This iconic blue chip industrial has been on a strong roll since the election, but it is still trading below highs hit last summer. General Electric Co. (NYSE: GE) is a highly diversified, global industrial corporation. Its businesses are organized broadly under six segments: GE Capital, Energy Infrastructure, Aviation, Healthcare, Transportation and Home & Business Solutions. Its products and services include power generation equipment, aircraft engines, locomotives, medical equipment, appliances, commercial leasing and personal finance.
The company recently announced a huge deal to combine GE’s Oil & Gas business and Baker Hughes to create a leader in oil and gas equipment, technology and services. It will have $32 billion in revenue and can leverage GE’s digital and technology expertise and Baker Hughes domain knowledge, capabilities and presence in oilfield services.
Most on Wall Street are very positive on this deal, which comes on the heels of a failed attempt by Halliburton to buy Baker Hughes. The UBS analysts note that the merger brings what they term as “pure play value, synergies, digital opportunities, perhaps most importantly, earnings accretion.”
GE investors are paid a 3.02% dividend. The $37 Merrill Lynch price objective compares with the consensus target of $32.77. Shares closed yesterday at $31.74.
This company remains the undisputed leader in the home improvement retail category. Home Depot Inc. (NYSE: HD) is the world’s largest home improvement specialty retailer, with 2,270 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.
Home Depot stores sell various building materials, home improvement products, and lawn and garden products, as well as provide installation, home maintenance and professional service programs to do-it-yourself (DIY), do-it-for-me (DIFM) and professional customers.
Home Depot could continue to be a benefactor from the damage done in Florida and along the Southeast from Hurricane Matthew. Toss in the huge rebuilding efforts in Louisiana after the severe flooding there, and the third and fourth quarter results could indeed be a bonanza for the company and investors.
Home Depot investors receive a 2.02% dividend. Merrill Lynch has a $158 price target. The consensus price objective is $146.67. Shares closed Tuesday at $136.54.
The fast-food giant still trades well below highs hit in the spring. McDonald’s Corp. (NYSE: MCD) is the world’s leading global foodservice retailer, with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local business persons.
The company reported very solid third-quarter results after a so-so second quarter. Merrill Lynch noted this when the earnings were released:
McDonald’s reported better than expected this operating results with global same store sales up 3.5%, including the U.S. up 1.3%. We maintain our 2016 GAAP earnings-per share estimate but are raising our 2017 estimate by $0.10. McDonald’s is executing restructuring plans.
McDonald’s shareholders are paid a 3.07% dividend. The Merrill Lynch price target is a whopping $140, and the consensus price objective is $127.76. The shares closed Tuesday at $122.68.
These stocks are trading well below their 52-week highs, and they make good sense for more conservative portfolios. Another good idea is to maybe hop on board early for the 2017 Dogs of the Dow.