9 Stocks That Resisted the S&P Downgrade

NEW YORK (TheStreet) --- MasterCard (MA), Motorola Mobility (MMI), CF Industries (CF), Cabot Oil & Gas Corporation (COG), Lexmark International (LXK), Newmont Mining (NEM), Google (GOOG), Range Resources (RRC) and Apple (AAPL) declined lower when compared to broader indices and their peers.

In the past month, fear took over the markets. Investors worried over the slowing U.S. economy, and the threat of an impending recession sent broader indices into a tailspin. The S&P's rating downgrade of the U.S. battered the markets pushing the Dow to its worst drop since Dec. 2008, sliding 15%.

We have identified nine stocks that seem to have braved the tide. Interestingly, these stocks returned 4% during the carnage. These stocks have market capitalization of up to $6.5 billion and potential to deliver attractive returns over the next one year.

On average, earnings for these stocks are expected to grow at 30% to 40% and analysts expect an upside of around 30% in the coming year. These stocks had mean returns of 42% in the last one year and analysts' buy ratings of 62%.

9. Google ( GOOG) focuses on areas like internet search, advertising, operating systems and platforms. Domestic revenue forms 46% of the aggregate revenue.

During the second quarter of 2011, revenue from Google sites, a major revenue spinner and the fastest growing segment, at 39%. Overall, Google reported revenue of $9.03 billion, increasing 32% from $6.82 billion in the same period last fiscal.

Net income was $2.3 billion, up 21% from the same quarter prior year. Earnings per share for the reporting quarter were $7.04 against $6.06 in the first quarter of 2010.

Cash and cash equivalents stood at $39 billion for the quarter under review. Of the 42 analysts tracking the stock, 36 rate it a buy and 6 maintain a hold. The stock is trading at 16 times its estimated 2011 earnings with an estimated upside of 28%, according to analysts polled by Bloomberg. The stock gained 4% in the past one month.

8. Motorola Mobility Holdings ( MMI) is a U.S.- based provider of products and services for mobile and digital communication.

For the second quarter of fiscal 2011, net revenue was up 28% to $3.3 billion. During the quarter, the company shipped 11 million mobile devices, including 4.4 million smart-phones. This compares to 8.3 million mobile devices, including 2.7 million smartphones during the corresponding quarter of 2010.

On the demand, Sanjay Jha, CEO, Motorola Mobility, commented, "In the second quarter, Mobile Devices launched several new smartphones in the U.S. and markets around the world. Revenues grew over 40 percent driven largely by Latin America and China where sales more than doubled year over year. Our Home business delivered another strong performance, and we introduced several innovative products and services for next generation multi-screen video solutions."

At the end of the quarter, total cash came in at $3.2 billion and operating cash flow was around breakeven. The company estimates 2011 EPS to range from 48 cents to 60 cents

Analysts have 53% buy ratings on the stock with an estimated upside of 18% over the next one year. The stock gained 10% in the past one month. The company is trading at 16 times its estimated 2012 earnings.

7. Lexmark International ( LXK) provides printing and content management solutions.

Revenue for the second quarter of 2011 was $1.04 billion vs. $1.03 billion during the same period last year. Gross profit margin was 39.6% against 36.8% in the corresponding quarter prior fiscal year. Net earnings were $101 million, up from $85 million in the second quarter of 2010.

Capital expenditure was $34 million, while cash and current marketable securities came in at $1.3 billion.

For the third quarter of 2011, the company expects revenue to come in flat to single digit, while EPS is pegged at $0.86 to $0.96. The stock gained 4% in the past one month. The stock is expected to appreciate 22% over the next one year and is trading at 6.3 times its estimated 2011 earnings.

6. Apple ( AAPL) designs and markets a range of PCs, mobile communication and media devices, and portable music players. The company derives around three-fifths of its revenue from international sales.

During the third quarter of fiscal 2011, revenue came in at $28.57 billion vs. $15.7 billion in the same quarter last year. Net profit increased from $3.25 billion to $7.31 billion during the quarter. However, gross margin for the quarter was 41.7% compared to 39.1% last year.

iPad sales amounted to 9.25 million units during the quarter, increasing 183% from the prior year period. Apple sold 3.95 million Macs during the quarter, up 28% over the year-ago quarter. iPhone sales were 20.34 million, a 142% volume increase. However, iPods sales declined 20% from the year-ago quarter.

Speaking on new offerings, Steve Jobs, Apple's CEO, said in a press statement, "Right now, we're very focused and excited about bringing iOS 5 and iCloud to our users this fall."

On the fourth quarter, Peter Oppenheimer, Apple's CFO, said, "Looking ahead to the fourth fiscal quarter of 2011, we expect revenue of about $25 billion and we expect diluted earnings per share of about $5.5." The stock gained 3% in the past one month.

5. MasterCard ( MA) is a global payments and technology company providing services related to credit, debit payments.

Net revenue for the second quarter of 2011 was $1.7 billion, increasing 22.1% from the same period prior year, driven by higher cross-border volumes and processed transactions.

Operating margin was 53.1%, up 50 basis points in the second quarter of 2010. Speaking about new initiatives, Ajay Banga, MasterCard CEO, said, "During the quarter, work continued in the mobile commerce category highlighted by an agreement with Google and multiple partners to launch the Google Wallet, as well as our alliance with Isis, in the U.S. Additionally, the previously announced Orange and Barclaycard contactless mobile payment service became available to U.K. consumers in May. Other notable agreements we executed include a commercial alliance with China Union Pay to enable its cards for cross-border e-Commerce, and a new, multi-product agreement with Swedbank in the Nordics and Baltics region."

Cash and other investments at the end of June 2011 stood at $2.75 billion. The stock was flat in the past one month. The stock is trading at 18 times its estimated 2011 earnings with analyst buy ratings of 76%.

4. Newmont Mining ( NEM) is a U.S.- based gold producer.

During the second quarter of fiscal 2011, consolidated revenue increased 11% to $2.4 billion from the prior year quarter. Average realized price for gold and copper were $1,501 per ounce and $3.78 per pound, up 25% and 62%, respectively, from the prior year quarter. Gold and copper production slumped 5% and 45% to 1.2 million ounces and 44 million pounds, respectively.

Operating cash flow from operations fell 45% year-over-year to $414 million due to tax payments in Indonesia.

The company is maintaining its previously announced 2011 production outlook for gold at 5.1 to 5.3 million ounces and copper production at 190 to 220 million pounds. Capital expenditure outlook for fiscal 2011 is expected to range from $2.7 to $3.0 billion on a consolidated basis. Capital spending through the first half of 2011 was lower than expected and is likely to accelerate during the second half.

The stock is trading at 12.3 times its estimated 2011 earnings with an estimated upside of 32% and analysts' buy ratings of 67%. The stock gained 3% in the past one month.

3. CF Industries Holdings ( CF) is a leading manufacturer of fertilizer products specializing in the nitrogen- and phosphate-based segments.

During the second quarter of 2011, net sales totaled $199 million compared to $167 million in the corresponding period in 2010 due to higher selling prices for ammonia and urea ammonium nitrate solutions (UAN). However, UAN and ammonia sales volumes decreased 11% and 5% during this period, respectively.

Ammonia and UAN prices increased 48% and 47%, respectively, during the second quarter as sales volumes decreased year-on-year. This price increase resulted from higher crop plantings in North America and global demand for nitrogen products.

Net earnings were $129 million for the second quarter of 2011 compared to $66.7 million during the same quarter prior year.

Cash and cash equivalents stood at $152 million vs. $125 million at the end of the 2010 June quarter 2010. The stock is trading at 7.4 times its estimated 2011 earnings. The stock gained 3% in the past one month. It has 23% upside over the next one year with buy ratings of 79%.

2. Range Resources ( RRC) is an oil and natural gas company.

Net revenue for the second quarter of 2011 grew 60% to $306.7 million from $191 million in the same period prior year. Results for the quarter reflect an 8% increase in production and 14% increase in realized prices. Net income stood at $51 million vs. $9 million during the same period of the earlier year.

Looking forward, John Pinkerton, Range's CEO, "Looking to the second half of the year, we anticipate fully replacing all of the Barnett production by the end of the third quarter, reaching our Company-wide production increase target of 10% for the year and exiting the year at 400 Mmcfe per day net from the Marcellus Shale. Additionally, as we continue to redeploy the Barnett sale proceeds into higher return projects, we expect to see further lowering of our cost structure.

In addition to the Marcellus, Upper Devonian and Utica plays in Appalachia, we are proactively expanding several other plays including the Mississippian Lime and St. Louis plays in our Midcontinent region. Range is extraordinarily well positioned to continue to drive up its per share value in the second half of 2011 and for 2012 and beyond." The stock is trading at 34 times its estimated 2011 earnings with an expected upside of 29% over the next one year. The stock gained 3% in the past one month.

1. Cabot Oil & Gas Corporation ( COG) is a U.S. - based oil and gas company.

Net income for the second quarter of 2011 was $54.7 million vs. $21.7 million in the comparable quarter prior year.

Production grew 47.5% year-over-year during the quarter. Total revenue for the first quarter was $240 million, increasing 20% from the same period last year.

Cash flow from operations for second quarter 2011 was $129.5 million compared to $127.1 million in the same quarter of 2010. Discretionary cash flow was $146.9 million against $109.5 million in the second quarter of 2010.

The stock doubled during the last one-year and analysts expect it to deliver 37% upside over the next one year. The stock gained 5% in the past one month. COG is trading at 23 times its 2012 estimated earnings.

>>To see these stocks in action, visit the 9 Stocks That Resisted the S&P Downgrade portfolio on Stockpickr.

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