. (NYSE: BNI): Warren Buffet has been increasing his stake in this railroad company lately. Shares closed at $55.00 today. Great long-term investment.
Denny’s Corp. (Nasdaq: DENN):On Jan. 15, the company said it expects to meet or exceed its previous guidance for full-year 2008, thanks to the success of the Franchise Growth Initiative (FGI) and other cost-saving actions that protect margins and cash flow. The company has also restructured quite a bit, selling off a lot of its franchises, and keeping its best locations for its own portfolio.
Priceline.com, Inc. (Nasdaq: PCLN):And it’s not because we’re huge Shatner fans, either. Trading at around $82 per share, the stock above its 52-week low, but well below the high for the period of $144. The Company’s Name Your Own Price (NYOP) strategy will continue to become more attractive especially in a recessionary mode–both for travelers looking for a good deal, and hotel operators looking to unload inventory.
ETFs are a great way to go for anyone looking to plug holes in their portfolio. If you’re looking for more exposure to foreign markets or can’t decide which biotech stock to invest in, maybe an ETF is the way to go. A lot of experts are pointing to ETFs as a good way for investors to get back some of their lost gains.
Here are a few differences between an ETF and an index fund.
Taxes: The big buzz about ETFs is their tax efficiency. The big “tax event” for ETF shareholders happens when you sell your shares, hopefully at a profit, after which you’ll pay capital gains taxes.
Expense ratios: By construction, ETF investors have less exposure to capital gains taxes than mutual fund shareholders. That’s because fund managers frequently buy and sell the fund’s holdings — and ask investors to pick up the tab. ETFs occasionally shift shares, too, although much less than most mutual funds. Annual expenses for ETFs range between 0.1% and 0.65% and are deducted from dividends. Index mutual funds charge anywhere from 0.1% to more than 3%.
Minimum investment requirement: For investors with limited funds (say, less than $1,000) who want to get started in the stock market, ETFs offer a cheap entrée. Through your discount brokerage account, you can buy one single measly share if you choose. In comparison, many index mutual funds have high initial balance requirements. (Those with lower requirements often charge higher fees.)
Ease of use: Here’s the double-edged sword of ETF investing. They are easy to buy — you simply need a discount brokerage account (and that’s easy to get — and cheap). Consequently, they’re easy to trade. And trade and trade and trade.
Here are a few ETFs we think are worth keeping an eye on:
2. SPDR S&P Dividend (SDY): Dividend ETFs seem to be gaining a lot of interest lately. This investment seeks to replicate, before expenses, correspond generally to the price and yield of the S&P High Yield Dividend Aristocrats index. The fund uses a passive management strategy designed to track the price and yield performance of the Dividend index. It is nondiversified.SDY has been down almost 23% over the last 12 months. However, its holdings, which include Con Edison (NYSE: ED), FirstMerit Corp. (Nasdaq: FMER) and Vectren Corp. (NYSE: VVC), all of which we think are in sweet spots of the market.
3. WisdomTree LargeCap Dividend (DLN): Another dividend ETF. DLN’s holdings include Chevron Corp. (NYSE: CVX), Pfizer, Inc. (NYSE: PFE), and Wal Mart Stores (NYSE: WMT). he fund employs a passive management (or indexing) investment approach designed to track the performance of the WisdomTree LargeCap Dividend index. It attempts to invest all, or substantially all, of assets in the stocks that make up the Index. DLN generally uses a replication strategy to achieve its investment objective and generally will hold each stock in approximately the same proportion as its weighting in the index. It is nondiversified.
4. Market Vectors Intermediate Municipal (ITM): The fund invests at least 80% of total assets in fixed-income securities that comprise the index. It has adopted a fundamental investment policy to invest at least 80% of assets in investments suggested by its name.
