The Zacks Analyst Blog Highlights: Exxon Mobil, General Electric, Johnson & Johnson, Wells Fargo and Verizon Communications
CHICAGO, Feb. 26, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Exxon Mobil (NYSE: XOM), General Electric Company (NYSE: GE), Johnson & Johnson (NYSE: JNJ), Wells Fargo (NYSE: WFC) and Verizon Communications Inc. (NYSE: VZ).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday's Analyst Blog:
Demystifying the 'Great Rotation'
It has been reported that there were very large net inflows into equity mutual funds in January, which reversed a nearly two-year trend. As a result, equity inflows surpassed purchases of bonds by a wide margin last month.
However, for there to be a meaningful rotation, funds need to flow from bonds to stocks. Bond funds still garnered tens of billions of dollars in January, which (though less than before) is counterintuitive to the notion of a Great Rotation.
The 'dash from cash' theory is also plausible but similarly weakened by continued accumulation in money market funds. Instead, investors appear to be allocating more for stocks, less for bonds and trimming their cash reserves.
The economy-wide allocation for equity in December 2012 was not terribly shy of normal levels, thereby stifling theories that investors have been keeping away from equities (and are therefore now more likely to embrace stocks).
For those still seeking shelter in bonds, expecting the generous returns from the past three decades would not be wise. Investors who consider the current government bond yield of lower than 2% a bad deal wouldn't like it a bit to see interest rates pick up again. Financial markets were temporarily roiled last week on rumors that the Fed would gradually reduce its multi-billion-dollar monthly bond buybacks which have kept rates rock bottom thus far.
The chase for yield is therefore increasingly pushing investors to embrace higher levels of risk, be it in the form of junk bonds or emerging market bonds. Even the most bearish of equity pundits are re-evaluating their 'wait and see' position, as they are concerned about missing out on reasonable domestic stock valuations.
The S&P 500 is trading at a P/E of about 14x, which is well within its historical range. Equities, therefore, still offer compelling value despite the run-up in prices since the Great Recession. Not only are equity valuations favorable, but many offer a better yield than government bonds.
Exxon Mobil (NYSE: XOM) provides a dividend yield of about 2.58%. General Electric Company (NYSE: GE) offers a yield of 3.45%. Johnson & Johnson (NYSE: JNJ) and Wells Fargo (NYSE: WFC) stand at approximately 3.36% and 2.51%, respectively. We are not even considering share buyback programs of some of these income-oriented stocks, which may drive up their composite yield by as much as a couple more percentage points.
Using our value-oriented approach, we found gazebo stocks in other sectors as well. Verizon Communications Inc. (NYSE: VZ), for example, offers a strong dividend yield of 4.96%.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
SOURCE Zacks Investment Research, Inc.