We’ve looked at five conglomerates that offer some upside: General Electric Co. (NYSE: GE), 3M Co. (NYSE: MMM), United Technologies Corp. (NYSE: UTX), Honeywell International Inc. (NYSE: HON), and Tyco International Ltd. (NYSE: TYC).

With one exception, implied upside for these companies wanders in the mid- to high-teens. The exception is United Technologies. The second-lowest of the five is Tyco, the de-conglomerated conglomerate.

General Electric Co. (NYSE: GE) traded at $19.06 and has a market value of $203 billion. The consensus target price from Thomson Reuters is $22.57 and the 52-week range is $14.02 to $21.00. GE has a dividend yield of 3.6%. The implied upside to the consensus target is 18%, but we would note that the target is above the 52-week high.

3M Co. (NYSE: MMM) traded at $83.38 and has a market value of around $58 billion. The consensus target price from Thomson Reuters is $95.47 and the 52-week range is $68.63 to $98.19. 3M has a dividend yield of 2.8%. The implied upside to the consensus target is 14.5%, but we would note that the target is also above the 52-week high.

United Technologies Corp. (NYSE: UTX) traded at $73.37 and has a market value of around $67 billion. The consensus target price from Thomson Reuters is $94.60 and the 52-week range is $66.87 to $91.83. UTX has a dividend yield of 2.6%. The implied upside to the consensus target is 29%, but we would note that the target is also above the 52-week high.

Honeywell International Inc. (NYSE: HON) traded at $56.72 and has a market value of around $44 billion. The consensus target price from Thomson Reuters is $67.56 and the 52-week range is $41.22 to $62.00. Honeywell has a dividend yield of 2.6%. The implied upside to the consensus target is 19%, but we would note that the target is also above the 52-week high.

Tyco International Ltd. (NYSE: TYC) traded at $53.59 and has a market value of around $24 billion. The consensus target price from Thomson Reuters is $62.20 and the 52-week range is $37.39 to $57.75. Tyco has a dividend yield of 1.9%. The implied upside to the consensus target is 16%, but we would note that the target is also above the 52-week high.

Based on these numbers, United Technologies offers the most potential upside, but the thing to keep in mind that its acquisition of Goodrich Corp. (NYSE: GR), which is set to close by mid-year, will leave the company with a large debt and not the brightest prospects for profit growth for another year or so.

Tyco, with the lowest implied gain at 16%, is splitting itself into three pieces. The company expects to complete the spin-off of its home security division into The ADT Corp. later this year as well as the spin-off of the fire and security division and the spin-off and merger of the flow control business with Pentair Inc. (NYSE: PNR). All these moves pushed the stock to a year-to-date gain of 20% in late March, which has since been ratcheted back to 15%. And over the past 12 months, only Tyco has shown an increase in share value, up more than 11%.

GE, with its 3.6% dividend yield, and implied upside of 18% is a safe choice here. 3M, with the lowest upside potential, and Honeywell are about equal otherwise. United Technologies has the most potential upside, but it may take a while to materialize. Overall, Tyco, which has withstood the fall in prices better than any of the others, may offer the best reward sooner than any of the others.

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Major Oil Companies with the Most Upside Value

Industrials with the Most Upside Value

Paul Ausick

News came on Thursday morning that Berkshire Hathaway Inc. (NYSE: BRK-B) (NYSE: BRK-A) has reached a deal with Media General, Inc. (NYSE: MEG) to buy all of Media General’s newspapers outside of the Tampa paper.  Buffett is joining a sector that has wrecked many private equity firms looking for deals over the last decade in printed news.  The price tag is listed as $142 million in cash, but Berkshire Hathaway will simultaneously issue a $400 million term loan and a $45 million revolving credit line.

Today’s news is likely to bring a focus on other newspaper outfits around the nation.  Some companies with high concentrations in newspapers are Gannett Co., Inc. (NYSE: GCI), The McClatchy Company (NYSE: MNI), Daily Journal Corp. (NASDAQ: DJCO), A. H. Belo Corporation (NYSE: BLC), Lee Enterprises Inc. (NYSE: LEE).

Berkshire Hathaway also owns 1.7 million shares of The Washington Post Company (NYSE: WPO), although Warren Buffett does not hold a board seat any longer.  Does it beg the question, “Does this increase or decrease the value of The New York Times Company (NYSE: NYT)?”…

Media General will also issue Berkshire Hathaway ‘penny warrants’ for approximately 4.6 million Class A shares and that will give Buffett the right to buy 19.9% of Media General’s existing shares outstanding. Berkshire Hathaway also has the option to nominate a director to Media General’s board of directors.

The newspaper sale includes websites and mobile applications and these outfits have commercial printing businesses as well.  These include 63 daily and weekly titles in Virginia, North Carolina, South Carolina and Alabama.

Dare we say Buffett is back to his paper route he had as a teenager?  Mr. Buffett said, “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper.  The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”

The move will allow Media General to focus on the broadcast television business, which accounted for some 77% of its 2011 platform cash flow in 2011.

Media General closed at $3.14 on Wednesday and its 52-week range is $1.14 to $6.84.  Its shares are indicated up about 40% around $4.75 in early indications.  With this newspaper and media outfit up so much, it may be safe to expect that other newspaper outfits could be worth more money than their battered shares indicate.

JON C. OGG

When you hear $30 versus $19 it probably sounds huge.  If you consider the real call, this is really calling for a move of about 15% compounded over each of the next three years.  It is perhaps even less than that if you consider that the dividend is only 3.6% here.  This 15% share growth also compares to what Jeff Immelt has as an internal ambition of each unit generating 20% in annual returns on capital.  The company has previously said that its dividend payment will increase by roughly the same amount as its earnings increase.

GE shares have not been at $30.00 since before the recession took it down under $10 at the peak of selling.  The Barclays thesis is that this clearance for a dividend should bring the first real excitement in years as part of its turnaround.  The company has said over and over that its capital unit operations were recovering, but the dividend news from the GECC unit on Wednesday morning should have been enough.

Another catalyst is that Barclays sees GE unloading its stake in NBC Universal by 2015 or so and then it expects GE to consider how to shed the appliance and lighting unit as it had previously considered.

Keep in mind that GE has a one-year price target consensus from Thomson Reuters of just over $22.50 and the highest analyst target is $25.00.

JON C. OGG

Thomson Reuters has estimates of $1.04 EPS and $110.4 billion in revenue.  We worry that currency could be an issue, but that may be the case for this current quarter rather than the quarter-end of April.  Estimates for the coming quarter are $1.16 EPS and $115.31 billion.

Wal-Mart’s stock chart matters immensely here.  The 50-day moving average has acted as significant resistance and that level is currently $59.75.  As it turns out, %59.50 to $59.75 acted as the last floor in February after the prior breakout attempt failed.  It probably does not hurt that Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-B) just raised the stake considerably in Wal-Mart shares.

Options traders are not expecting much of a move on the earnings.  While expiration date is this Friday, the options trades only have an event-pricing of up to about $1.20 or so in either direction.  The stock fell $2.00 after the prior earnings report in February.

Analysts have not abandoned Wal-Mart and the current $59.20 or so price compares to a Thomson Reuters consensus target of $63.82 on the stock.  Wal-Mart yields 2.7% and the 52-week trading range is $48.31 to $62.63.

Keep in mind that Target Corporation (NYSE: TGT) has already report earnings and the stock is up only 0.7% in a late-day reaction.

Sears Holdings Corporation (NASDAQ: SHLD) is also set to report earnings on Thursday but the retailer under Eddie Lampert and friends is thinly followed by the analyst community.  Of the few estimates (literally three estimates) from Thomson Reuters we see a “consensus” of a loss at -$0.67 EPS on $9.15 billion in sales.  Sears shares are down 3.2% around $51.25 late on Wednesday ahead of the report and that is against a 52-week range of $28.89 to $85.90.  Keep in mind that Sears shares are down from $65.00 as recently as May 1 but the price the day before (April 30) was only $53.78.  Volatility rules the roost here, and maybe the short interest of 10.55 million shares too (over 8-days to cover ratio).

Another more broad issue is that The Home Depot, Inc. (NYSE: HD) stubbed its toe this week as the stock is down by more than 2% from its pre-earnings level.  Investors were hoping that it is doing better along with a slight housing recovery or bottoming-out.  Its stock was initially down about 3% closer to $48 after the earnings report against a 52-week trading range of $28.13 to $52.88.

Thursday is set up to be an interesting day for large retail earnings.  Wal-Mart could be a wild card in either direction.

JON C. OGG

Here is where the news really gets interesting for GE… In addition to the second quarter dividend from GECC, the unit is now planning to pay a special dividend of $4.5 billion to GE in 2012.

GECC had to suspend the historical dividend in 2009 during the financial crisis.   As a result of the dividend and the special dividend, General Electric said that it plans to accelerate its common stock buyback starting in the second quarter if market conditions permit.

GE shares are up 1.8% at $18.73 against a 52-week trading range of $14.02 to $21.00 and its dividend on the common stock is currently almost 3.6% paid to public shareholders.

JON C. OGG

Also, keep in mind that portfolio managers Todd Combs and Ted Weschler are still new and those new positions of under $200 million $300 million are likely tied to them.

24/7 Wall St. has gone through line by line of each position to see which stocks have been bought and sold as new positions, as well as having added in whether or not the number of shares grew or shrank on each since the prior quarter. We had added some color in on some of the positions if applicable.

Be advised that the number of subsidiaries that this filing covers is 14 entities rather than 18 entities in the prior quarter. There is also a note in the 13F filing showing that the SEC has granted “Confidential Treatment” on some Berkshire stock holdings and that likely suggests that Buffett is still acquiring a position he does not want the public to know about yet. This filing does not signal the half-dozen or more European shares that Buffett said he bought so that remains an outstanding issue as well.

The value of the stock portfolio was $66,151,587,000 at the end of 2011 and this was listed as $75,300,250,000 at the end of March 2012.

American Express Co. (NYSE: AXP) was over 151.6 million shares, SAME AS last quarter.

Bank of New York Mellon Corp. (NYSE: BK) is now 5.6 million shares, HIGHER THAN the 1,793,915 shares last quarter.

CVS Caremark Corporation (NYSE: CVS) is the SAME SIZE at 7.106 million shares after having been a new holding in a recent quarter and having been raised one quarter ago.

Coca Cola Co. (NYSE: KO) was right at 200 million shares, SAME AS BEFORE.

ConocoPhillips (NYSE: COP) is roughly 29.1 million shares, roughly the SAME AS BEFORE but it is still lower than previous quarters in past reports.

Costco Wholesale (NASDAQ: COST) 4,333,363 Shares, SAME AS last quarter after having lowered it before.

Da Vita Inc. (NYSE: DVA) is now 6 million shares worth $541 million and that LARGER THAN BEFORE after having been a new position of 2.684 million shares.

DirecTV (NASDAQ: DTV) is a LARGER POSITION listed at 22.999 million worth over $1.13 billion. This one had been 20.348 million shares worth $870 million one quarter earlier and it had been a new position just two quarters ago at 4.249 million shares.

The move joins Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) because the conglomerate owns a stake of 636,000 shares of its common stock.  That Berkshire stake is still way down from prior reports but was the same stake as of the end of 2011.

Peltz said in a SEC filing that shares are currently undervalued and the fund wants to communicate its view that things could be better if the company would look at various strategic alternatives including a restructuring of its key business segments.

Ingersoll-Rand is in the design, manufacturing, sales, and servicing of a diverse portfolio of industrial and commercial products in the United States and internationally.  Under the current Euro worries, it is worth noting that the company’s official headquarters is in Dublin, Ireland.

It is interesting that the reaction is so muted, but that may be because the DJIA is down another 100 points or so and with international markets on the skid again.  The reaction has Ingersoll-Rand shares up 1.4% at $42.83 against a 52-week range of $25.86 to $52.06.

JON C. OGG

When Team Buffett adds to a position, it is often in the new or relatively new positions already in the Buffett portfolio.  24/7 Wall St. has taken a look at the recent additional stake or new stake positions to see which shares that Mr. Buffett and his team of portfolio managers has likely added to along with some color and logic behind the move.

CVS Caremark Corporation (NYSE: CVS) was a larger position as of the end of 2011 at 7.106 million shares after having been a new holding in a recent quarter.  This was worth about $280 million at the start of 2012 and it is up more than 10% since then and the market cap here is $58 billion.

Da Vita Inc. (NYSE: DVA) was previously listed as a new position of 2.684 million shares worth $203 million at the end of 2011 but that position is worth about 12% more.  This is the leader as a kidney dialysis provider.  If the health trends remain then this one is right up Buffett’s alley.

DirecTV (NASDAQ: DTV) was most recently listed as a larger position which was listed as 20.348 million shares worth $870 million at the end of 2011.  In a prior report we had it as a new position of 4.249 million shares one quarter earlier.  The share price alone is up over 13% from the value at the end of 2011.

Dollar General Corporation (NYSE: DG) is one of the stocks which we think Team Buffett would have liked to own much more of.  The rapid rise in the value of the dollar store trends as a secular theme was even noticed at Berkshire.  This was the same size at the end of 2011 at 4.497 million shares but this was a new position and a larger position and it seems that the price just appreciated too fast for Buffett and friends to add many shares.  Perhaps they participated in the most recent secondary offering, but that might not appear based on the cut-off dates.

General Dynamics Corporation (NYSE: GD) was most recently a larger stake of 3.877 million shares worth $257 million after being listed as a new position just one quarter earlier before of 3.064 million shares.  These shares are hardly higher than the end of 2011, so perhaps Buffett and team have added to the stake on weakness.

Intel Corporation (NASDAQ: INTC) was a larger of 11.495 million shares worth $278 million at the end of 2011; this was a new position of 9.333 million shares last quarter.  Shares are up 16% so far in 2012, so Buffett’s stake here may have grown in size and in value.

International Business Machines Corporation (NYSE: IBM) is one that Buffett already hinted at owning more of, but perhaps that is due to IBM’s share float shrinking from its buybacks.  The most recent filing showed some 63.905 million shares worth some $11.75 billion now after having been a new position with an average cost of about $170 per share.  Buffett’s bet has been worth more than a 10% unrealized gain ($1 billion or so) on what is now one of his largest positions.

Liberty Media Corporation (NASDAQ: LMCA) was a new position of 1.7 million shares worth some $132.7 million.  If Buffett is involved much here, it is under his new portfolio managers. Shares are up about 6% this year so far but it is unknown what the real goal or strategy is here when you consider the DirecTV angle.

Visa Inc. (NYSE: V) was most recently listed as a larger position of 2.865 million shares worth $291 million at the end of 2011.  This was listed as 2.291 million shares in the previous quarter.  The company has a near-duopoly and market strength and history that it seems just like a Buffett dream.  He likes banks, but owning the toll road providers for the theme of consumers using less cash and more card swipes in the years ahead.

Wells Fargo & Co. (NYSE: WFC) is almost certainly a larger stake.  The reason for believing that is that Wells Fargo seems to be a position which grows in size infinitely and it was raised during the prior filing period to more than 383 million shares.  As of Friday’s closing bell, that stake (assuming no share count growth at all) would be worth a shopping $12.65 billion.

It is unlikely that Buffett would have added to each and every position.  He just doesn’t do that and his new team may be more interested in adding on other new targeted stocks on the books.

Again, here is the FULL BUFFETT STOCK HOLDINGS.

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JON C. OGG

Prostate cancer and the issue of Buffett’s successor are likely first.  Will this cause shareholders to call for a more focused disclosure over who will take over as CEO? Even if so, every Berkshire Hathaway investor knows that Berkshire Hathaway is Warren Buffett and Warren Buffett is Berkshire Hathaway.  Our take: Buffett is likely to divulge his successor only when it is on his terms or when the decision must be announced.

The second issue is The Buffett Rule.  Most of the Berkshire Hathaway shareholders are not exactly middle class.  They are usually the one-percenters, at least they are for the A-Shares with that super-high share price.  Warren Buffett was met with a cold stare from the audience before when he defended Lloyd Blankfein at Goldman Sachs Group Inc. (NYSE: GS) and it will be interesting to see how the audience reacts to any notion of paying higher taxes and their chief capitalist calling for Obama and Washington D.C. to increase the tax burden on the wealthy.

Read Also: Buffett’s Full Investment Holdings

While this may seem like a sideshow, the investments in International Business Machines Corporation (NYSE: IBM) and Intel Corporation (NASDAQ: INTC) almost have to be a topic to bring up.  For years Mr. Buffett has shied away from technology.  A $10 billion bet or thereabouts has only grown in value and we all know that Buffett said he would never invest in shares of Microsoft Corporation (NASDAQ: MSFT) because his close ties with Bill Gates would be construed as possessing knowledge that is too close to the situation.

It will be interesting to see if Buffett addresses relatively new positions such as DaVita Inc. (NYSE: DVA) and Dollar General Corporation (NYSE: DG).  DaVita is the king of kidney dialysis and if that is not a captive market then no other market is captive.  Dollar General is one we have referred to over and over as benefitting from the secular trend of dollar stores as these stores are reaching up to grab customers from traditional retailers.

We would also expect to hear a little bit more about the investing decisions and input from Berkshire’s two new portfolio managers Ted Weschler and Todd Combs.

With extremely large stakes in Coca-Cola Company (NYSE: KO) and Wells Fargo & Co. (NYSE: WFC) and with those positions now being up near highs again, it will be interesting to see if Buffett addresses these core holdings as keys to the core holdings with higher dividends.

Berkshire Hathaway’s A-shares closed on Thursday at $121,800 against a 52-week range of $98,952.00 to $123,578.00; and the B-shares closed at $81.26 against a 52-week range of $65.35 to $82.47.

JON C. OGG

Many investors might actually hope that we do get a 10% correction so that they can get into stocks again.  Recent reports have shown that the average investor has still shied away from stocks in favor of the safety of bonds.  The DJIA peaked above 13,300 in March after having ended 2011 at 12,217.56.  It is hard to imagine this, but the DJIA had a low of under 6,500 in early 2009 at the peak of the panic selling.  That was back to 10,000 by October of 2009 and the market is above 13,000 at the current time.  Is it possible that the DJIA has really doubled from the lows and Joe Public has not participated at all?

We want to take a look at the valuations, dividend yields, performance, and underlying trends driving some of the key industry leaders which have already reported earnings and offered guidance in order to get a better handle on what to expect for the coming summer.

Chrysler is also acting as a strong barometer for U.S. auto sales, even if the highly-volatile durable goods orders have been weak for two months.  While the retail segment is marred by a couple of undercurrents right now, sales have remained positive in 2012 when some were expecting some negative overall numbers. Now we also have a fresh report calling for at least 8% dividend growth from DJIA stocks this year and the components have so far been hiking dividends above what was expected.

We have taken a look at the following: Bank of America Corporation (NYSE: BAC) and J.P. Morgan Chase & Co. (NYSE: JPM) in banking; General Electric Co. (NYSE: GE) as the conglomerate leader (and economic barometer); Alcoa Inc. (NYSE: AA) as a leading indicator of the metals markets; Caterpillar Inc. (NYSE: CAT) as the construction and super-heavy equipment leader; Microsoft Corporation (NASDAQ: MSFT) and Intel Corporation (NASDAQ: INTC) as the tech leaders; Apple Inc. (NASDAQ: AAPL) not as a DJIA component but as an asset class; and Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX) as the American leaders in Big Oil. We also want to consider E. I. du Pont de Nemours and Company (NYSE: DD), or DuPont,

A Recent History of “Sell In May and Go Away”

2009 was a very different year because the market was recovering from the crash and stocks were still benefitting from that move.  2010 was a nasty start of summer as investors worried about a double-dip recession as housing prices continued to sink and unemployment was still a prime concern.  We also faced that punishing event called ‘The Flash Crash.’ Another big distraction was BP PLC (NYSE: BP) for its disaster in the Gulf and America and the rest of the world was starting to consider some problems in nations called the PIIGS.  The market peaked around 11,300 in late April and had sunk to a 9,800 by early May.  Even around July 6 the DJIA was only around 10,200 and was only back up to almost 10,500 after the end of August around Labor Day.

2011 felt close to a repeat of 2010 with the worries not just about the PIIGS but about the possibilities of a U.S. debt rating downgrade which did ultimately come.  Housing was still in the tank and employment was not yet in a full-blown recovery in America. While the end of April to the end of May did see a drop of 800 points in the DJIA from almost 12,900 in late April and early May to just above 12,000 by late May and 11,900 by late June, it was late-July and August which were the cruel months for the DJIA as companies began to suffer serious earnings concerns. The DJIA bottomed out just under 10,600 in August.  By late-October the market was back above 12,000 again.

So, here we sit at the end of April in 2012 with a long road of political hate ahead of us, and an economy that is still sluggish but one which not go into recession.  Right now the labor data is still choppy even though unemployment is down to 8.2% due to lower labor force participation rates.  Earnings growth has slowed down and Europe remains a key concern with the stable European nations being a concern on top of the PIIGS.  The good news is that equity values remain attractive and the FOMC is still pledged to a policy of maintaining an “exceptionally low rate policy” through the end of 2014.

The Leading Companies As Economic Barometers

Bank of America Corporation (NYSE: BAC) and J.P. Morgan Chase & Co. (NYSE: JPM) are the two DJIA money-center banking leaders and they are both at discounts to their respective book values.  Both banks turned in earnings reports that show some stabilization even if mortgage woes remain a hangover from yesteryear.  2012 has also been a period of incredible recovery from an awful 2011.  Bank of America effectively doubled from trough to peak from late 2011 to the end of the first quarter and at $8.26 it has a consensus analyst target of effectively $10 that implies upside of close to 21%.  J.P. Morgan is around $43 it has risen 35% from trough to peak from late 2011 to the present time.  Its dividend yield is back up to almost 3% and the price target of about $52.80 implies upside of almost 23%.