Like others in its industry, leading defense firm Raytheon (NYSE:RTN) is struggling to grow. Its third quarter financial release last Thursday confirmed its top-line challenges. The wind down of major combat operations across the globe and a cost-cutting mindset in Washington could persist to make sales growth difficult for some time. However, defense spending is not going away; in fact, it should continue to grow internationally, and the larger players are proving adept at cutting costs to keep profits moving forward. Combined with low valuations and high dividend yields, the industry, including Raytheon, are worth a look for patient investors. (For additional reading, check out: Dividend Yield For The Downturn.)
Casino giant Las Vegas Sands (NYSE:LVS) had a near-death experience during the credit crisis and saw its stock fall to less than $2 per share in early 2009. Investors that anted up at that time have seen the stock jump back close to $50 per share, which is still well below highs closer to $140 per share back in 2007. The volatility demonstrates the feast-or-famine market dynamics in the industry, but right now the company and a number of rivals are feasting on overseas growth in Asia, which could continue to boost their prospects considerably. (For more stocks similar to the Las Vegas Sands, check out Top 5 Stocks Back From The Dead.)
Medical device firm Zimmer Holdings (NYSE:ZMH) posted respectable third quarter sales growth, but needed to rely on share buybacks to boost its bottom line. Growth has been a challenge at the firm for some time, although profits remain robust and the earnings valuation remains compelling. (To know more about buybacks, read: 6 Bad Stock Buyback Scenarios. )
Back in January, industrial conglomerate ITT Corp. (NYSE:ITT) announced plans to break itself into three separate, publicly-traded companies. The move, which was billed as helping the units “emerge as three strong and focused standalone companies,” is finally set to take place on Halloween. On Friday, the company reported its last quarter as a combined entity and lent further insight into what each unit will look like when they start to trade independently on Monday.
Consumer goods giant, Kimberly-Clark (NYSE:KMB), reported solid sales growth and earnings that met analyst projections on Oct. 24, 2011. Results continue to be adversely impacted by rising raw material costs, but are still as consistent as investors are likely to find, in the market today. Throw in an above-average dividend yield and the stock may appeal to conservative, income-minded investors.
Tupperware (NYSE:TUP), known best for its Tupperware parties, or social neighborhood gatherings, where a host sells its kitchen storage products, and other related products, possesses a business model that is well suited for emerging markets. Its third quarter results offered the most recent illustration that growth potential is wide open across the world, as is considerable and consistent profit expansion.
Autoliv (NYSE:ALV) bills itself as the global leader in automotive safety suppliers and estimates that its products save 25,000 lives annually. Despite the social benefits of its business model and steady growth trends, as demonstrated by double-digit sales growth during its third quarter, fears of a global economic slowdown sent its share price down by more than 30%.
Posted: October 11, 2011 10:34AM by Ryan C. Fuhrmann , CFA
A recent study by consulting firm McKinsey, highlighted that most major downturns in the economy have been caused by “some sort of credit crisis.” For financial firms, the resulting economic recession can lead to ruin. Firms with heavy debt loads or that were caught expanding too aggressively before a downturn, can also be ruined. Yet other firms simply succumb to intense industry competition, as occurs frequently in the technology industry. (To help your portfolio make a comeback from the dead, read Bouncing Back From A Portfolio Hit.)
It’s no secret that emerging markets [1] hold vast potential. Take the rise of the emerging-market consumer, for example. A report from earlier this year detailed that annual income rates in China quadrupled to $1,910 in the past decade and nearly doubled to $5,739 in Latin America. These rapid rates of growth should only continue in the coming 10 years and beyond.
Diversified healthcare giant Abbott (NYSE:ABT) announced third quarter results on Wednesday and reported solid sales growth. Profit levels were also decent on an adjusted basis, but the release was overshadowed by its announcement to break into two publicly-traded firms. The move looks unwise given Abbott has led the industry in terms of shareholder returns, but there could be motivations that end up making sense for future investors.
Honeywell International (NYSE:HON) bills itself as a leading technology and manufacturing firm and is, for all practical purposes, an industrial conglomerate. Judging by its third quarter results, many segments of the global economy it serves, remain on solid footing. Management detailed it expects solid economic growth for the remainder of 2011 and into next year, which should put prospective investors at ease; so should the reasonable cash flow multiple.
Diversified healthcare bellwether Johnson & Johnson (NYSE:JNJ) reported decent third quarter sales trends on October 18, though profits fell. Despite continued tepid near-term results, J&J stands out for its product and sales diversification. And though upside potential remains questionable, the stock has protected investors on the downside. Year-to-date, it is up 5% while the overall market is down about 5%.
Thanks to financial market turmoil in Europe, after a hiatus lasting nearly three years, investors have returned to blindly selling their holdings in the largest financial institutions. Banking giant Citigroup (NYSE:C) has been no exception, and its stock appears to now be discounting an overly bearish outlook on its future growth and profit prospects. (For more on how the banking industry has changed, check out The Evolution Of Banking.)
November 1 will mark the four year anniversary of Zep, Inc. (NYSE:ZEP) as an independent, publicly-traded firm. Back on this date in 2007, lighting firm Acuity Brands (NYSE:AYI) spun off its cleaning products operations to create Zep. Last Friday, Zep reported financial results for its full fiscal year. Sales trends are proving difficult, but future trends are looking more appealing, as is the valuation due to a recent share price swoon.
Banking giant JPMorgan Chase (NYSE:JPM) posted solid third quarter results on Wednesday, but the market chose to remain fearful over its future, as the company reported a slight profit decline. Its full-year outlook calls for double-digit earnings growth and total shareholder returns look impressive, and the bank had enough excess capital to repurchase $4.4 billion of its own shares.
By Ryan FuhrmannPublished 10/13/2011 – 11:00
In today’s uneven stock market [1], investors end up overlooking many appealing companies. And right now, they are particularly ignoring growth stocks. This usually happens when fears surface that the global economy [2] could be heading into recession [3].
In times of economic stress, the health care sector is usually seen as a safe haven. But recently, many leaders in the industry have also been out of favor.
Facilitating the execution of electronic transactions is a mundane business, but can be very lucrative. Global Payments (NYSE:GPN) has grown rapidly and profitably for more than a decade now, and overseas expansion is forming the backbone of its current growth initiatives. Coupled with a reasonable valuation, the stock is worth a close look.
Yum! Brands (NYSE:YUM) has traded down, recently, on fears that growth in China, its primary growth driver, is starting to slow down. This has knocked the valuation into more reasonable territory, though growth trends in the more mature domestic market remain a concern. Higher food costs are also denting near-term profits, but Yum’s long-term prospects, including above-average overseas growth, remain intact. (For more on growth, read Is Growth Always A Good Thing?)
Discount membership warehouse operator Costco (Nasdaq:COST) closed out its fiscal year on a high note and reported double-digit growth, for the full year. This is likely ahead of what the company will be able to report over the long haul which, combined with a rather lofty earnings valuation, suggests other rivals are more appealing investment candidates. (For more on growth, read Steady Growth Stocks Win The Race.)
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