2012 Outlook: Analysts See Volatility

2012 Outlook: Analysts See Volatility

Research  these Stocks on Kapitall’s Playground Now

 
research now

The end of 2011 is near, and with it come analyst expectations for the new year. But the perennial bullishness of analysts seems to be absent – most analysts can only agree on volatility for 2012, with few asset classes offering an obvious safe haven.

Great Uncertainty

This has to do with the large uncertainties facing financial markets at the moment. Among the uncertainties named by analysts at Reuters 2012 Investment Outlook Summit are the potential breakup of the euro zone, a “potentially divisive U.S. presidential election” that can put US deficit reduction at risk, and China’s handling of a cooling economy.

With regard to the Euro crisis, Global Chief Investment Officer at Citi Private Bank Richard Cookson told Reuters, "It's not even as simple as avoiding everything European because you cannot be bullish about assets in the United States, particularly equities, while being that incredibly bearish about Europe.”

According to Fran Kinniry, a principal in Vanguard's Investment Strategy Group, 2012’s volatility will make diversification and long-term planning even more important. “[Investors] need to develop an asset allocation plan and really try not to get the short-term market to run their emotions."

Investing Ideas

So which stocks are poised to endure this period of volatility?

For ideas, we ran a screen on the S&P 500 for stocks paying dividend yields above 1% and sustainable payout ratios below 50%. We then ran DuPont analysis on these names to find those with the strongest sources of increasing return on equity (ROE) profitability year-over-year.

DuPont analysis breaks up a company’s ROE into three components: net margin, asset turnover, and leverage. Companies with increasing net margin, increasing asset turnover, and decreasing leverage are viewed favorably.

Do you think these companies have strong enough profitability to withstand next year’s expected volatility?

 

 

1. Entergy Corporation (ETR, Earnings, Analysts, Financials): Operates as an integrated energy company in the United States. Market cap of $12.75B. Dividend yield at 4.59%, payout ratio at 41.72%. MRQ Net Profit Margin increased to 18.64% from 14.94% year-over-year, Sales/Assets increased to 0.0867 from 0.0862, while Assets/Equity decreased to 4.22 from 4.28.

 

2. NYSE Euronext, Inc. (NYX, Earnings, Analysts, Financials): Operates securities exchanges. Market cap of $7.41B. Dividend yield at 4.24%, payout ratio at 48.77%. MRQ Net Profit Margin increased to 15.90% from 12.19% year-over-year, Sales/Assets increased to 0.10 from 0.08, while Assets/Equity decreased to 1.91 from 2.0.

 

3. General Electric Company (GE, Earnings, Analysts, Financials): Operates as a technology, service, and finance company worldwide. Market cap of $172.40B. Dividend yield at 3.67%, payout ratio at 47.38%. MRQ Net Profit Margin increased to 9.12% from 5.81% year-over-year, Sales/Assets increased to 0.0479 from 0.0466, while Assets/Equity decreased to 5.93 from 6.57.

 

4. Wisconsin Energy Corp. (WEC, Earnings, Analysts, Financials): Engages in the generation, distribution, and sale of electric energy and steam. Market cap of $7.64B. Dividend yield at 3.63%, payout ratio at 43.57%. MRQ Net Profit Margin increased to 12.33% from 11.53% year-over-year, Sales/Assets increased to 0.0795 from 0.0765, while Assets/Equity decreased to 3.34 from 3.38.

 

5. The Dow Chemical Company (DOW, Earnings, Analysts, Financials): Manufactures and supplies products used as raw materials in the production of customer products and services worldwide. Market cap of $33.08B. Dividend yield at 3.57%, payout ratio at 32.23%. MRQ Net Profit Margin increased to 5.96% from 4.64% year-over-year, Sales/Assets increased to 0.23 from 0.19, while Assets/Equity decreased to 2.77 from 3.01.

 

6. Northrop Grumman Corporation (NOC, Earnings, Analysts, Financials): Provides products, services, and solutions in aerospace, electronics, information systems, shipbuilding, and technical service sectors. Market cap of $15.0B. Dividend yield at 3.48%, payout ratio at 30.93%. MRQ Net Profit Margin increased to 7.86% from 7.03% year-over-year, Sales/Assets increased to 0.26 from 0.23, while Assets/Equity decreased to 2.10 from 2.29.

 

7. Chevron Corporation (CVX, Earnings, Analysts, Financials): Engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. Market cap of $204.76B. Dividend yield at 3.15%, payout ratio at 22.20%. MRQ Net Profit Margin increased to 12.15% from 7.58% year-over-year, Sales/Assets increased to 0.32 from 0.28, while Assets/Equity decreased to 1.69 from 1.73.

 

8. Eaton Corporation (ETN, Earnings, Analysts, Financials): Operates as a power management company worldwide. Market cap of $15.38B. Dividend yield at 2.96%, payout ratio at 35.17%. MRQ Net Profit Margin increased to 8.85% from 7.50% year-over-year, Sales/Assets increased to 0.23 from 0.21, while Assets/Equity decreased to 2.28 from 2.36.

 

 

(Written by Alexander Crawford. Accounting data sourced from Google Finance.)

 

Use Kapitall's Tools: Looking for ways to analyze this list?

Use this article snapshot as a launch pad (click here for help): Simply click on the links, and use Kapitall's tab navigation to browse through the data…

 

Analyze These Ideas: Getting Started

Dig Deeper: Access Company Snapshots, Charts, Filings

ABOUT US

© Kapitall, Inc. All rights reserved. Kapitall Wire is a division of Kapitall, Inc. Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

Kapitall Wire offers free cutting edge investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by Kapitall Inc., and its affiliate companies.

Open a free account today get access to virtual cash portfolios, cutting-edge tools, stock market insights, and a live brokerage platform through our affiliated company, Kapitall Generation, LLC. 

Securities products and services are offered by Kapitall Generation, LLC - a FINRA/SIPC member. 

playfor100kwirebanner2png

Leave a Reply

Protected by WP Anti Spam

playfor100kwirebannerpng