We have already issued many sector calls for 2011 with our outlooks and we have even given a 2011 DJIA target of 13,042 based upon the same methodology that got us within about 1% of the DJIA close for 2010. Now we are looking at the world of the larger conglomerates to see which of the peers have the best chance of outperforming in 2011. In this review, we have highlighted reviews of 3M Co. (NYSE: MMM), General Electric Co. (NYSE: GE), Honeywell International Inc. (NYSE: HON), United Technologies Corp. (NYSE: UTX) and Berkshire Hathaway Inc. (NYSE: BRK-B).
We have looked at the closing prices, dividend yields, expected upside to the Thomson Reuters consensus targets for a year out, and looked at the past performance and expected upside for what lies ahead. There is a clear winner by our take for 2011.
3M Co. (NYSE: MMM) closed out 2010 at $86.30 and its shares saw range of $68.96 to $91.49 in 2010. If you adjust for its dividend payments, the return for 2010 was just over 7% for the year. Its dividend yield is 2.4% and has raised its payouts over and over year after year. Management change has been on the forefront and it underperformed during 2010. The consensus price target of $99.38 implies expected upside of a tad above 15% for 2011.
General Electric Co. (NYSE: GE) closed out 2010 at $18.29 and its shares saw range of $13.75 to $19.70 in 2010. If you adjust for its dividend payment changes, the return for 2010 was over 24%. The company is likely to raise its dividend in 2011 again and it is buying back stock. The most recent Jeff Immelt presentation was about growth and its opportunities rather than asking for atonement. The $21.00 consensus price target still leaves upside of almost 15% for 2011.
Honeywell International Inc. (NYSE: HON) closed out 2010 at $53.16 and its shares saw range of $36.69 to $54.21 in 2010. If you adjust for its dividend payments, the return for 2010 was just under 40% for the year and it has a dividend yield of 2.3%. The consensus price target of $57.53 implies expected upside of only about 8.2%.
United Technologies Corp. (NYSE: UTX) closed out 2010 at $78.72 and its 52-week range was $62.88 to $79.70. It has a 2.1% dividend yield and its shares rose just over 16% in 2010. With a mean price target of $87.13, the implied 2010 upside is about 10.6%.
Berkshire Hathaway Inc. (NYSE: BRK-B) (using B-shares for better liquidity) closed 2010 $80.11 and its 52-week range was $64.72 to $85.86. There are too few analyst estimates to really predict what the real price target should be. Due to it being added to the S&P 500 and other indexes and splitting its shares after the BNSF acquisition, Berkshire Hathaway’s B-shares rose almost 22% in 2010.