With the market creeping toward the end of 2016, many of the firms we cover here at 24/7 Wall St. are in vacation mode, and new research, as is always the case this time of year, is hard to come by. While the Dow Jones Industrial Average seemingly inexorable climb toward 20,000 remains a top story, what many investors are really interested in is what are some solid stock ideas that they can put on now.
In a recent research roundup, the analysts at Jefferies are out with some late 2016 picks, and we found four stocks that could make good sense as we play out the string on 2016 and head into the new trading year next week. All are rated Buy at Jefferies and all pay solid dividends.
This top aerospace industrial has been on a roll since the election and may be ready to breakthrough to multiyear highs. Boeing Co. (NYSE: BA), together with its subsidiaries, designs, develops, manufactures, sells, services and supports commercial jetliners, military aircraft, satellites, missile defense, human space flight and launch systems and services worldwide.
The company operates in five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital.
Recent reports indicate that the U.S. Navy plans to divest its older model F/A-18 Hornet fighter jets in coming years and hopes to buy dozens of F/A-18E/F Super Hornets to deal with a shortfall of strike fighters aboard its carriers. If implemented, the plan would provide dozens of new orders for Boeing and keep its St. Louis production line running for several more years.
The Jefferies team also sees big value in the stock and said this in a research note:
Boeing’s 30% dividend hike was 2 times what we had expected, although shares have declined since the announcement. The dividend yield is now ~1% higher than the average DJI yield and given that Boeing’s recent yield has been in the 3% range, we see significant upside to shares. Looking at core earnings and adding back 787 amortization, shares trade at just 13 times our 2017 estimates, in line with stable growers, while cyclical shares are carrying multiples above 20 times earnings.
Boeing investors are paid a very solid 3.62% dividend. The Jefferies price objective for the stock is $185, the Wall Street consensus target price is at $156.50. The stock closed just above that level on Tuesday at $157.48 per share.
This top money management company makes solid sense for aggressive income investors. The Blackstone Group L.P. (NYSE: BX) provides financial advisory services to its clients, including public and corporate pension funds and academic, cultural and charitable organizations. The firm manages separate client-focused portfolios. Blackstone also launches and manages private equity funds, real estate funds, funds of hedge funds and credit-focused funds for its clients. It invests in private equity, public equity, fixed income and alternative investment markets.
The analysts noted this in their report:
It would also appear CEO Steve Schwarzman isn’t convinced that moving from a partnership structure to a c-corp is the right move for Blackstone or its unit holders. He is however of the belief that the incoming administration will bring with it sweeping architectural change that is pro-business and will prove to have a “profound” effect on the US economy.
Blackstone investors are paid an outstanding 5.95% distribution. Jefferies has a $31 price objective for the stock, while the consensus target is a bit lower at $29. Shares closed most recently at $27.74.