We've identified five stocks that analysts have just released optimistic opinions on. Wells Fargo (WFC), Ralph Lauren (RL), Kraft Foods (KFT), and Edwards Lifesciences (EW) all are running great businesses. Meanwhile, takeover talks have sparked Research In Motion (RIMM) a bit. Let's see what's been happening with these five stocks:
Analyst action: Credit Suisse is rating Ralph Lauren at Outperform. Price target is $168, and Credit Suisse likes this company's growth prospects. In addition, Goldman Sachs upgraded the company not long ago. That firm has the stock rated as a Conviction Buy due to global success and improving material costs.
Recent performance: Ralph Lauren was trading for over $160 a share in October, but the stock price is now just above $145.
Recent headlines: Ralph Lauren has hired Daniel Lalonde as president of its international segment. Lalonde worked for LVMH Moe Hennessy Louis Vuitton previously, so this addition should work well for Ralph Lauren. Investors should also check out this praise for Ralph Lauren from its employees. That article discusses the strength of the Ralph Lauren brand as well as the company's impeccable stores.
Competitors: Compared to The Jones Group (NYSE: JNY) and PVH (NYSE:PVH), Ralph Lauren's price to sales ratio is relatively high. Strong margins (58.67% gross and 15.68% operating) help explain that though.
Cash flows: $110.1 million flowed out of Ralph Lauren during fiscal year 2011, and $45.3 million flowed out during the 2 quarters after that. Those outflows are mostly due to stock repurchases, however.
Other interesting statistics: Ralph Lauren's quarterly revenue growth is 24.30% year over year.
Analyst action: ThinkEquity is rating Edwards Lifesciences at Buy. Price target is $100, and ThinkEquity says the company's Sapien catheter should bring in revenue.
Recent headlines: Edwards Lifesciences expects the transcatheter heart value to be approved in the middle of 2012, and related projects are being lined up for after that. For instance, the Sapien XT valve also looks promising. These products will be directed towards patients with a variety of risk levels, which is important for having a strong portfolio.
Competitors: Compared to Hospira, Medtronic, and St. Jude Medical, Edwards Lifesciences has high price to earnings and price to sales ratios. Price/earnings to growth ratio is low, though, which is a sign of this stock's high expected growth. Margins for Edwards Lifesciences are about average - those numbers are 70.52% gross and 17.93% operating.
Cash flows: $62 million flowed into Edwards Lifesciences during 2010, and $55 million flowed in during the first 3 quarters of 2011. The company has also done a fine job of distributing value to shareholders by buying back stock.
Other interesting statistics: This stock has a beta of 0.44 and quarterly revenue growth of 18.3% year over year.
Analyst action: UBS increased its price target for Kraft to $45. Earnings estimates were also bumped up due to the company's new distribution system.
Recent headlines: The New York Times is reporting that Kraft is beginning a massive advertising campaign that has a budget of over $50 million. Specifically, Kraft hopes to increase awareness of its Singles, grated parmesan, shredded cheese, Natural Slices, and Fresh Take products. The theme of the campaign is "Make something amazing," and Kraft's Racquel Harris says, "We're trying to invest more in our iconic brands." Meanwhile, The Wall Street Journal is reporting that Kraft is embarking on some interesting cost-cutting initiatives. With job cuts, consolidation, and streamlining on the way, the company is trying to get skinny before its previously announced split into two.
Competitors: Compared to Danone and General Mills, Kraft has cheap price/earnings to growth and price to sales ratios. That can be explained be relatively low margins - those numbers are 35.40% gross and 13.24% operating.
Cash flows: $380 million flowed into Kraft during 2010, although $505 million flowed out in the first 3 quarters of 2011. Much of Kraft's 2010 inflows were due to taking on debt, however.
Other interesting statistics: This stock has a beta of 0.49 and dividend yield of 3.10%.
Research In Motion
Analyst action: Jefferies raised its price target for Research in Motion to $17 due to a potential partnership with Samsung.
Recent headlines: The latest news says that Samsung doesn't have any plans to buy Research In Motion, although nobody seems to be ruling out the two companies working together. Now probably wouldn't be an ideal time for a company to buy Research In Motion, and Research In Motion may have some other tricks up its sleeve anyway. For instance, licensing technology and allowing other companies to use its networks are two possibilities. Additionally, Asian companies besides Samsung might still be interested in buying Research In Motion. According to Reuters, LG Electronics, HTC and ZTE are just three possibilities. We also noted recently that Research In Motion was accused of spying, which is something to keep an eye on as it develops.
Competitors: Compared to Apple, Google, and Nokia, Research In Motion has very low price to earnings and price to sales ratios. Margins for the company are about average though - those numbers are 38.61% gross and 15.16% operating.
Cash flows: $240 million flowed into Research In Motion during 2010, but $668 million flowed out during the first three quarters of 2011. Increased capital expenditures are one reason for that.
Other interesting statistics: Both price/earnings to 5 year expected growth and quarterly revenue growth are negative for Research In Motion.
Analyst action: Morgan Stanley, UBS, Citigroup, and Oppenheimer all raised their price target for Wells Fargo.
Recent headlines: Wells Fargo continues to differentiate itself from Wall Street's other banks, and the strategy appears to be working based on the latest earnings report. Profits were up significantly from this time a year ago, although the bank is still rather nonchalant about its investment banking operations. Despite the fact that the company's investment banking market share improved a bit, CFO Tim Sloan had this to say: "We don't have a goal saying we want investment banking or capital markets to be X percent of our earnings or our revenue. Important for us is don't look at the league tables and focus on the opportunities where we can gain share and can help customers succeed and then it'll take care of itself." The New York Times is also reporting some interesting information about Wells Fargo's trading operations. Specifically, Wells Fargo continues to do well with its small but efficient set of trading desks.
Competitors: Price to earnings and price to sales ratios are high for Wells Fargo compared to Citigroup and JPMorgan Chase. Wells Fargo has the best operating margin, though (35.65%).
Other interesting statistics: Wells Fargo has a beta of 2.00 and a dividend yield of 1.60%.