Giving the Grade to Five Popular Stocks
Some stocks are more popular than others. But that doesn't mean they're always the best shares to hold. Michael Farr, president of Farr, Miller and Washington, gave his assessment of five of the most widely held companies.
General Electric —“I have liked General Electric for a long time. I have owned it at much higher levels and continue to own it at much higher levels. I think they have been in the best position than all the other financials at eleven times earnings. I think growth will continue at around 11 percent, 6 1/4 percent dividend.”
(See the accompanying video for Farr's full take on these five stocks.)
Exxon —“Exxon is probably the best in class of the oils. Eight percent earnings growth, around a two, two and a quarter percent in the dividend. The best return on capital, most stable track record...Probably won’t be a hot stock but will be a safe stock.”
Microsoft —"Microsoft in particular, looks to me fairly inexpensive. At eleven times earnings, with a huge amount of cash on the balance sheet, no real need to access capital markets. Ten percent earnings growth, I think it probably makes sense.”
Wal Mart —"Wal Mart’s done very well, I just think it’s too expensive at these levels. We have seen a great trade depth, consumers that were buying at higher end retailers are all going to Wal Mart now. Wal Mart’s numbers look pretty good but at 15 1/2 times while the consumer is still shrinking and feeling pressure, and housing prices are still dropping, I’d like to buy it a little cheaper.”
Pfizer—"My least favorite of the five. Lipitor is coming off patent here, their going to loose 25 percent of their revenue coming up. Pfizer certainly look’s pretty cheap at 7 ½ times earnings but I’m only seeing projected earning growth of about 2 percent.”
Disclosure information on Farr's stock holdings was not available.