paid-member-subscriptions domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /hermes/bosnacweb06/bosnacweb06al/b592/ipg.prostockmarkets/prostockmarkets.com/wp-includes/functions.php on line 6114Oil prices have started to move higher and there is a better economic climate for Exxon Mobile Corp. (NYSE:XOM) to start posting strong gains into the next few quarters. In addition to this, the stock has an excellent dividend yield of 3.5%.
Analyst stock recommendations:
Stock Price Target:
Entertainment Stocks: Disney Will Buy Marvel Comics for $4 Billion
Stock market activity continues to be sluggish in most sectors but we are now starting to see more activity in the consumer entertainment sector. This month, we learned that Walt Disney Co. (NYSE:DIS) will buy Marvel Comics for $4 billion in a move to diversify its content base. The company hopes to expand its outreach in age demographics in order to shield against potential declines in other areas of its businesses.
More recent news of sexual misconduct from one of Marvel’s founding members, Stan Lee, could impact the timing of the deal, according to analysts. Disney has had a much-storied run over the last year, and the injection of negative media headlines could prove to be ill-timed as far as the investor outlook is concerned.
Stocks Strategies: Brookfield Real Assets (RA) Offers Value in Elevated Markets
In December, Brookfield Investment Management (NYSE: RA) announced its decision to merge three legacy funds (Brookfield Mortgage Opportunity Income Fund Inc, Brookfield High Income Fund Inc., and the Brookfield Total Return Fund Inc.) These funds became the Brookfield Real Assets Income Fund (the Fund) on Dec 5th, 2016. The Fund has an annualized distribution rate of 10.3% as of March 2, 2017.
In the chart above, we can see that the recent strategy changes at Brookfield have been viewed positively by the market, with significant rallies already posted this year. This means that stocks like RA should be on the radar for any investor looking for sustainable value in an environment where stock benchmarks like the S&P 500 and the Dow Jones Industrials are trading at overextended levels.
Recent Updates
In the Q4 update, Brookfield stated that the objectives of the reorganization were threefold. Merging the fund would provide a larger scale through trading liquidity for shareholders and broaden market interest. In this way, it is clear that Brookfield still sees opportunities for greater income and growth. Additionally, merging the funds has allowed income levels to stabilize and this should lead to less volatility during market cycles.
Strategically, this closed-end investment instrument looks to provide high total return using two approaches. Primarily, the Fund looks for high current income opportunities and, secondly, it looks for growth of capital. As its name suggests, the Fund looks to invest in so-called “real assets” such as real estate securities, infrastructure, and natural resources.
Those three industries comprise more than 97% of the Fund’s total investments. The Fund’s NAV is currently more than $25 and this number has increased by more than 3% since its December inception. The stock trades at a NAV discount that is something of a rarity when we look at the elevated nature of stock prices in general.
Stock Market Optimism
So far in 2017, the Trump victory has supported analyst expectations for higher economic growth within this US-focused fund. The stock has clear potential for growth as Trump’s pro-business agenda will likely lead to continued improvement in the nation’s housing market fundamentals.
As a whole, investors have in bullish fashion as Brookfield is already well-positioned in a somewhat overlooked industry that still has potential to grow over the next few years. Notably, the Fund’s investment in hotels, health, telecom, and oil and gas transportation has been positively received as an added volatility safeguard. But even with the significant price rallies already seen this year, the stock still trades at a NAV discount of nearly 10%:
As 2017 continues, the outlook remains favorable. Streamlining regulations, tax reforms, and growing infrastructure spending policies should continue to support the assets that make up Brookfield’s portfolio. Of course, as U.S. policy becomes more clear over the next few months it should be noted that there is some inherent risk if broader market surprises are seen.
For example, inflation may continue to rise as energy prices stabilize. The Fund management believes the general improvement of the US economy should tighten credit spreads and increase equity prices, however. If this turns out to be the case, RA should be able to extend in its rallies and gain more of the market’s attention in the process.
For more information, visit Pristine Advisers for a free investor relations consultation.
Dividend Stocks: Johnson & Johnson Looks Strong After Earnings
Johnson & Johnson (NYSE:JNJ) is a company that has one of the most firmly-established presences of any name that can be located in the financial markets. The company was founded in 1887 by Robert Wood Johnson, James Wood Johnson and Edward Mead Johnson with its headquarters in New Brunswick, NJ. Today, Johnson & Johnson is, ultimately, a holdings company. Their main businesses are in health care products and its manufacture and sale of a wide range of products that are sold in almost every American household.
In the healthcare field, the company has been a forerunner in the research and development of everyday products that have become staples in defining modern daily life. The company, through its subsidiaries, does business around the world in 120 manufacturing facilities and can be traded using the MT4 platform.
Johnson & Johnson’s Redefined Expansion
With this context in mind, it should be understood that there is still room for expansion at the company — and Johnson & Johnson has taken recent steps to define this as an emerging outlook. Last month, the company announced its plans to buy Abbott Medical Optics for $4.325 billion in cash. In a similar move last quarter, the company acquired Vogue International for $3.3 billion in cash as a means to strengthen its position in hair care and other personal care products. From a strategy perspective, it can be said that these efforts have come in response to recent disappointments in its quarterly earnings reports.
On July 19, the company announced Q2 results, with earnings-per-share of $1.43 and Q2 sales of $18.5 billion. Prior to this, the analyst consensus showed expectations of earning-per-share at $1.68 and sales of $17.97 billion. On the positive side, JNJ’s Q2 worldwide sales increased by 7.9% while domestic sales grew by 8.8%. Thomson Reuters polls suggest that FY2016 sales will come in from $71.5 billion to $72.2 billion and adjusted earnings-per-share will come in from $6.63 to $6.73.
Stock Performance
Johnson & Johnson stock is currently trading near $117, toward the upper end of its 52-week trading range of $94-126, with a trailing twelve-month earnings-per-share is $5.37. At these valuations, this gives JNJ a 21.9 PE — and this is perhaps one of the most overlooked features of the stock at current price levels. The industry average shows a PE multiple of 36.6. So when we take these factors into consideration along with the significant buy momentum that has already been seen this year, it is much easier to see why the current bull run has not yet run its course. At this stage, the analyst majority is expecting earnings-per-share of $6.96 for the year ending December 2016 and $7.11 for December 2017, and this supports the outlook for further gains in the market valuation.
Over the last five years, Johnson & Johnson has produced a 13.32% annualized return-on-investment, and a 20.05% annualized return-on-equity during the same period. On the negative side, it should be noted that the company has a somewhat subdued 5-year annualized sales growth rate of 2.62% and 5-year annualized EPS growth rate of 2.76. This can be attributed largely to the broader weakness we have seen in global markets, and this is something that should continue to be rectified as long as most central banks in emerging markets maintain a dovish policy stance. Another factor that helps to reduce these negatives is the fact that the company performs much better with its margin levels than the comparable industry average. Its gross margin is TTM 69.61% vs industry average of 54.53% and its net profit margin is 21.20% where the industry average now rests at 11.10%.
Dividend Stock Investing
So while many analysts have dismissed the stock as being overvalued in the current market context, there are several factors that put those forecasts at risk in favor of additional runs higher. Given the regular nature of the stock’s price performance over the last year, investors can wait for a drop back toward the 200-day moving average near $115 (highlighted in the chart above). One factor that could change the outlook and reduce performance within the company is the fact that Johnson & Johnson is still lagging when we talk about the company’s return-on-assets. Its 5-year average annualized return-on-assets is 10.66% (compared to the industry average of 13.25%), so there are clearly managerial issues here that will need to be addressed. Similar trends have been seen in cryptocurrency markets and this is likely to continue until investors see a Bitcoin ETF.
But, overall, investors will continue to be rewarded for their patience in the stock as the company is one of the best regular dividend payers in the market. JNJ pays its dividend quarterly, and over the last two-quarters the company paid $0.80 a share (a dividend-yielding 2.7% at current prices). This is nearly double the industry average, which is now showing yields of 1.41%, and this is why there are still many in the analyst community expecting the stock to outperform when bought on dips from current levels.
