Apple Inc. (NASDAQ: AAPL) is often considered the king of stocks. Even after the death of Steve Jobs, Apple remains the most valuable company by market cap and shares recently made it back over the prized $400.00 share price. 24/7 Wall St. is looking for implied upside than just Apple… Apple has a consensus price target of about $491.60, implying nearly 23% upside. We wanted to find ten big stocks which are expected to outperform Apple over the next year and we found about 18 that we filtered down to 12 within our criteria.
Some of these stocks are in technology, some are not. Our criteria is to eliminate junk: no companies losing money, no declining earnings, no fresh implosions, no Chinese ADRs, no stuck multi-year turnarounds, and no restructurings that are changing the identity of a company. We also wanted to find companies where analysts still believe that earnings in 2012 will be higher than in 2011, and we eliminated companies in the troubled banking, housing, and auto sectors. We screened out the volatile commodity stocks, used a multi-billion market cap floor, demanded many years of operating history, and even made sure that each stock had 10 or more analysts covering the stock to make sure that consensus was truly a consensus rather than a straw-poll.
The screened stocks expected to outperform Apple are as follows: Caterpillar Inc. (NYSE: CAT); EI DuPont de Nemours & Co. (NYSE: DD); EMC Corporation (NYSE: EMC); FedEx Corporation (NYSE: FDX); General Electric Company (NYSE: GE); Google Inc. (NASDAQ: GOOG); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); QUALCOMM Incorporated (NASDAQ: QCOM); SanDisk Corporation (NASDAQ: SNDK); Staples, Inc. (NASDAQ: SPLS); Urban Outfitters Inc. (NASDAQ: URBN); and Walt Disney Co. (NYSE: DIS). A few names with more upside that might immediately come to mind are Netflix, Inc. (NASDAQ: NFLX), OpenTable, Inc. (NASDAQ: OPEN), or First Solar Inc. (NASDAQ: FSLR). Unfortunately, these stocks, even if they do technically have higher implied upside according to analysts, are all under death watch due to a share price implosion. The consensus targets and any earnings estimates are from Thomson Reuters and Yahoo! Finance.
Caterpillar Inc. (NYSE: CAT) is not a restructuring company, but the DJIA component has been battered while Europe falls off the cliff and while China and India seem to be applying all tools possible to constrain growth or inflation. Caterpillar needs emerging markets and it is actually a concurrent indicator even if it lacks much of the sex appeal compared to Apple. At $80.66, the consensus price target of just over $114.00 is actually less than the 52-week high of $116.55. It may seem too good to be true (and it actually may be too good to be true) but this objective price target implies a whopping 41% upside. Caterpillar also pays a dividend yield of about 2.4%.
EI DuPont de Nemours & Co. (NYSE: DD), or the great DuPont, is yet another DJIA components that is magically expected to outperform Apple. DuPont is also going to be far more cyclical and dependent upon economic growth than Apple as well. Nothing is perfect in exploring for higher upside even for this chemicals and agriculture giant. After recently trading at $43.42, the consensus price target of just above $60.00 implies a whopping upside of over 38%. DuPont also pays a 3.9% dividend yield today.
EMC Corporation (NYSE: EMC) has not been immune from the market sell-off of late but if one company has been able to grow sales in storage it is EMC. The company also has much vested interest (only about 85% or so) in VMware Inc. (NYSE: VMW). After recently closing at $23.04, the consensus price target of $30.67 generates an implied upside of 33%. The storage giant pays no dividend and we would caution that the stock has not traded to the current price target in the last five years. Still, if EMC shares were to rally back to the 52-week high then the implied gains would still be about 24.7%.
FedEx Corporation (NYSE: FDX) has been hit harder than rival United Parcel Service, Inc. (NYSE: UPS) during the pullback. FedEx is going to obviously be far more economically sensitive than Apple due to its reliance upon broad business and consumer spending. Still, its $73.43 price and $97.48 price target generates an implied upside of nearly 33% and that target is under the 52-week high of $98.66. The company sports a lackluster dividend of 0.7%, but we have been suspecting this low-yield policy to change be increased at some point in the future.
General Electric Company (NYSE: GE) is nearly shocking to still see as having more upside than Apple. The largest conglomerate is paring down some of its operations, but Jeff Immelt maintains that the portfolio is the best he has had in years. With shares recently at $16.14, the consensus price target of $21.04 implies upside of more than 30% and GE pays close to a 4% dividend now. Its consensus price target is under the $21.65 year high and the consensus price target was closer to $23.00 over the last quarter. Ge may need economic growth more than Apple does, but seeing the king of conglomerates in this screen was surprising.
Google Inc. (NASDAQ: GOOG) may be well off of highs, but the internet search giant still has massive upside if Wall Street has this one correct even if Main Street is confused by its expanding business model. At $543.18, Google’s consensus price target from analysts is above $723.00 gives an implied upside of 33%. The company is overpaying according to some for the Motorola assets and patents, but Google has been able to grow its business and that growth is expected ahead. One concern may be that the 52-week high of $642.96 is “only” about 18% upside and another concern may be that no dividend exists.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) has already been one of 2011’s greatest stock performers. The market turmoil caused a pause, but analysts have remained positive. It is amazing that this is now a $14 billion company and that it is up tenfold since the recession lows. Shares are at $93.62 and that implies upside of over 29% to the $121.50 consensus price target. It is worth noting that this stock trades with a large P/E and buyers are still betting that growth continues from 2012 to 2014. That $121.50 price target is also above the all-time high of $115.98.
QUALCOMM Incorporated (NASDAQ: QCOM) has been a beneficiary of the boom in smartphones and the tablet migration will be a win for the company if the tablet market can expand beyond just the iPad market. The company has also bought back stock and currently offers a dividend yield of about 1.7% with the promise of higher payouts to come in the years ahead. At $51.65, there is an implied upside of about 24.8% to he $64.47 consensus price target. We would note that this price target is above the $59.84 52-week high. It may seem amazing, but the CDMA platform has allowed QUALCOMM’s international growth and domestic growth to make this worth almost $87 billion today.
SanDisk Corporation (NASDAQ: SNDK) is the independent king of flash memory. Shares were hit unusually hard during the summer sell-off but they have recovered handily. Some may argue that the stock has actually recovered too handily with literally a 40% bounce since the lows when we were referring to it as a technology value stock. Shares are around $44.46 and that implies upside of about 26.5% to the consensus price target of $56.28. We would note that the price target is above the 52-week high of $53.61.
Staples, Inc. (NASDAQ: SPLS) has come down substantially off of highs and it carries a value stock status. The office supplies giant has been treated very harshly as the investment community has been pricing in a slower business spending climate. Selling in May and going away would have been a huge win here and shares are fighting in a $13 to $15 range right now. At $14.40, there is an implied upside of 25.4% to the $18.07 consensus price target. We would also note that this was above $20 before the big sell-off and the stock’s 52-week high is $23.75. Despite the woes and concerns there is expected growth and this trades at about ten-times expected earnings. Staples even carries a 2.7% dividend yield.
Urban Outfitters Inc. (NASDAQ: URBN) has lost much of its mojo. Selling $200 blue jeans and controversial tee-shirts was a huge growth generator for the company but it now appears to be a maturing model if you just look at the stock chart and nothing else. If you look to earnings and growth, this is a transition year but there is expected growth in 2010. Urban Outfitters is also a company which often gets discussed as a “private equity wish list company” when it comes to retail and apparel M&A candidates. At $23.54, the consensus price target of $31.38 gives an implied upside of about 33%. We would also note that this target of $31.38 is way under the 52-week high of $39.26. This one has almost pulled back too much and it feels as though no imminent catalyst is there. Still, this makes it the largest retailer with the highest upside based upon the criteria we used.
Walt Disney Co. (NYSE: DIS) has been hit hard with the pullback as its business growth plans have staggered a bit. Is it a paradox or irony that Steve Jobs was the largest individual shareholder of Disney? The Mouse House recently closed at $32.61 and the consensus price target of $42.17 gives an implied upside of more than 29%. It is also worth noting that the 52-week high of $44.34 is above the consensus price target. Bob Iger has also just recently agreed to remain CEO until early in 2015 to leave plenty of time for a succession plan. For a DJIA component, Disney does have a rather unimpressive 1.2% dividend yield.
JON C. OGG
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