5 Philadelphia Stocks to Consider

These companies headquartered in the Philadelphia area, including Urban Outfitters, are worth considering for a potential trade or investment.
By Scott Rothbort ,

MILLBURN, N.J. (Stockpickr) -- In past columns, I've highlighted regional stock plays off of the World Series matchup between the Texas Rangers and the San Francisco Giants. Turning to collegiate football, for the second consecutive year, the University of Pennsylvania Quakers recently won the Ivy League football championship by completing its second consecutive undefeated league season.

The University of Pennsylvania is located in West Philadelphia. It's not surprising that, as the sixth-largest city in the U.S., Philadelphia is headquarters for many major corporations.

In honor of the Quakers' victory -- and of my alma mater (I graduated from U. Penn's Wharton School of Business) -- let's take a look at some of these

companies headquartered in the Philadelphia/Delaware Valley area

.

Sunoco

(SUN) - Get Report

You might not expect Philadelphia to be home to a major oil company, but note that the Northeast -- and Pennsylvania in particular -- remains a major center for oil and gas refining and marketing. Both Sunoco and the Standard Oil Company were founded in Pittsburgh. Sunoco has a market capitalization of $4.8 billion and ranks 78th on the

Fortune

500. The company has a modest annual yield of 1.5%.

After a difficult 2009 when refining margins were under pressure, Sunoco has sprung back to life in 2010. Analysts expect Sunoco to earn $1.78 for the full year and grow earnings by about 30% to $2.35 in 2011. Sunoco's balance sheet is in good shape, with just $1.42 billion in net debt (arrived at by subtracting $1.13 billion in cash and equivalents from total debt of $2.55 billion).

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This refiner and marketer will benefit if oil prices remain high or continue to rise. Sunoco is small enough to be the subject of a takeover while large enough and with the balance sheet capacity to expand by buying a smaller competitor. I think the company can win either way.

Comcast

(CMCSA) - Get Report

Comcast is a very interesting company, with an astute management team led by Brian Roberts. The company provides cable, high speed internet, video-on-demand and telephone services across most of the country. Comcast sports a market capitalization of $57.5 billion and ranks 59th on the

Fortune

500.

Back in 2004, Comcast tried, unsuccessfully, to merge with

Walt Disney

(DIS) - Get Report

, and several years later, it set its sights on 30 Rock and agreed to a joint venture with

General Electric

(GE) - Get Report

for Jeffrey Immelt's NBC Universal division.

>>Who Owns Comcast?:

John Paulson

Comcast is a cash cow, generating more than $10 billion annual in cash from operations, which allows the company to pay a 1.9% annual dividend and repurchase shares. But the company is also saddled with a heavy debt load of about $31 billion, vs. cash and equivalents of about $4.6 billion.

I am a bit skeptical to jump into Comcast as an investment, but it is an excellent trading stock that seems to move in 2-point swings with some regularity.

Cigna

(CI) - Get Report

and

Lincoln National

(LNC) - Get Report

Insurance giant Cigna has a market capitalization of $10.2 billion and ranks 129th in the

Fortune

500. Cigna, which was founded in 1792, a few years after the Liberty Bell was rung to proclaim the reading of the Declaration of Independence, remains headquartered in Central Philadelphia. The company specializes in health care, life, disability and run-off reinsurance insurance plans.

Another large insurance company, Lincoln National, is headquartered in the Radnor, Pa., suburb of Philadelphia. Lincoln, which I own personally and for clients of

LakeView Asset Management

, owns the naming rights to Lincoln Financial Field, home of the NFL's Philadelphia Eagles. Lincoln National has a market capitalization of $7.5 billion and stands in the 256th position in the

Fortune

500. The company focuses on life insurance, non-group medical and dental insurance, annuities and retirement planning.

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Cigna pays a nominal dividend of 0.1% per year, while Lincoln National's dividend is a little better at 0.8%.

While both may be insurers, they clearly have different business models. I would be concerned about Cigna's exposure to the ever-fluid and politically charged health care business. (Though, as a member of a group health plan that Cigna has underwritten, I am very happy with the insurer's services.)

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Lincoln National, on the other hand, has a business model better-suited to long-term financial, estate and tax planning, a segment I think will be generating greater demand in the future, despite what tax changes may or may not occur in Washington, DC.

Urban Outfitters

(URBN) - Get Report

Urban Outfitters has a market capitalization of $6.2 billion but does not rank in the

Fortune

500. The first Urban Outfitters store, where I shopped as a student in 1978-1982, opened up right near the campus of the University of Pennsylvania.

In 2010, the company operated a total of 355 stores at the end of its fiscal third quarter under the Urban Outfitters, Anthropologie and Free People brands. Another 15 stores will be opened in the fourth quarter. For 2012, Urban Outfitters expects to increase its store count by 50 to 55. Direct-to-consumer e-commerce sales are increasing rapidly, and the company just reported a 31% year-over-year increase for its most recent quarter. The company recently opened a European store and is doing its due diligence for expansion in Asia.

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Urban Outfitters is one of the more attractive young-adult specialty retailers in the market today and is a stock which I hold for clients and myself personally.

-- Written by Scott Rothbort in Millburn, N.J.

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At the time of publication, Rothbort was long long LNC and URBN personally and in client portfolios, although positions can change at any time.

Scott Rothbort has over 25 years of experience in the financial services industry. He is the Founder and President of

LakeView Asset Management

, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of

TheFinanceProfessor.com

, an educational social networking site; and, publisher of

The LakeView Restaurant & Food Chain Report

. Rothbort is also a Term Professor of Finance at Seton Hall University's Stillman School of Business, where he teaches courses in finance and economics. He is the Chief Market Strategist for The Stillman School of Business and the co-supervisor of the Center for Securities Trading and Analysis.

Mr. Rothbort is a regular contributor to

TheStreet.com's RealMoney Silver

website and has frequently appeared as a professional guest on

Bloomberg Radio

,

Bloomberg Television

,

Fox Business Network

,

CNBC Television

,

TheStreet.com TV

and local television. As an expert in the field of derivatives and exchange-traded funds (ETFs), he frequently speaks at industry conferences. He is an ETF advisory board member for the Information Management Network, a global organizer of institutional finance and investment conferences. In addition, he is widely quoted in interviews in the printed press and on the internet.

Mr. Rothbort founded LakeView Asset Management in 2002. Prior to that, since 1991, he worked at Merrill Lynch, where he held a wide variety of senior-level management positions, including Business Director for the Global Equity Derivative Department, Global Director for Equity Swaps Trading and Risk Management, and Director for secured funding and collateral management for the Global Capital Markets Group and Corporate Treasury. Prior to working at Merrill Lynch, within the financial services industry, he worked for County Nat West Securities and Morgan Stanley, where he had international assignments in Tokyo, Hong Kong and London. He began his career working at Price Waterhouse from 1982 to 1984.

Mr. Rothbort received an M.B.A., majoring in Finance and International Business from the Stern School of Business, New York University, in 1992, and a B.Sc. in Economics, majoring in Accounting, from the Wharton School of Business, University of Pennsylvania, in 1982. He is also a graduate of the prestigious Stuyvesant High School in New York City. Mr. Rothbort is married to Layni Horowitz Rothbort, a real estate attorney, and together they have five children.

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