8 S&P 500 Stocks With Upside

NEW YORK (TheStreet) -- According to data compiled by Bloomberg, companies on the S&P 500 Index are likely to report revenue increases of 10% in 2011, doubling from 5.2% in 2010, boosted by a recovery in personal income and spending. Additionally, capital spending by these companies is seen expanding 21% in 2011. These revenue gains may further push the Index's profits to $99.08 per share, growing 17% from 2010.

Meanwhile, in a separate development, industry estimates predict a marginal acceleration in growth during the second half of 2011, with opportunities in the technology, industrials, and healthcare sectors. Barry Knapp, head of U.S. equity strategy at Barclays Capital, said that the nonfinancial corporate sector is witnessing robust recovery in profit and relative valuations are attractive.

Knapp further adds that fundamental drivers like analysts' earnings estimate revisions and expanding margins impart greater strength to companies in the industrial sector. Furthermore, capital investment is expected to be robust through the year, supporting the growth rate. Meanwhile, the Industrial SPDR ETF ( XLI) has gained almost 32% during the past full year, and has grown 4.6% year-to-date.

These eight stocks from the industrial sector have potential upsides ranging from 11% to 14%. These stocks have no sell ratings and are analysts' favorites. The average buy and hold ratings for these stocks is 61% and 39%, respectively, based on a Bloomberg consensus.

The stocks are stacked based on upside, great to greatest.

8. Union Pacific ( UNP), operating through its principal company Union Pacific Railroad Company, engages in the transportation business linking 23 states in the western two-thirds of the U.S. The company's business mix includes agricultural products, automotive, chemicals, energy, industrial products and intermodal.

For the first quarter of 2011, the company recorded net income of $639 million, or $1.29 per diluted share, which compares to $516 million, or $1.01 per diluted share, in the year-ago quarter. Quarterly operating revenue increased 13% year-over-year to $4.5 billion with business volumes, as measured by total revenue carloads, soaring 5%. Meanwhile, the customer satisfaction index expanded 4 points to hit an all-time quarterly record of 91.

Early May, the company raised its quarterly dividend on common stock by 25% to 47.5 cents per share, payable July 1, 2011. The company's chief executive commented that the dividend increase is a move toward its target payout ratio of almost 30%. Also, the company's board has approved an additional $100 million capital spending in 2011, raising full-year investment to $3.3 billion. As per the consensus estimates of analysts polled by Bloomberg, the year-over-year sales growth for the second quarter is 14%.

Of the 29 analyst covering the stock, 69% recommend a buy while the remaining rate a hold. Data from Bloomberg has analysts forecasting the stock gaining 10.8% to $112.68 in the upcoming 12 months.

7. Pall ( PLL), along with its subsidiaries, supplies filtration, separation and purification technologies, based on its engineering and fluid management expertise. The company serves customers through two business groups: Life Sciences and Industrial.

For the third quarter of 2011, sales increased 15.2% to $709.8 million from the prior year's quarter. Net earnings were $71.07 million, or 60 cents per share, growing from $69.69 million, or 58 cents per share, in year-ago quarter. Free cash flow improved 8.7% to $177.8 million, while dividends paid soared 8.9% to $57.3 million. At the end of the quarter, the company's total backlog was over 25%.

Pall recently introduced Pall Allegro 200L Single-Use Mixer -- a single-use mixer for biopharmaceutical applications from pilot scale to full production mixing. This new product will be used for high-performance mixing. Recently, Avacta Group entered into a venture with Pall to deliver analytical services to biopharmaceutical developers with focus in North America and in regions where Avacta is not represented currently.

Looking ahead to 2011, the company estimates earnings per share guidance at the higher end of the range $2.80 to $2.90. The consensus estimates of analysts polled by Bloomberg estimates year-over-year sales growth for the fourth quarter at 12%.

Of the 11 analysts covering the stock, 27% recommend a buy and the rest rate a hold. Data from Bloomberg has analysts forecasting the stock gaining 12.4% to $62.29 in the upcoming 12 months.

6. Tyco International ( TYC) is a diversified global company offering security products and services, fire protection and detection products and services, valves and controls, and other industrial products. The company structures its operations in five segments: ADT worldwide, flow control, fire protection services, electrical and metal products and safety products.

Net income for the second quarter of 2011 was reported at $315 million, or 67 cents per share. This compares to $310 million, or 65 cents per share, in year-ago quarter. Revenue stood at $4 billion, with 6% growth, excluding the electrical and metal products business and 3% organic revenue growth. Moreover, operating margin before special items expanded 190 basis points to 11.9%. Tyco recently declared a quarterly dividend of 25 cents per share payable August 24, 2011.

Visonic, an Israel-based maker of electronic security systems, has announced that Tyco is negotiating to acquire the company for almost $90 to $105 million. In the second week of May, Tyco completed its $181.6 million acquisition of Signature Security from Oceania Capital Partners. Signature will be combined with Tyco's ADT Security business. Signature Security provides electronic security services to more than 90,000 premises, with annualized revenue of $85 million. As per the consensus estimates of analysts polled by Bloomberg, the year-over-year sales growth for the third quarter is negative 2%.

Of the 22 analysts covering the stock, 55% recommend a buy and the remaining suggest a hold. Analysts polled by Bloomberg expect the stock to gain an average 12.9% to $56.64 in the upcoming 12 months.

5. United Technologies ( UTX) is involved in providing technology products and services to the building systems and aerospace industries worldwide. The company's operating units include businesses with worldwide operations. Otis, Carrier and UTC Fire and Security serve commercial and residential customers worldwide, while Carrier serves commercial, industrial, transport refrigeration and food service equipment customers. Pratt and Whitney, Hamilton Sundstrand and Sikorsky serve commercial and government customers in the aerospace industry.

For the first quarter of 2011, the company reported net income of $1 billion and earnings per share of $1.11, up 17% and 19%, respectively over the year-ago quarter. Sales grew 11% to $13.3 billion with 9% organic growth. Segmental operating margin for the quarter expanded 100 basis points to 14.7% from the prior year's quarter. New equipment orders at Otis, Carrier, Pratt & Whitney and Hamilton Sundstrand were up 17%, 26%, 33%, and 23%, respectively, over the first quarter of 2010.

The company recently declared its regular quarterly dividend of 48 cents per common share for the second quarter 2011, payable September 10, 2011. Based on the strong first-quarter results, the company has raised its full-year earnings per share guidance to range from $5.25 to $5.40 over the earlier range of $5.20 to $5.35. At the same time, 2011 sales are estimated at $57 billion, the high end of the earlier guidance range of $56 to $57 billion. Analysts polled by Bloomberg estimate the year-over-year sales growth for the second quarter is 6%.

Of the 25 analysts covering the stock, 80% recommend a buy and the remaining rate it a hold. Data from Bloomberg has analysts forecasting the stock gaining 13.5% to $98.25 in the upcoming 12 months.

4. Rockwell Automation ( ROK) is a global provider of industrial automation power, control and information solutions. The company operates in two major segments: Architecture and Software, and Control Products and Solutions. These segments serve sectors such as food and beverage, transportation, oil and gas, metals, mining, home and personal care, pulp and paper, and life sciences.

Total revenue reported for the second quarter of 2011 was $1.5 billion, up 26% from the year-ago quarter. Net income for the quarter stood at $166.4 million, or $1.14 per share, compared to $137 million, or 95 cents per share, in the year-ago quarter. During the quarter, the company recorded return on invested capital of 27.5% as compared to 13.2% earlier. Free cash flow increased to $226.2 million from $166.8 million in the second quarter of 2010.

The company recently declared 21% increase in its quarterly dividend to 42.5 cents per share, payable September 12, 2011. During the last week of May, the company acquired Lektronix, an independent industrial automation repairs and service provider in Europe and Asia. Lektronix's management team will join the Rockwell Automation Control Products & Solutions segment.

The company has raised its revenue outlook for full-year 2011 to range from $5.7 billion to $5.8 billion from the earlier $5.5 billion to $5.7 billion. Earnings per share are estimated between $4.40 and $4.60, indicating a 50% increase from 2010 and record EPS for the company. Analysts polled by Bloomberg estimate the year-over-year sales growth for the third quarter is 17%.

Of the 18 analysts covering the stock, 44% rated a buy and the rest suggest a hold. A Bloomberg poll foresees the stock gaining an average 13.5% to $95.33 in the upcoming 12 months.

3. CSX ( CSX) provides rail-based transportation services, including rail service and the transport of intermodal containers and trailers. CSX provides a link to the transportation supply chain through its approximately 21,000-route mile rail network. It transports utility, industrial and export coal to electric utilities, steel manufacturers, industrial plants and deep-water port facilities.

For the first quarter of 2011, operating income improved 22% to $773 million from the year-ago quarter. Furthermore, operating ratio expanded 210 basis points to 72.5%. Revenue during the quarter increased 13% to $2.8 billion, with a 7% surge in overall volume. Earnings per share grew 36% during the quarter. Looking ahead to 2011, it expects to deliver a high-60s operating ratio.

Recently, it was known that CSX is planning to reconstruct two dated bridges in Baltimore under a $12 million deal struck with the city. With CSX agreeing to pay 75% of construction costs, work on the bridges is likely to begin in early August. CSX commented that it targets a compound annual growth rate in earnings per share of 18% to 20% through 2015. Further, it intends to base future dividends on a payout ratio of 30% to 35% of earnings per share, as measured on a trailing 12-month basis. Analysts polled by Bloomberg estimate the year-over-year sales growth for the second quarter is 11%.

Of the 29 analysts covering the stock, 76% recommend a buy, whereas the remaining rate it a hold. Analysts polled by Bloomberg expect the stock to gain an average 13.5% to $28.96 over the next 12 months.

2. Ryder System ( R) provides transportation and supply chain management solutions and structures its operations in three segments: Fleet Management Solutions, Supply Chain Solutions and Dedicated Contract Carriage. Ryder offers these solutions to industries such as automotive, electronics, transportation, grocery, lumber and wood products, food service and home furnishings.

For the first quarter of 2011, adjusted quarterly net income increased 104% year-over-year to $26.4 million. Revenue stood at $1.4 billion, reflecting a 16.8% year-over-year increase. Operating revenue improved 14.3%, driven by acquisitions and organic growth. The company recently paid its regular quarterly cash dividend of 27 cents per share on its common stock.

Ryder recently said it has secured lease agreements for 87 heavy-duty natural gas trucks from customers looking to take advantage of fuel cost savings and the environmental benefits of using vehicles powered by alternative fuels. Of the total, 65 vehicles form a part of Ryder's natural gas fleet in Southern California. The Ryder/SANBAG project, estimated to cost a total $38.7 million, has 202 natural gas vehicles available for lease or rent. Ryder took delivery of 70 vehicles in May and intends to complete the rest by end of 2011.

Recently, Ryder announced that it has acquired UK-based Hill Hire, an independently run and wholly owned subsidiary of Lloyds Banking Group in a cash transaction of almost $252 million. Heading into the second quarter of 2011, the company expects earnings per share to range from 72 cents to 77 cents. Meanwhile, it has raised its 2011 earnings per share guidance range from $2.90 to $3.00 over the earlier $2.80 to $2.90. As per the consensus estimates of analysts polled by Bloomberg, the year-over-year sales growth for the second quarter is 14%.

Of the 14 analysts covering the stock, 64% recommend a buy and the rest rate a hold. Analysts polled by Bloomberg expect the stock to gain an average 14.3% to $62.25 over the next 12 months.

1. Dover ( DOV) owns and operates a global portfolio of manufacturing companies providing components and equipment, specialty systems and support services for diverse applications. These are spread across the industrial products, engineered systems, fluid management and electronic technologies markets.

For the first quarter of 2011, total revenue was reported at $2 billion, increasing 24% from the year-ago period, with organic revenue growth of 19%. Net earnings for the first quarter of 2011 were $194.9 million, or $1.03 per share. This compares to $108.1 million, or 58 cents per share, in the year-ago period. During the quarter, the company successfully closed four acquisitions and recorded solid order rates leading to a strong book-to-bill of 1.15.

The company recently appointed Lazard Middle Market to sell three business segments, Texas Hydraulics, Paladin and Crenlo, over the next 18 months. These units reportedly comprise of $400 million in revenue. Meanwhile, NXP Semiconductors revealed that its definitive agreement with Dover to acquire Sound Solutions, business of NXP, is expected to complete by early July. The deal is valued approximately $855 million.

For full year 2011, the company expects revenue growth of 12%-14%, representing organic revenue growth of 9% to 11%, and 3% growth from acquisitions. Based on this growth, full-year diluted earnings per share from continuing operations are estimated to range from $4.30 to $4.45. Analysts polled by Bloomberg estimate the year-over-year sales growth for the second quarter is 16%.

Of the 14 analysts covering the stock, 71% assign a buy rating and the rest suggest a hold. Analysts polled by Bloomberg expect the stock to gain an average 14.4% to $75.82 over the next 12 months.

>>To see these stocks in action, visit the 8 S&P 500 Stocks With Upside portfolio on Stockpickr.

More from Stocks

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker