Three Dow Stocks Analysts Love
BOSTON (TheStreet) -- Analysts are overwhelmingly bullish on the following Dow stocks. Investors looking for blue-chips should consider these names first.
3. United Technologies
is a defense contractor and maker of elevators, escalators and air conditioners. It also sells helicopters, heating systems and aircraft engines. During the past three years, it has boosted revenue 3% annually, on average.
Quarter
: Fourth-quarter profit decreased 6.3% to $1.1 billion, or $1.15 a share, as revenue declined 3.7%. The operating margin widened from 12% to 14%. United has $4.5 billion of cash and $9.7 billion of debt, translating to a debt-to-equity ratio of 0.5.
Stock
: United Technologies has advanced 66% during the past 12 months, outperforming U.S. indices. The stock trades at a price-to-projected-earnings ratio of 14 and a price-to-book ratio of 3.4, reflecting 11% and 48% discounts to the industry averages.
Consensus
: Of analysts covering United Technologies, 15, or 79%, advise purchasing its shares and four recommend holding them.
Macquarie
expects the stock to advance 25% to $92.
Goldman Sachs
(GS) - Get Report
rates the stock "buy."
Catalyst
:
Barclays
(BCS) - Get Report
, which rates United Technologies "overweight", expects the company to benefit from emerging market demand and efforts to expand profit margins. Increased aircraft demand might also increase earnings.
2. Cisco Systems
(CSCO) - Get Report
makes networking and communications equipment. Its products transport data, voice and video around the world. Cisco's quarterly return on equity, a measure of profitability, dropped from 20% to 15% as return on assets fell from 12% to 7.9%.
Quarter
: Fiscal second-quarter profit increased 23% to $1.9 billion, or 32 cents, as revenue gained 8%. Cisco's operating margin expanded from 20% to 25%. Its balance sheet has $40 billion of cash, equal to a quick ratio of 3.1, and $15 billion of debt.
Stock
: Cisco has advanced 56% in the past year, outpacing benchmarks. The stock sells for a price-to-projected-earnings ratio of 15 and a PEG ratio, a measure of value based on expected growth, of 0.6. A PEG ratio that's less than 1 suggests cheap shares.
Consensus
: Of researchers evaluating Cisco, 35, or 83%, rate its stock "buy" and seven rate it "hold."
Deutsche Bank
(DB) - Get Report
projects a share price of $32, a potential 21% gain.
Credit Suisse
(CS) - Get Report
expects the shares to outperform.
Catalyst
: Orders are increasing across all of Cisco's product categories. It beat quarterly revenue expectations by a margin of 4.3% and adjusted earnings by a margin of 14%. Upward revisions could generate momentum in the weeks ahead.
1. Bank of America
(BAC) - Get Report
is a diversified financial services company, offering products to individuals, small companies, large corporations and governments. It purchased mortgage lender
Countrywide Financial
and investment bank
Merrill Lynch
in 2008.
Quarter
: Its fourth-quarter loss narrowed 89% to $194 million, but expanded 25% to 60 cents on a per-share basis. Revenue grew 29%. The operating margin widened from 3.2% to 14%. Bank of America has $336 billion of cash and $763 billion of debt.
Stock
: Bank of America has more than doubled during the past year, beating U.S. indices. The stock trades at a price-to-projected-earnings ratio of 8.6 and a price-to-cash-flow ratio of 1.2, 70% and 65% discounts to the financial industry averages.
Consensus
: Of firms rating Bank of America, 26, or 81%, advocate purchasing its shares and six say to hold them.
Morgan Stanley
(MS) - Get Report
expects the stock to rise 56% to $28. Hedge funds
and
hold stakes.
Catalyst
: Bank of America is the largest U.S. bank by assets and the world's largest wealth manager. Its recently announced principle reduction plan will increase net charge-offs at first, but help it stabilize its earnings in the long term.
-- Reported by Jake Lynch in Boston.
