Night­mare elec­tion al­most over

Financial Mirror (Cyprus) - - FRONT PAGE - By Lee Jack­son

It’s been al­most 600 days since the elec­tion cy­cle for the 2016 pres­i­den­tial race started. In­vestors, and al­most ev­ery­body else, are just ready for it to be over. With the race in many bat­tle­ground states too close to call, one thing is for sure. There will be a win­ner, and the un­cer­tainty that some com­pa­nies pointed to dur­ing third-quar­ter re­sults pre­sen­ta­tions will also soon be over.

Some top Wall Street strate­gists feel that fi­nan­cial and con­sumer dis­cre­tionary com­pa­nies could ben­e­fit from the con­clu­sion of the elec­tion, as far more of them noted the un­cer­tainty dur­ing con­fer­ence calls than other sec­tors. We screened the Mer­rill Lynch re­search data base for com­pa­nies in the two sec­tors that look solid and are rated Buy. We found five that in­vestors may want to add to port­fo­lios now, all of which pay out­stand­ing div­i­dends.

The stock mar­ket dis­likes one thing more than any­thing else, and that is un­cer­tainty. The res­o­lu­tion of the elec­tion, re­gard­less of who wins, will at the min­i­mum take away that un­cer­tainty. All five of th­ese blue chip lead­ers make good sense for growth and in­come port­fo­lios.

Re­mains a top War­ren Buf­fet hold­ing and of­fers not only safety, but an in­cred­i­ble strong world­wide brand. Coca-Cola Co. (NYSE: KO) is the world’s largest bev­er­age com­pany, re­fresh­ing con­sumers with more than 500 sparkling and still brands.

Led by Coca-Cola, its port­fo­lio fea­tures 20 bil­lion-dol­lar brands, in­clud­ing Diet Coke, Fanta, Sprite, Coca-Cola Zero, vi­ta­m­in­wa­ter, Pow­er­ade and Minute Maid. Glob­ally, it is the top provider of sparkling bev­er­ages, readyto-drink cof­fees and juices and juice drinks. Through the world’s largest bev­er­age dis­tri­bu­tion sys­tem, con­sumers in more than 200 coun­tries en­joy its bev­er­ages at a rate of more than 1.9 bln serv­ings a day.

The com­pany re­ported solid third-quar­ter re­sults that beat the Mer­rill Lynch es­ti­mates. The firm also noted that with mar­gin ex­pan­sion grow­ing and head­winds from cur­rency start­ing to abate, things are look­ing up for the bev­er­age gi­ant. The com­pany also owns 31.5% of Mon­ster Bev­er­age, which con­tin­ues to de­liver big num­bers.

Coca-Cola in­vestors re­ceive a 3.3% div­i­dend. The Mer­rill Lynch price tar­get for the stock is $50. The Wall Street con­sen­sus tar­get is $46.89. The stock closed Fri­day at $42.23.

This fi­nan­cial ser­vices leader has strong po­si­tions in both eq­uity ex­change traded funds (ETFs) and ac­tively man­aged eq­uity and debt mu­tual funds. In­vesco Ltd. (NYSE: IVZ) looks to be very well-po­si­tioned to cap­i­talise on in­flows into both seg­ments, as well as higher as­set prices, as many on Wall Street see a con­tin­u­a­tion of the seven-year bull mar­ket. In­vesco Pow­erShares is the bou­tique in­vest­ment man­age­ment firm that man­ages a fam­ily of ETFs. The com­pany has been part of In­vesco, which mar­kets the Pow­erShares prod­uct, since 2006. The in­cred­i­ble growth and pop­u­lar­ity of the prod­uct is why many on Wall Street re­main so bullish on the stock.

The an­a­lysts see the com­pany as one that is best po­si­tioned to com­pete for share, given mix, prod­uct of­fer­ings and at­trac­tive rel­a­tive per­for­mance.

In­vesco in­vestors re­ceive div­i­dend. Mer­rill Lynch has a tar­get, and the con­sen­sus tar­get Shares closed Fri­day at $28.54. a 3.92% $36 price is $34.23

This stock trades at a very low 10.8 times es­ti­mated 2017 for­ward earn­ings and could re­spond well in a ris­ing rate sce­nario. JPMor­gan Chase & Co. (NYSE: JPM) is ex­pected to con­tinue to ben­e­fit from com­mer­cial loan growth and an up­turn in cap­i­tal spend­ing. Wall Street an­a­lysts agree that the stock seems at­trac­tively val­ued on es­ti­mated price-to-earn­ings and a very solid price-to-book value. Some on Wall Street have cau­tioned that last year’s di­vesti­ture of the phys­i­cal com­modi­ties busi­ness could pro­vide earn­ings head­wind through­out this year.

The com­pany re­ported out­stand­ing thirdquar­ter re­sults, and Mer­rill Lynch thinks the re­sults are sus­tain­able go­ing for­ward. The firm raised its es­ti­mates for 2017 and feels JPMor­gan can earn as much as $7 a share by 2018. De­spite be­ing a crowded trade, Mer­rill Lynch also feels that the bank’s su­pe­rior earn­ings growth should con­tinue the stock’s out­per­for­mance.

Im­prove­ment in loan growth, ter­rific eq­uity cap­i­tal mar­kets and a steady in­crease in de­posits will be a solid plus. Trad­ing at a dis­count to many of the large cap banks on 2016 earn­ings es­ti­mates helps up­side po­ten­tial as well. With $2.6 trln in as­sets on a world­wide ba­sis, and one of Wall Street’s savvi­est lead­ers in Jamie Di­mon, the stock is a solid buy for in­vestors.

Ear­lier this year, Di­mon put his money where his mouth was and re­port­edly bought a stun­ning 500,000 shares of JPMor­gan stock for a mas­sive $26 mln. That brought his to­tal hold­ings in the bank to 6.7 mln shares, worth over $360 mln.

In­vestors re­ceive a 2.78% div­i­dend. The $74 Mer­rill Lynch price tar­get com­pares with the con­sen­sus tar­get of $72.24. Shares closed Fri­day at $69.11.

The fast-food gi­ant has been on a roller­coaster this year, but it re­mains a solid pick for in­vestors seek­ing div­i­dends and a de­gree of safety. McDon­ald’s Corp. (NYSE: MCD) is the world’s lead­ing global food­ser­vice re­tailer, with over 36,000 lo­ca­tions serv­ing 69 mln cus­tomers in over 100 coun­tries each day. More than 80% of its restau­rants world­wide are owned and op­er­ated by in­de­pen­dent lo­cal busi­ness per­sons.

The com­pany re­ported solid third-quar­ter re­sults af­ter a so-so sec­ond quar­ter, said a Mer­rill Lynch re­search re­port.

McDon­ald’s share­hold­ers re­ceive a 3.35% div­i­dend. Mer­rill Lynch has a whop­ping $140 price tar­get. The con­sen­sus price ob­jec­tive is $127.32. Shares closed Fri­day at $112.10.

This top re­gional bank re­cently was added to the Mer­rill Lynch US 1 list and of­fers in­vestors a solid en­try point. The PNC Fi­nan­cial Ser­vices Group Inc. (NYSE: PNC) is one of the coun­try’s largest di­ver­si­fied fi­nan­cial ser­vices or­gan­i­sa­tions. It pro­vides re­tail and busi­ness bank­ing; res­i­den­tial mort­gage bank­ing; spe­cialised ser­vices for cor­po­ra­tions and govern­ment en­ti­ties, in­clud­ing cor­po­rate bank­ing, real es­tate fi­nance and as­set-based lend­ing; and wealth man­age­ment and as­set man­age­ment. With con­sis­tent earn­ings growth and a pos­i­tive and grow­ing loan port­fo­lio, the com­pany is a pre­miere su­per-re­gional bank stock to own.

Wall Street an­a­lysts point to nu­mer­ous pos­i­tives, in­clud­ing the bank im­ple­ment­ing huge cost savings plans. The bank is work­ing on up to $100 mln of new savings an­nounced last year, and it is also ap­plauded for out­stand­ing credit/risk man­age­ment and the lim­ited ex­po­sure to the cap­i­tal mar­kets re­lated ar­eas, while fo­cus­ing on tra­di­tional bank­ing.

Mer­rill Lynch feels the un­der­per­for­mance this year makes the stock very at­trac­tive, and it notes the savings ini­tia­tive and the move to digi­ti­sa­tion as pos­i­tives to what is a very solid bank­ing story.

PNC share­hold­ers re­ceive a 2.31% div­i­dend. The Mer­rill Lynch price tar­get is set at $100. The con­sen­sus tar­get is $96.80. Shares closed Fri­day at $95.10.

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