Stocks that Brian Rogers Keeps Buying
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 Barron's, 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.”
Here are some of its latest stock purchases:
General Electric Co. (GE): General Electric is a diversified manufacturer organized into four segments: technology infrastructure, energy infrastructure, home and business services, and capital services.
In terms of quarter results, GE's industrial unit generated healthy cash flow of $14.7 billion, or 14% of revenue, in 2010 and held $19 billion in cash at the end of the year.
GE's cash position is permanently supported and allows the infrastructure businesses to receive more capital and management attention. In addition, GE's global presence gives it access to more information about the direction of economic activity than other firms, giving the company an advantage in getting its feet on the ground in emerging economies.
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 September 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. JP Morgan 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 — is a major advantage when competing for new business.
Wells Fargo & Co. (WFC): Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services through stores, its Internet site and other distribution channels across North America as well as internationally.
Its diversified businesses generated record net income of $4.1 billion in the third quarter, an increase of 21% from a year ago, and a record EPS of $0.72, an increase of 20% from a year ago.
WFC is extremely focused on meeting customers' financial needs, which led to robust deposit growth and their strongest quarterly loan growth since their merger with Wachovia almost three years ago. Lower expenses and improved credit quality have also been beneficial.
Last but not least, Wells Fargo is a market-share leader in online banking. Online customers tend to be more profitable than traditional banking clients. With Wachovia, Wells has national scale.
U.S. Bancorp (USB): U.S. Bancorp is more than just a bank. Its banking business stretches through the Midwest and Western United States. A sizable asset-management business and payment-processing business bring this company's fee income to about half of total revenue.
Despite the economic downturn, the company has remained profitable. A strong capital base and solid bottom line have allowed U.S. Bancorp to grow while much of the industry is trying to shrink.
Entergy Corp. (ETR): Entergy is an integrated energy company with two primary businesses: its regulated utility segment and its wholesale commodity segment.
Entergy's nuclear fleet is among the cream of the merchant-generation crop. Investors who are bullish on power prices should give Entergy ample consideration.
Sensitivity to natural gas prices and possible restrictions on carbon dioxide emissions make the economics of nuclear power increasingly appealing. Improving regulatory returns and a rapid recovery in industrial demand in the Southeast are boosting earnings for its utilities.