Raytheon ( RTN) has been rated a buy since October 2004. The company's strengths include steady growth in revenue, led by higher sales of defense electronics and business jets, and solid net income growth. Moreover, Raytheon, the fifth-largest Pentagon contractor, should benefit from higher proposed defense spending as President Bush's 2007 budget continues to favor spending on defense and homeland security. Negative variables include a global economic slowdown, terrorist attacks and increased fuel costs.
Hewlett-Packard ( HPQ) has been rated a buy since November 2004. This computer manufacturer's positives include robust top-line growth due to strong demand for its products, focused cost-cutting initiatives and improving profitability. Its strategy of acquiring businesses that complement its core operations is also commendable. However, TheStreet.com Ratings' optimism is tempered by the intense competition in the desktop, laptop and printer markets from Dell ( DELL) and Lexmark ( LXK). This pressures H-P to cut costs.
Lincoln National ( LNC) is the holding company for a number of insurance and investment businesses in the U.S. and U.K. It has been rated a buy since September 2004. TheStreet.com Ratings expects the company to benefit from its April 2006 acquisition of Jefferson-Pilot, whose customer base, distribution platform and product portfolio appear to be complimentary. Risks to the buy rating include any roadblocks in the integration with Jefferson-Pilot, any undue decline in equity market leading to a fall in account value and any adverse regulatory development.
Sempra Energy ( SRE) provides natural gas service throughout Southern California and portions of central California. It has been rated a buy since December 2004. The company's strengths include its notable return on equity, attractive valuation levels, good cash flow from operations, solid stock price performance and compelling growth in net income. Although the company may harbor some minor weaknesses, TheStreet.com Ratings feels they are unlikely to have a significant impact on results.
Nordstrom ( JWN) operates approximately 187 stores, including Full-Line Nordstrom stores, which sell a broad selection of apparel, shoes and accessories, Nordstrom Racks, Faconnable boutiques, a single free-standing shoe store and two clearance stores. The company has been rated a buy since December 2004. The company's strengths include its notable return on equity, revenue growth, solid stock price performance, impressive record of earnings per share growth and expanding profit margins.
Johnson Controls ( JCI) provides installed building control systems and technical and facility management services, designs and manufactures products and systems for passenger cars and light trucks and provides advanced battery technology. It has been rated a buy since October 2004. The buy rating is supported by the company's recent acquisitions, as well as restructuring at Ford , a major customer; both are likely to improve the top and bottom line at Johnson Controls going forward. Risks to the buy rating include Johnson Controls' dependence on automobile manufacturers, whose production volumes in turn are dependent on general economic conditions and the level of consumer spending. Any significant economic decline that results in a reduction in automotive production and sales would almost certainly have a material adverse effect on company's business. Any further significant loss of market share by the U.S. industry to foreign automakers could also negatively impact Johson Controls.