I have analyzed a diversified group of S&P500 stocks that may be suited to the current market environment in an attempt to identify potential buying opportunities. I will focus specifically on the historical performance and financial ratio’s to determine the investment potential of each stock.
General Mills (NYSE:GIS) is a global manufacturer and marketer of consumer foods sold through retail stores. The Company is also a supplier of branded and unbranded food products to the foodservice and commercial baking industries. As a global foods producer the stock is seen as defensive and therefore a good share for current volatile market conditions.
At the time of writing GIS is trading at around $38.60, 5.99% below its 52-week high of $41.06, set on Jan 17, 2012. On Dec 20, 2011, General Mills, Inc. reported 2nd quarter 2011 earnings of 0.76c per share. This result was in line with the consensus of the 16 analysts following the company and was the same as last year's 2nd quarter results. The next earnings announcement is expected on Mar 21, 2012.
GIS is currently trading at a price to earnings ratio of 16.25 with an earnings per share of $2.35 and has a market capitalization of $24.65bn. It declared annual dividend of $1.22 which puts it on a dividend yield of 3.19%.
The company has been lagging the S&P 500 index of late with a one month return of -4.68% vs. +3.89% for the benchmark index, however over the long term it has been a steady performer returning 33.44% over the past five years during which the S&P 500 has returned -5.89%. However, it has underperformed its peers over the last year. The USA consumer staples sector has returned 10.61% whilst GIS returned a modest 4.12%. GIS remains a BUY.
Molex (MOLX) is a manufacturer of electronic connectors. The Company manufactures and sells electronic components for the telecommunication and consumer electronics sectors. The company recently announced an agreement with TEConnectivity Ltd. TE will manufacture, market and sell several Molex high speed interconnect solutions to a world-wide market. At the time of writing Molex Inc is trading around $27.28, 2.92% below its 52-week high of 28.10, set on Mar 01, 2011. It is trading off aprice to earnings ratio of 16.75 and has earnings per share of $1.64. The Market capitalization of the company is $4.47bn. Economic fundamentals leading into 2012 have set a generally positive pace with GDP growth likely to pick up throughout the year. These conditions are likely to benefit high momentum shares such as MOLX. Within its peer group MOLX has an earnings per share near the bottom of end of the list with companies like Acuity Brands (earnings per share $2.54) and Arrow electronics (earnings per share$5.17) leading the rankings. MOLX has underperformed both the S&P 500 Index as well as its peer group over the past year. Its share price returned -0.74%, the S&P500 returned +3.69% and the USA Information Technology Sector returned 9.35%. The analyst consensus recommendation for MOLX is a HOLD.
Mosaic (NYSE:MOS) is a producer and marketer of concentrated phosphate and potash crop nutrients for the global agricultural industry. MOS is trading around$58.99, 31.50% above the 52 week low of 44.86 set on Oct 04, 2011. It is currently trading at aprice to earnings ratio of 10.85 with an earnings per share of $5.24. The company has a market cap of $24.21bn. Mosaic has been a long term underperformer returning -12.82% over the past year and -26.64% over five years versus a return of +15.29% for one year and +3.21% over five years from the S&P 500 Index.
Mosaics’ main competition is the Potash (NYSE:POT) which trades off a price to earnings ratio of 13.26. It has also had a tough year retuning -21.84%.
The Mosaic Company announced on February 22, 2012 that its Board of Directors approved an annual dividend program of $0.50 per share. This program increases the annual targeted dividend 150 percent, from the current level of $0.20 per share.
As of Feb 25, 2012, the consensus forecast amongst 22 polled investment analysts covering Mosaic Co advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on May 31, 2011. The previous consensus forecast advised investors to hold their position in Mosaic Co. The new dividend policy is intended to sweeten the offering. MOS is therefore a BUY.
Analysts included Honeywell International (NYSE:HON) in the list of top three companies in the Aerospace and Defense industry with the highest year-over-year expected earnings per share growth rates with an expected growth rate of 79.8%
HON is a diversified technology and manufacturing company, serving customers worldwide with aerospace products and services, control, sensing and security technologies for buildings, homes and industry. It is currently trading around $59.48, 4.48% below its 52-week high of $62.27, set on May 02, 2011. The current price to earnings ratio is $25.70. The company’s market capitalization is $46.44bn and it currently trades at an earnings per share of $2.33. The most recent annual dividend paid was $1.49 putting it on an annual dividend yield of 2.49%.
Honeywell has performed well against the S&P 500 index returning 4.29% over the past year and 29.42% over five years while the S&P500 has returned 3.81% over one year and -2.06% over five.
On Jan 27, 2012, Honeywell International Inc. reported 4th quarter 2011 earnings of 1.05 per share. The next earnings announcement is expected on Apr 16, 2012. The 20 analysts offering 12 month price targets for Honeywell International Inc. have a median target of 64.00, with a high estimate of 74.00 and a low estimate of 57.00. The median estimate represents a 7.98% increase from the last price of 59.27. HON is a BUY.
FMC Technologies (NYSE:FTI) is a global provider of technology solutions for the energy industry. FTI is currently trading at around $51.80, 6.14% below its 52-week high of 55.19, set on Feb 13, 2012. This puts the company on a price to earnings ratio of 31.11 with earnings per share of $1.64. FMC has 1 year performance of 14.60% and 5 year performance of 204.48% whilst the S&P 500 has had an annual return of 3.29% with 5 year returns coming in at -6.70%. Competitor, Cameron International has not fared as well returning -5.78% over the past year.
On February 20, 2012 FMC Technologies said it had struck a deal to buy Control Systems International for an unrevealed purchase price. As of Feb 25, 2012, the consensus forecast amongst 30 polled investment analysts covering FMC Technologies advises investors to hold their position in the company. The previous forecast advised that FMC Technologies, Inc. would outperform the market showing deterioration in earnings expectations. FMC is therefore a HOLD.
About the author:
I fundamentally analyze every business from the top down.
In my personal life, I have a strong Jewish faith and enjoy playing Scrabble and entrepreneurship.