In-store promotion by P&G and by peers depressed margins and that is likely what has kept P&G as having more upside than we would have guessed. Valuations at 15-times earnings also feel close to full, so it is earnings growth and dividend growth that investors have to look for here. Its 52-week high is $65.00, but the stock was above $70.00 back in 2007 and 2008.
9) United Parcel Service (UPS) trades around $71.55, giving it an implied upside of 12.6% to its consensus price target of $80.71. What is interesting is that UPS also hit a 52-week high of $71.90 just on Dec. 1. The company also trades at a premium valuation at more than 17-times expected 2011 earnings. One contributing factor to higher guidance is that it has exceeded estimates and raised guidance in 2010. That $80+ target is also significant in that the last time UPS shares were up there was in early 2006. This was a surprise to see in the screening process, but that is what makes a ballgame.
10) Wells Fargo (WFC) has long been called "Buffett's Favorite Bank." With a 336+ million share stake that still keeps getting larger and larger, Buffett is putting his money where his mouth is. At $27.40, there is just about 29% implied upside to the consensus price target of $35.47. Over the last year, shares have traded in a range of $23.02 to $34.25. The current yield is a mere 0.7%, so no one is accumulating wealth via quarterly payouts. The current "have vs. have-not" field in the banking sector may take away some of the upside here, but Wells Fargo is likely one of the banks that will be able to return to paying a higher dividend again when regulators allow it.
Runner-up in the United States was Wal-Mart (WMT) at $54.69, leaving an implied upside of 10.9% to the $60.64 consensus target. Had we limited financial stocks to only two or three of the top upside candidates in the Berkshire Hathaway portfolio, the world's largest retailer would have made it. Still, shares are at the higher-end of a very long trading range and Wal-Mart ended up winning less than many would have guessed during the Great Recession.
Two pharmaceutical stocks were screened out because the pool of analysts with formal U.S.-dollar price targets were too small. They are also ADR shares to boot. GlaxoSmithKline (GSK) at $38.48 has an implied upside of more than 19% to a $45.97 consensus target; and Sanofi-Aventis (SNY) also suffered the same with too few analysts covering it despite its $31.50 price having an implied upside of more than 22% to its consensus target of $38.73. If too few data points are available, it is harder to count on the data.Berkshire Hathaway trades closer to $120,700 per A-share and that has an implied upside of about 8.8% to the consensus target of $131,333.00. While that is lower than the cut-off hurdle of 10% upside above, we would caution that the consensus price objective is also based on less than a full handful of analyst estimates. You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.
-- Written by Jon C. Ogg of 24/7 Wall St.
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