A
research report this past week from Credit Suisse analysts featured financials Discover
Financial Services (NYSE: DFS)
and KeyCorp (NYSE: KEY),
as well as energy plays Cameron International (NYSE: CAM)
and Tesoro (NYSE: TSO),
as picks for the remainder of 2014.
The
momentous rise in the stock market in 2013 is well behind us now, and
2014 has proved to more volatile. One correction already has happened and
concerns grow about another as economic signals are mixed. The standoff between
Russia and West is ongoing, and new uncertainty about Federal Reserve
strategies has appeared. It is time for investors to be more choosy about
picking stocks.
Below
is a quick look at how the four Credit Suisse picks have fared and what
analysts expect from them. Note that the analysts also liked retailer AutoZone
and IT company Cognizant Technology Solutions in their report.
Cameron
International
Last
week, this oil and gas equipment and services provider announced that its board
had approved a $500 million increase in the company’s share repurchase
program. The Houston-based company sports a market capitalization of more than
$13 billion. Its long-term earnings per share (EPS) growth forecast is about 18
percent.
Seven
of the 29 analysts surveyed by Thomson/First Call rate the stock at Strong Buy,
and 11 more recommend buying shares. The mean price target, or where analysts
expect the share price to go, is more than nine percent higher than the current
share price. That target would be a new multi-year high.
Shares
are trading about seven percent higher than at the beginning of the year. The
50-day and 200-day moving averages formed a golden cross at the end of
February. Over the past six months, the stock has outperformed competitors
National Oilwell Varco and Schlumberger.
Discover Financial
Services
After
passing the most recent Federal Reserve stress test, this credit services
company said it will seek approval to increase its dividend and buy back
shares. Its market cap is more than $27 billion, and it offers a dividend yield
of about 1.4 percent. Its return on equity is more than 24 percent.
Of
the 26 analysts polled, all but five recommend buying shares, with 11 of them
rating the stock at Strong Buy. Analysts see some headroom for shares, as their
mean price target is more than eight percent higher than the current share
price. Here too, the consensus target would be a new multi-year high.
The
share price hit a new 52-week high on Friday and is more than four percent
higher year to date. The stock is up almost 750 percent in the past five years.
It narrowly outperformed MasterCard and Visa over the past six months. It also
outperformed the S&P 500 in that time.
KeyCorp
This
Cleveland-based regional bank is scheduled to report its Federal Reserve stress
test results this week and its first-quarter results on April 17. The bank
holding company has a market cap of less than $13 billion. Its dividend yield
is near 1.6 percent, and its price-to-earnings (P/E) ratio is less than the
industry average.
For
at least three months, the consensus recommendation has been to hold shares,
though more of them say to buy that to sell. However, the share price has
overrun their mean price target, meaning the analysts see no upside potential
at this time. At least one analyst sees more than 10 percent upside,
though.
KeyCorp
also hit a multiyear high on Friday. The share price is up more than eight
percent year to date, as well as almost 73 percent in the past five years. Over
the past six months, the stock has outperformed competitors Huntington
Bancshares and U.S. Bancorp, as well as the broader markets.
Tesoro
Earlier
this month, this independent petroleum refiner offered $300 million in senior
notes in order to pay down debt. The San Antonio-based company has a market cap
of more than $6 billion and a dividend yield around 1.9 percent. Its forward
earnings multiple is much less than the trailing P/E ratio.
Ten
of the 17 analysts surveyed recommend buying shares, with three of them rating
the stock at Strong Buy. A move to the analysts’ mean price target would
represent an almost 25 percent gain for shareholders. That consensus price
target would be a new multi-year high.
The
share price is down about 13 percent year-to-date, after a five percent drop in
the past week. And note that the 50-day and 200-day moving averages formed a death
cross last week. The stock has underperformed competitors HollyFrontier and
Valero Energy over the past six months.
Read more
Benzinga.com small-cap articles: http://www.benzinga.com/news/small-cap
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