Stocks That Are Cheaper Than Brian Rogers Bought
He employs a classic value investing strategy and seeks out-of-favor or undervalued yet established companies that pay above-average dividends.
In an interview in the November issue of Barrons, Rogers made remarks on his investing outlook in light of the vacillating economic conditions: “The economic performance of most companies has been quite strong. Earnings and cash flow have been strong. Corporate balance sheets are in great shape, yet prices have fallen sharply. That sets up investors to take advantage of some good price opportunities. Also, when you compare the equity market to yields in the fixed-income market, equity markets globally look like a solid value.”
Some of his stocks include:
Corning Inc. (GLW): Corning is the leading designer and manufacturer of glass and ceramic substrates found in liquid crystal displays, fiber-optic cables, automobiles, and laboratory products. The company has five primary divisions — display technologies, telecommunications, environmental technologies, specialty materials and life sciences.
Corning's ability to create thinner and larger glass panels should support demand for ever-larger televisions and computer monitors. In addition, the company is completing manufacturing capacity expansion and upgrade projects.
Corning's balance sheet is in good shape, with $6.4 billion of cash and short-term investments, $4.4 billion in long-term investments in joint ventures, and $2.3 billion in long-term debt.
Petroleo Brasileiro SA Petrobras (PBR): Petrobras is a Brazil-based integrated energy company controlled by the Brazilian government. The company focuses on exploration and production for oil and gas in Brazilian offshore fields. It operates 12 refineries in Brazil with a capacity of 2 million barrels a day and distributes refined products and natural gas.
Petrobras' extensive experience in deepwater offshore operations gives the firm the necessary expertise and skills required to exploit the newly discovered resources. Moreover, with nearly all of Brazil's refining capacity and investments to increase diesel production, Petrobras can capitalize on the growing domestic demand for refined products.
Heavy reliance on Brazil for exploration, production, and downstream operations isolates Petrobras from geopolitical risk that threatens many of its competitors.
JPMorgan Chase & Co. (JPM): JPMorgan Chase & Co. is a leading global financial services firm. The firm is a leader in investment banking, asset management, private banking, private equity, custody and transaction services and retail and middle market financial services.
With headquarters in New York, the company serves the world's most prominent corporate, institutional and government clients.
JPMorgan is in sound financial health. The firm posted a Tier 1 common capital ratio of 9.9% as of Sept. 30, 2011. Its allowance for loan losses totaled 4.09% of retained loans as of the same date. Together, these figures provide a sizable cushion against losses. JPMorgan is also generating capital at a reasonable pace, posting double-digit returns on equity in four of the last five quarters.
JPMorgan Chase achieved a reasonable level of profitability in recent quarters and did a remarkable job limiting its losses during the financial crisis.
Its reputation in the market is arguably the strongest among its peers. This — along with continued missteps by peers like Bank of America — a major advantage when competing for new business.
Northern Trust Corporation (NTRS): Northern Trust is a large custodian bank, providing services to big institutional clients such as endowments and fund managers, as well as to high-net-worth individuals. The company is also a large asset manager, with around $750 billion in assets under management.
The firm has a well-established reputation in private banking, and its client list is a who's who of some of America's (and the world's) richest names.
Most of Northern's revenue is drawn from its fee-based custodial and asset-management services. These tend to provide a more stable and stickier base of revenue than solely relying on banking.
The firm is focused heavily on international markets--nearly half its investments are funded from foreign time deposits, and its global custody assets are increasing at a 30% annual clip. This diversifies Northern's revenue base and opens the firm to faster-growing international markets.
Ingersoll-Rand Plc (IR): Ingersoll Rand manufactures air conditioning systems, refrigeration systems, mechanical locks, electronic security systems, golf carts, and several other products. It has four segments: climate solutions, residential solutions, industrial technologies, and security technologies. The company's strongest brands include Trane, Thermo King, Club Car, Schlage and Ingersoll Rand. These brands are all highly recognized in their industries, and each enjoys leading or near-leading market share.
IR's financial health is improving due to its strong cash flow. Net debt/net total capital stands at about 26%, and EBITDA covered interest expense almost six times last year.
Only about 26% of Ingersoll Rand's revenue is derived from new equipment sales. Replacement units are the largest part of its sales line at about 44%, and other recurring revenue makes up about 30%. This mix somewhat reduces revenue volatility.