Make Millions Trading Stocks: J.P. Morgan's Top 30 Dividend Stocks for 2016

Wednesday, December 16, 2015

J.P. Morgan's Top 30 Dividend Stocks for 2016

Investors looking for yield in 2016 should consider one of J.P. Morgan's top stock picks for income.

J.P. Morgan equity analysts identified the most compelling income investment ideas for 2016 in their coverage group in a December 7 note to clients. Below is the list of stocks that made the analysts' top long ideas. Companies that trade below $5 million in average daily volume were excluded from the list.

The group is paired with ratings from TheStreet Ratings, TheStreet's proprietary ratings tool, for another perspective. Additional dividend and rating data is also provided by TheStreet Ratings, as of Dec. 13, 2015.

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equity market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Here's the list and when you're done check out Bank of America's 10 stock picks for 10 S&P sectors in 2016.

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Image result for 8point3 Energy Partners

1. 8point3 Energy Partners (CAFD )
Industry: Energy/Solar
Dividend Yield: 7.5%
Year-to-date return: -36.8%

JPMorgan Rating/Price Target: Overweight/$21
JPMorgan Analysts Said: We highlight CAFD as our top income oriented pick, a relatively safer, more conservatively-run company within our YieldCo coverage. The stock is yielding 7.5% on a FY16E DPS basis, and provides predictable income over the next several years, regardless of new projects beyond the initial portfolio. With two of the strongest companies in the solar industry serving as sponsors, enough liquidity on the balance sheet to fund growth-projects through mid-2016, and additional levers to pull in order to grow DPS if needed (e.g. payout ratio), we believe CAFD is undervalued.

TheStreet Said: not rated

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2. Accenture Plc (ACN - Get Report )
Industry: Technology/IT Consulting & Other Services
Dividend Yield: 2%
Year-to-date return: 19.1%

JPMorgan Rating/Price Target: Overweight/$117
JPMorgan Analysts Said: With a dividend payout ratio of 44% and dividend yield of 2%, we consider Accenture our favorite income oriented security, recognizing valuation is near peak multiples. Fundamentally, we believe its mix of business should result in above-average revenue growth, and mix allows for modest margin expansion (rare in IT Services), that should result in steady and attractive double-digit total returns to shareholders.

TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate ACCENTURE PLC as a Buy with a ratings score of A+. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The revenue growth came in higher than the industry average of 27.1%. Since the same quarter one year prior, revenues slightly increased by 1.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
ACN's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.50% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ACN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
ACCENTURE PLC has improved earnings per share by 6.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ACCENTURE PLC increased its bottom line by earning $4.76 versus $4.52 in the prior year. This year, the market expects an improvement in earnings ($5.20 versus $4.76).
The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the IT Services industry average, but is greater than that of the S&P 500. The net income increased by 5.2% when compared to the same quarter one year prior, going from $701.02 million to $737.63 million.
You can view the full analysis from the report here: ACN

T data by YCharts

3. AT&T Inc.(T - Get Report )
Industry: Telecom/Integrated Telecommunications Services
Dividend Yield: 5.6%
Year-to-date return: flat

JPMorgan Rating/Price Target: Overweight/$40
JPMorgan Analysts Said: AT&T shares currently yield a 5.6% dividend, which we believe is sustainable and will look even more solid as the company's free cash flow grows going forward and payout ratio comes down. We expect that AT&T will report a 7.3% EPS CAGR over the next three years ('15-'18) driven by DTV synergies and organic cost cutting. This compares to Verizon's 5.0% dividend and expected 2.5% EPS CAGR over the similar time frame, so we believe investors win with AT&T through both faster EPS growth and potential multiple expansion/dividend convergence.

We rate AT&T INC as a Buy with a ratings score of B-. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

T's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Net operating cash flow has increased to $10,797.00 million or 23.76% when compared to the same quarter last year. In addition, AT&T INC has also modestly surpassed the industry average cash flow growth rate of 16.21%.
The gross profit margin for AT&T INC is rather high; currently it is at 55.43%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.65% trails the industry average.
AT&T INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, AT&T INC reported lower earnings of $1.23 versus $3.41 in the prior year. This year, the market expects an improvement in earnings ($2.71 versus $1.23).
After a year of stock price fluctuations, the net result is that T's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
You can view the full analysis from the report here: T

CA data by YCharts

4. CA Inc. (CA - Get Report )
Industry: Technology/Systems Software
Dividend Yield: 3.5%
Year-to-date return: -8.9%

JPMorgan Rating/Price Target: Neutral/$31
JPMorgan Analysts Said: The current dividend yield for CA is 3.55%, well above the 2.07% for the S&P 500. We believe the dividend is safe as improvements in marketing and sales should help return the top line to growth in the middle of calendar 2016, while still seeing modest margin expansion.

We rate CA INC as a Hold with a ratings score of C+. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The gross profit margin for CA INC is currently very high, coming in at 85.27%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.31% trails the industry average.
Regardless of the drop in revenue, the company managed to outperform against the industry average of 15.5%. Since the same quarter one year prior, revenues slightly dropped by 6.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
Net operating cash flow has decreased to $45.00 million or 31.81% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Software industry average. The net income has significantly decreased by 32.0% when compared to the same quarter one year ago, falling from $256.00 million to $174.00 million.
You can view the full analysis from the report here: CA

CAG data by YCharts

5. ConAgra Foods Inc. (CAG - Get Report )
Industry: Consumer Non-Discretionary/Packaged Foods & Meats
Dividend Yield: 2.5%
Year-to-date return: 8.3%

JPMorgan Rating/Price Target: Overweight/$47
JPMorgan Analysts Said: Following 1) the recent sale of its Private Brands segment, 2) the announcement of the spin-off of Lamb Weston, 3) commentary around improving its margin structure in the Consumer segment, and 4) management's recognition that the company has not raised its dividend in years, we think CAG is heading in the right direction. For income-oriented investors, note that CAG has a great deal of cash coming in from the Private Brands sale, and that management has stated its commitment to a strong dividend. As noted above, CAG is our best idea heading into 2016.

We rate CONAGRA FOODS INC as a Hold with a ratings score of C+. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
Despite its growing revenue, the company underperformed as compared with the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 1.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
CONAGRA FOODS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CONAGRA FOODS INC swung to a loss, reporting -$1.49 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($2.26 versus -$1.49).
The debt-to-equity ratio is very high at 2.34 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.25, which clearly demonstrates the inability to cover short-term cash needs.
Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, CONAGRA FOODS INC's return on equity significantly trails that of both the industry average and the S&P 500.
You can view the full analysis from the report here: CAG

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6. Corning Inc. (GLW )
Industry: Technology/Electronic Components
Dividend Yield: 2.7%
Year-to-date return: -21.2%

JPMorgan Rating/Price Target: Overweight/$20
JPMorgan Analysts Said: We believe 4K TV demand is ramping strongly, and management execution has been solid in our opinion. We also note the company's focus on increased shareholder returns. Overall, we see the stock as undervalued on an ex-cash P/E basis despite growing EPS faster than peers.

We rate CORNING INC as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

GLW's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.30, which clearly demonstrates the ability to cover short-term cash needs.
The gross profit margin for CORNING INC is rather high; currently it is at 51.58%. Regardless of GLW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.33% trails the industry average.
GLW, with its decline in revenue, underperformed when compared the industry average of 1.7%. Since the same quarter one year prior, revenues fell by 10.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, CORNING INC's return on equity is below that of both the industry average and the S&P 500.
CORNING INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CORNING INC increased its bottom line by earning $1.73 versus $1.34 in the prior year. For the next year, the market is expecting a contraction of 20.2% in earnings ($1.38 versus $1.73).
You can view the full analysis from the report here: GLW

ETP data by YCharts

7. Energy Transfer Partners LP (ETP )
Industry: Energy/Oil & Gas Storage & Transportation
Dividend Yield: 12.6%
Year-to-date return: -55.5%

JPMorgan Rating/Price Target: Overweight/$73
JPMorgan Analysts Said: Double digit distribution secure, market underappreciates ETE support. We believe ETP has outlined a clear path to funding needed through YE16, after which ETP should start to realize the benefit of the ~$10bn of projects under construction. The ~$2.2bn drop down to SUN announced at the recent Analyst Day pre-funds nearly 70% of planned 2016 equity needs, with the potential for non-core asset sales and/or IDR waivers on future equity issuance to cover the balance. ETE's growth depends upon a strong ETP, and we believe ETE will do what it takes to defend ETP.

We rate ENERGY TRANSFER PARTNERS -LP as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

Net operating cash flow has significantly increased by 104.27% to $860.00 million when compared to the same quarter last year. In addition, ENERGY TRANSFER PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of -26.50%.
Along with the very weak revenue results, ETP underperformed when compared to the industry average of 36.8%. Since the same quarter one year prior, revenues plummeted by 55.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.65%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 77.27% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, ETP is still more expensive than most of the other companies in its industry.
The debt-to-equity ratio of 1.30 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, ETP maintains a poor quick ratio of 0.86, which illustrates the inability to avoid short-term cash problems.
You can view the full analysis from the report here: ETP

EPR data by YCharts

8. EPR Properties (EPR )
Industry: Financial Services/Specialized REITs
Dividend Yield: 6.5%
Year-to-date return: -4%

JPMorgan Rating/Price Target: Overweight/$65
JPMorgan Analysts Said: EPR's investment pipeline should drive about 6-7% earnings growth in 2016, and historically the company's dividend growth has roughly equated to earnings growth. Starting with an above-average 6.5% yield, we find this compelling for income-oriented investors.

We rate EPR PROPERTIES as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

EPR's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 17.5% when compared to the same quarter one year prior, going from $42.71 million to $50.20 million.
Net operating cash flow has increased to $64.42 million or 19.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.39%.
The gross profit margin for EPR PROPERTIES is currently very high, coming in at 73.12%. Regardless of EPR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, EPR's net profit margin of 46.18% significantly outperformed against the industry.
EPR PROPERTIES has improved earnings per share by 11.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EPR PROPERTIES reported lower earnings of $2.78 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($2.91 versus $2.78).
You can view the full analysis from the report here: EPR

FE data by YCharts

9. FirstEnergy Corp. (FE )
Industry: Utilities Non-Telecom/Electric Utilities
Dividend Yield: 4.6%
Year-to-date return: -20.5%

JPMorgan Rating/Price Target: Overweight/$38
JPMorgan Analysts Said: FirstEnergy is a de-risking and de-levering hybrid utility story that is well positioned to benefit from early-stage transmission growth. At a sizable discount to regulated peers despite deriving a shrinking portion of earnings from its power business, we think the company stands out as undervalued while paying a 3.8% yield. Its aggressive cost cutting efforts are expected to result in meaningful cash flow increases and a slowly de-levering balance sheet. We see these factors as slowly being priced into shares as 2016 progresses, even in a stagnant utility and commodity price landscape.

We rate FIRSTENERGY CORP as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

FE's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 6.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Electric Utilities industry average. The net income increased by 18.6% when compared to the same quarter one year prior, going from $333.00 million to $395.00 million.
FIRSTENERGY CORP has improved earnings per share by 17.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FIRSTENERGY CORP reported lower earnings of $0.50 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($2.71 versus $0.50).
Currently the debt-to-equity ratio of 1.76 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.32, which clearly demonstrates the inability to cover short-term cash needs.
The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Electric Utilities industry and the overall market, FIRSTENERGY CORP's return on equity is below that of both the industry average and the S&P 500.
You can view the full analysis from the report here: FE

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10. Foresight Energy LP (FELP )
Industry: Energy/Coal & Consumable Fuels
Dividend Yield: 57.1%
Year-to-date return: -84%

JPMorgan Rating/Price Target: Overweight/$38
JPMorgan Analysts Said: After the recent distribution cut, Foresight's distribution coverage is over 6.0x with much of the future cash flow dedicated to reducing leverage. It has over 80% of its coal sales priced for next year and its costs should improve as the low cost Hillsboro mine comes back into production early next year. It is also benefitting from cost synergies with the Murray operations. We believe Foresight's new distribution level is sustainable. With its 15.5% yield, we feel FELP could be attractive to income seeking investors.

We rate FORESIGHT ENERGY LP as a Sell with a ratings score of E+. This is based on a variety of negative investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins, generally disappointing historical performance in the stock itself, deteriorating net income and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The debt-to-equity ratio is very high at 18.59 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, FELP has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
The gross profit margin for FORESIGHT ENERGY LP is currently lower than what is desirable, coming in at 33.76%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 3.18% is above that of the industry average.
Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 83.17%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 82.85% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 82.3% when compared to the same quarter one year ago, falling from $45.72 million to $8.07 million.
FORESIGHT ENERGY LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FORESIGHT ENERGY LP increased its bottom line by earning $0.78 versus $0.08 in the prior year. For the next year, the market is expecting a contraction of 67.9% in earnings ($0.25 versus $0.78).
You can view the full analysis from the report here: FELP

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12. General Motors (GM )
Industry: Consumer Goods & Services/Automobile Manufacturers
Dividend Yield: 4%
Year-to-date return: 1.5%

JPMorgan Rating/Price Target: Overweight/$47
JPMorgan Analysts Said: Even after a recent rally, GM still trades at just 3.1x NTM EBITDAPO, a discount to the low-end of our sense of its normalized historical trading range of roughly 3.5x to 4.5x, despite significant structural improvements in the North American automotive industry and the company, which in our view argue for a premium to history. Auto parts suppliers, for example, trade at material premiums to history (7.0x NTM EBITDAP vs. 5.3x long-run average), largely given the improvements at OEMs such as General Motors, which have made for a structurally healthier and more profitable industry for all market participants. We note GM also sports a 4.0% dividend yield, making it attractive to income oriented investors, and yields 8.5% free cash flow to equity, on our 2016 estimates. GM has another $2.1 billion remaining on a repurchase program management intends to complete by 2016-end, equating to another 4% of shares outstanding (on top of the over 5% repurchased to date).

We rate GENERAL MOTORS CO as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Automobiles industry and the overall market, GENERAL MOTORS CO's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
Net operating cash flow has significantly increased by 204.04% to $3,308.00 million when compared to the same quarter last year. In addition, GENERAL MOTORS CO has also vastly surpassed the industry average cash flow growth rate of 12.29%.
The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
GENERAL MOTORS CO's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENERAL MOTORS CO reported lower earnings of $1.64 versus $2.35 in the prior year. This year, the market expects an improvement in earnings ($4.78 versus $1.64).
GM, with its decline in revenue, underperformed when compared the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 1.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
You can view the full analysis from the report here: GM

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13. Gilead Sciences Inc. (GILD )
Industry: Health Care/Biotechnology
Dividend Yield: 1.7%
Year-to-date return: 6.6%

JPMorgan Rating/Price Target: Overweight/$133
JPMorgan Analysts Said: As GILD continues to look for further growth drivers beyond HIV and HCV, investor focus unsurprisingly centers on future BD (optionality remains strong with $25B in cash at 3Q15). In the meantime, HCV has turned into a mammoth cash cow allowing GILD to generate ~$15.5B in FCF over the first 9 months of 2015. With ~$11B remaining in its current share repo plan paired with a $0.43/share dividend, we expect GILD to continue returning cash to shareholders.

We rate GILEAD SCIENCES INC as a Buy with a ratings score of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, attractive valuation levels, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The revenue growth came in higher than the industry average of 13.4%. Since the same quarter one year prior, revenues rose by 37.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
GILEAD SCIENCES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GILEAD SCIENCES INC increased its bottom line by earning $7.38 versus $1.83 in the prior year. This year, the market expects an improvement in earnings ($12.19 versus $7.38).
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 68.4% when compared to the same quarter one year prior, rising from $2,731.27 million to $4,600.00 million.
The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, GILEAD SCIENCES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
You can view the full analysis from the report here: GILD

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14. Goldcorp Inc. (GG )
Industry: Materials/Gold
Dividend Yield: 2%
Year-to-date return: -40%

JPMorgan Rating/Price Target: Overweight/$21
JPMorgan Analysts Said: Goldcorp has one of the youngest portfolios of gold assets. While it has disappointed recently with the timelines on two of its new mines we see this as a teething problem rather than any fundamental flaw. Even after its recent dividend cut, the stock, at 2%, has one of the highest and best supported yields in our gold coverage.

We rate GOLDCORP INC as a Sell with a ratings score of D+. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 336.4% when compared to the same quarter one year ago, falling from -$44.00 million to -$192.00 million.
Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market, GOLDCORP INC's return on equity significantly trails that of both the industry average and the S&P 500.
Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 39.73%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 283.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
GOLDCORP INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GOLDCORP INC continued to lose money by earning -$2.67 versus -$3.30 in the prior year. This year, the market expects an improvement in earnings ($0.12 versus -$2.67).
GG's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that GG's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
You can view the full analysis from the report here: GG

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15. Honeywell International (HON )
Industry: Industrials/Aerospace & Defense
Dividend Yield: 2%
Year-to-date return: -0.94%

JPMorgan Rating/Price Target: Overweight/$121
JPMorgan Analysts Said: HON is our top pick and a core EE/MI holding. While fundamentals are not best-in-class, we see HON as the best Energy play within the group with overall profit growth continuing to stand out next year, driven by high business quality and ongoing execution around cost and margins. And with '17 the "inflection" year for revenues and Elster accretion, coupled with plenty of balance sheet optionality, we believe the stock deserves to trade at a premium versus an average discount across a range of metrics, including an adjustment for pension.

We rate HONEYWELL INTERNATIONAL INC as a Buy with a ratings score of A+. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

HONEYWELL INTERNATIONAL INC has improved earnings per share by 8.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HONEYWELL INTERNATIONAL INC increased its bottom line by earning $5.33 versus $4.92 in the prior year. This year, the market expects an improvement in earnings ($6.10 versus $5.33).
The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Aerospace & Defense industry average. The net income increased by 8.3% when compared to the same quarter one year prior, going from $1,167.00 million to $1,264.00 million.
Net operating cash flow has increased to $1,666.00 million or 35.11% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 21.56%.
After a year of stock price fluctuations, the net result is that HON's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
The current debt-to-equity ratio, 0.60, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.
You can view the full analysis from the report here: HON

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16. Interpublic Group of Companies Inc. (IPG )
Industry: Consumer Goods & Services/Advertising
Dividend Yield: 2%
Year-to-date return: 8.2%

JPMorgan Rating/Price Target: Overweight/$121
JPMorgan Analysts Said: Interpublic is our income play in our media universe. While other stocks we cover offer a higher yield than IPG's 2.1%, the company's double digit EPS growth projections for 2016 (following an estimated 18% in 2015) will also likely be a driver of outperformance for the year. While results can be somewhat volatile for IPG, we would point to record new business win backlog this year, which improves our conviction that the better than average recent organic revenue growth trends will continue next year. At 18x our 2016 EPS estimate, we find IPG shares attractive at current levels for another projected year of healthy double digit total returns.

We rate INTERPUBLIC GROUP OF COS as a Buy with a ratings score of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

Despite its growing revenue, the company underperformed as compared with the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Media industry and the overall market, INTERPUBLIC GROUP OF COS's return on equity significantly exceeds that of both the industry average and the S&P 500.
Net operating cash flow has significantly increased by 59.42% to $280.90 million when compared to the same quarter last year. In addition, INTERPUBLIC GROUP OF COS has also vastly surpassed the industry average cash flow growth rate of 8.14%.
The debt-to-equity ratio is somewhat low, currently at 0.94, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
You can view the full analysis from the report here: IPG

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17. Iron Mountain Inc.(IRM )
Industry: Financial Services/Specialized REITs
Dividend Yield: 7%
Year-to-date return: -32.4%

JPMorgan Rating/Price Target: Overweight/$42
JPMorgan Analysts Said: Iron Mountain is the largest global vendor of business records management services. We view IRM as a growing annuity stream business with strong cash flows, as business record storage has not tracked the decline in paper demand. The higher margin Storage business (60% of revs) has seen stable organic revenue growth, and Service revenues have begun to stabilize. IRM is taking advantage of opportunities to improve margins, particularly in Services, which should help the company achieve dividend growth goals. The closing of the pending acquisition of #2 competitor Recall (expected early 2016) could be a catalyst for the shares. At 6.8%, IRM's div. yield compares favorably to those of traditional industrial and self-storage REITs at 4.0% and 2.9%, respectively, as well as non-traditional data center REITs at 4.1%.

We rate IRON MOUNTAIN INC as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 34915.2% when compared to the same quarter one year prior, rising from $0.07 million to $23.11 million.
Net operating cash flow has increased to $140.36 million or 32.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.39%.
The gross profit margin for IRON MOUNTAIN INC is rather high; currently it is at 57.45%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, IRM's net profit margin of 3.09% significantly trails the industry average.
Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, IRON MOUNTAIN INC's return on equity exceeds that of both the industry average and the S&P 500.
This stock's share value has moved by only 27.41% over the past year. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
You can view the full analysis from the report here: IRM

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18. KLA-Tencor Corp. (KLAC )
Industry: Technology/Semiconductor Equipment
Dividend Yield: 3%
Year-to-date return: -3.8%

JPMorgan Rating/Price Target: Overweight/$78
JPMorgan Analysts Said: KLA-Tencor, which is in the process of being acquired by Lam Research, continues to deliver best-in-class dividends as a result of its solid operational performance and strong free cash flow generation. The company's current dividend yield is at 3.1%.

We rate KLA-TENCOR CORP as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 45.2% when compared to the same quarter one year prior, rising from $72.23 million to $104.90 million.
The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, KLA-TENCOR CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
KLA-TENCOR CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KLA-TENCOR CORP reported lower earnings of $2.25 versus $3.47 in the prior year. This year, the market expects an improvement in earnings ($3.54 versus $2.25).
After a year of stock price fluctuations, the net result is that KLAC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
The debt-to-equity ratio is very high at 10.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.00, which shows the ability to cover short-term cash needs.
You can view the full analysis from the report here: KLAC

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19. Lockheed Martin Corp. (LMT )
Industry: Industrials/Aerospace & Defense
Dividend Yield: 3%
Year-to-date return: 12.5%

JPMorgan Rating/Price Target: Neutral/$225
JPMorgan Analysts Said: Lockheed is a leading defense company in an attractive market with a capable management team focused on shareholder returns. The company intends to return roughly all of its cash from ops to shareholders through 2017 (~$5bn annually) through share repurchases and dividends with the current yield of 3.0% leading the group.

We rate LOCKHEED MARTIN CORP as a Buy with a ratings score of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

LMT's revenue growth has slightly outpaced the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 3.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Aerospace & Defense industry and the overall market, LOCKHEED MARTIN CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
Net operating cash flow has significantly increased by 53.23% to $1,517.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 21.56%.
LOCKHEED MARTIN CORP reported flat earnings per share in the most recent quarter. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LOCKHEED MARTIN CORP increased its bottom line by earning $11.21 versus $9.04 in the prior year. This year, the market expects an improvement in earnings ($11.35 versus $11.21).
You can view the full analysis from the report here: LMT

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20. Michaels Cos. Inc. (MIK )
Industry: Consumer Goods & Services/Specialty Stores
Dividend Yield: n/a
Year-to-date return: -9.9%

JPMorgan Rating/Price Target: Overweight/$32
JPMorgan Analysts Said: MIK's results over the past year point to the company's success in improving merchandising, marketing, and in-store execution plus the benefits of having a functioning e-commerce website. We believe part of the challenge for the bears is both a lack of appreciation for the category as well as missing the historical context of how leadership has evolved. Indeed, the difference in focus on "the front end" under CEO Chuck Rubin (who arrived in 2013) vs. a more process-oriented and margin-focused CEO prior to his arrival left a lot of impactful, low hanging fruit opportunities. Finally, while we acknowledge that longer term the sustainable comp is lower than the recent ~4% underlying trend, we point to the low volatility of sales, high cash generative nature of the business, barriers to entry (e.g., high SKU density, low inventory turns, lack of brands), and MIK's market leadership as reasons why the multiple has the potential to expand over time (a la AZO). Balance sheet de-levering should also make the PE look increasingly cheap over time and transfer cash/value to equity holders.

We rate MICHAELS COS INC as a Sell with a ratings score of D+. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

Net operating cash flow has decreased to $94.64 million or 40.85% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
After a year of stock price fluctuations, the net result is that MIK's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
42.37% is the gross profit margin for MICHAELS COS INC which we consider to be strong. Regardless of MIK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.57% trails the industry average.
MICHAELS COS INC has improved earnings per share by 19.4% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($1.70 versus $1.04).
The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Specialty Retail industry average. The net income increased by 20.0% when compared to the same quarter one year prior, going from $64.00 million to $76.80 million.
You can view the full analysis from the report here: MIK

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21. PACCAR Inc. (PCAR )
Industry: Industrials/Construction & Farm Machinery & Heavy Trucks
Dividend Yield: 1.9%
Year-to-date return: -30%

JPMorgan Rating/Price Target: Neutral/$55
JPMorgan Analysts Said: We are Neutral on PCAR as the company faces the risk of both lower volume and margin pressure from declining demand in its core NA HD truck business in 2016. However, we believe PCAR should command a premium valuation due to its track record of solid execution. In addition, PCAR pays out a normal and a special dividend which, in total, should equal ~50% of net income and currently offers a yield of 4.1% (JPMe total payout of ~$2.12/share) making it potentially attractive to income-oriented investors.

We rate PACCAR INC as a Buy with a ratings score of B-. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, notable return on equity, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

PACCAR INC has improved earnings per share by 16.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PACCAR INC increased its bottom line by earning $3.82 versus $3.30 in the prior year. This year, the market expects an improvement in earnings ($4.58 versus $3.82).
The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 16.1% when compared to the same quarter one year prior, going from $371.40 million to $431.20 million.
The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market, PACCAR INC's return on equity exceeds that of both the industry average and the S&P 500.
Despite the weak revenue results, PCAR has outperformed against the industry average of 21.6%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
You can view the full analysis from the report here: PCAR

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22. Pan American Silver Corp. (PAAS )
Industry: Materials
Dividend Yield: 2.8%
Year-to-date return: -29%

JPMorgan Rating/Price Target: Neutral/$7.50
JPMorgan Analysts Said: The weak silver sentiment has raised PAAS' dividend yield to 2.8% which we feel is well supported by PAAS' strong balance sheet and its healthy liquidity position of $566mn. The company is also advancing two growth projects, expected to add 5moz of silver and 128koz of gold pa to its production from 2018. Its costs are also improving, helped by devalued operating currencies and productivity improvements.

We rate PAN AMERICAN SILVER CORP as a Sell with a ratings score of D. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 231.0% when compared to the same quarter one year ago, falling from -$20.25 million to -$67.05 million.
Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, PAN AMERICAN SILVER CORP's return on equity significantly trails that of both the industry average and the S&P 500.
Net operating cash flow has decreased to $32.87 million or 14.64% when compared to the same quarter last year. Despite a decrease in cash flow PAN AMERICAN SILVER CORP is still fairing well by exceeding its industry average cash flow growth rate of -28.24%.
Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.22%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 193.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
PAN AMERICAN SILVER CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, PAN AMERICAN SILVER CORP reported poor results of -$3.62 versus -$2.98 in the prior year. This year, the market expects an improvement in earnings (-$0.35 versus -$3.62).
You can view the full analysis from the report here: PAAS

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23. Procter & Gamble Co. (PG )
Industry: Consumer Non-Discretionary/Household Products
Dividend Yield: 3.4%
Year-to-date return: -14%

JPMorgan Rating/Price Target: Overweight/$88
JPMorgan Analysts Said: Procter looks poised to rebound given weak performance in 2015, improving organic sales growth (off a very low base), and accelerating EPS growth. PG offers a 3.5% dividend yield, which should remain attractive, even in the context of a rising rate environment. Furthermore, Procter recently highlighted that organic sales growth should have bottomed in CQ3 '15, as the company launches more new products and puts slightly less focus on gross margins and portfolio restructuring going forward.

We rate PROCTER & GAMBLE CO as a Buy with a ratings score of B. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Household Products industry average. The net income increased by 30.7% when compared to the same quarter one year prior, rising from $1,990.00 million to $2,601.00 million.
The gross profit margin for PROCTER & GAMBLE CO is rather high; currently it is at 55.64%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.73% is above that of the industry average.
The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that PG's debt-to-equity ratio is low, the quick ratio, which is currently 0.55, displays a potential problem in covering short-term cash needs.
Regardless of the drop in revenue, the company managed to outperform against the industry average of 16.9%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
PROCTER & GAMBLE CO's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PROCTER & GAMBLE CO reported lower earnings of $3.01 versus $3.85 in the prior year. This year, the market expects an improvement in earnings ($3.75 versus $3.01).
You can view the full analysis from the report here: PG

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24. Solar Capital Ltd. (SLRC )
Industry: Financial Services/Asset Management & Custody Banks
Dividend Yield: 9.3%
Year-to-date return: -10.6%

JPMorgan Rating/Price Target: Overweight/$20.50
JPMorgan Analysts Said: We believe SLRC provides a unique combination of dividend stability, potential price appreciation, and a hedge against rising interest rates (beyond 100bps). SLRC's low multiple (0.85x of NAV) is due to is below average ROE, which is a function of portfolio repayments and low leverage. Unlike many BDC peers, SLRC has no exposure to the volatile energy sector. We believe as SLRC re-levers its balance sheet, ROE will improve and the discount to NAV will narrow. Meanwhile, the 8.8% dividend yield helps compensate shareholders as they wait.

We rate SOLAR CAPITAL LTD as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 7.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
The gross profit margin for SOLAR CAPITAL LTD is rather high; currently it is at 68.53%. Regardless of SLRC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SLRC's net profit margin of 0.28% is significantly lower than the industry average.
SOLAR CAPITAL LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SOLAR CAPITAL LTD reported lower earnings of $1.12 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus $1.12).
Net operating cash flow has declined marginally to -$127.54 million or 2.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
In its most recent trading session, SLRC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
You can view the full analysis from the report here: SLRC

TGP data by YCharts

25. Teekay LNG Partners LP (TGP )
Industry: Energy/Oil & Gas Storage & Transportation
Dividend Yield: 15.3%
Year-to-date return: -60%

JPMorgan Rating/Price Target: Overweight/$37
JPMorgan Analysts Said: Given our view on LNG shipping, we prefer high charter coverage, and Teekay LNG outperforms its peers here. This, combined with its position in promoting new technologies and its diversity of charterer relationships, results in TGP being our top pick within the LNG segment. We view the 12.7% distribution as sustainable and expect moderate dividend growth in 2017+.

We rate TEEKAY LNG PARTNERS LP as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

Net operating cash flow has significantly increased by 109.59% to $85.16 million when compared to the same quarter last year. In addition, TEEKAY LNG PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -26.50%.
The gross profit margin for TEEKAY LNG PARTNERS LP is currently very high, coming in at 75.05%. Regardless of TGP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TGP's net profit margin of 7.61% compares favorably to the industry average.
TEEKAY LNG PARTNERS LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, TEEKAY LNG PARTNERS LP reported lower earnings of $2.30 versus $2.49 in the prior year. For the next year, the market is expecting a contraction of 7.2% in earnings ($2.14 versus $2.30).
The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, TGP has a quick ratio of 0.51, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
You can view the full analysis from the report here: TGP

TXN data by YCharts

26. Texas Instruments Inc. (TXN )
Industry: Technology/Semiconductors
Dividend Yield: 2.4%
Year-to-date return: 5.2%

JPMorgan Rating/Price Target: Overweight/$62
JPMorgan Analysts Said: We continue to favor TXN on margin performance, broad end-market exposure, cash generation and capital return strategy. We anticipate further gross margin upside as product mix becomes richer and as more products are manufactured at TI's 300mm fab over time (move to 300mm over time should drive 15% product cost reductions). TI's end-market diversification is paying off as weaker end-markets are being offset by stronger end-markets. With disciplined capital expenditures, TI continues to generate significant cash and will likely continue its 100% target payout ratio. TI's dividend yield of 2.6% is near its three-year average and the company has grown its dividend in each of the past five years.

We rate TEXAS INSTRUMENTS INC as a Buy with a ratings score of A+. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations, solid stock price performance and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, TXN has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TEXAS INSTRUMENTS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
Net operating cash flow has slightly increased to $1,409.00 million or 1.87% when compared to the same quarter last year. In addition, TEXAS INSTRUMENTS INC has also modestly surpassed the industry average cash flow growth rate of -5.51%.
TEXAS INSTRUMENTS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TEXAS INSTRUMENTS INC increased its bottom line by earning $2.58 versus $1.92 in the prior year. This year, the market expects an improvement in earnings ($2.72 versus $2.58).
Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
You can view the full analysis from the report here: TXN

CG data by YCharts

27. The Carlyle Group LP (CG )
Industry: Financial Services/Asset Management & Custody Banks
Dividend Yield: 18.1%
Year-to-date return: -45%

JPMorgan Rating/Price Target: Overweight/$31
JPMorgan Analysts Said: Carlyle is positioned to generate attractive distributions yields in 2016 and 2017. Here we see positives being significant dry powder with opportunities in energy, a step up in management fees in early 2016 as new capital is put to work, and public portfolio valuations on track to rebound nicely in 4Q. We expect distributable earnings and distributions to remain elevated with US private equity funds in its harvesting cycle, supplemented by performance in Asian/European pre-financial crisis vintage funds. Given payouts of 75-85%, we estimate $2.44 in 2017 dividends, representing 13.7% yield on Carlyle's current stock price.

We rate CARLYLE GROUP LP as a Sell with a ratings score of D. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins and feeble growth in its earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 430.3% when compared to the same quarter one year ago, falling from $25.40 million to -$83.90 million.
Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Capital Markets industry and the overall market, CARLYLE GROUP LP's return on equity significantly trails that of both the industry average and the S&P 500.
The gross profit margin for CARLYLE GROUP LP is currently extremely low, coming in at 11.33%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -28.20% is significantly below that of the industry average.
CARLYLE GROUP LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CARLYLE GROUP LP reported lower earnings of $1.26 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($1.45 versus $1.26).
CG, with its very weak revenue results, has greatly underperformed against the industry average of 5.7%. Since the same quarter one year prior, revenues plummeted by 60.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
You can view the full analysis from the report here: CG

TMO data by YCharts

28. Thermo Fisher Scientific Inc. (TMO )
Industry: Health Care/Life Sciences Tools & Services
Dividend Yield: 0.44%
Year-to-date return: 8.1%

JPMorgan Rating/Price Target: Overweight/$160
JPMorgan Analysts Said: As a dominant supplier to the diversified life science tools, diagnostics, and broader industrial markets, Thermo should continue to be an industry consolidator in 2016 as the company utilizes growing free cash flow for accretive acquisitions, as well as share buybacks (announced $1B repurchase authorization in November) and the dividend, while a growing presence in key emerging markets, combined with potential for continued margin expansion and healthy end markets (biopharma in particular) make TMO a compelling investment in our view.

We rate THERMO FISHER SCIENTIFIC INC as a Buy with a ratings score of A+. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, reasonable valuation levels, good cash flow from operations and growth in earnings per share. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Life Sciences Tools & Services industry average. The net income increased by 0.9% when compared to the same quarter one year prior, going from $471.60 million to $476.10 million.
Net operating cash flow has increased to $743.90 million or 10.04% when compared to the same quarter last year. In addition, THERMO FISHER SCIENTIFIC INC has also modestly surpassed the industry average cash flow growth rate of 0.44%.
THERMO FISHER SCIENTIFIC INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, THERMO FISHER SCIENTIFIC INC increased its bottom line by earning $4.70 versus $3.49 in the prior year. This year, the market expects an improvement in earnings ($7.39 versus $4.70).
You can view the full analysis from the report here: TMO

WFC data by YCharts

29. Wells Fargo & Co. (WFC )
Industry: Financial Services/Diversified Banks
Dividend Yield: 2.8%
Year-to-date return: -3%

JPMorgan Rating/Price Target: Overweight/$59
JPMorgan Analysts Said: We recommend Wells Fargo into 2016 for several reasons: 1) a safe haven stock in a choppy, uncertain time period; 2) some benefit from acquisitions from GE Capital; 3) continued growth in several other areas - investment banking, credit cards, and payments; and 4) continued sizable capital return.

We rate WELLS FARGO & CO as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in stock price during the past year, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

WFC's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
WELLS FARGO & CO's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WELLS FARGO & CO increased its bottom line by earning $4.10 versus $3.89 in the prior year. This year, the market expects an improvement in earnings ($4.16 versus $4.10).
After a year of stock price fluctuations, the net result is that WFC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
Net operating cash flow has increased to $18,937.00 million or 25.72% when compared to the same quarter last year. Despite an increase in cash flow of 25.72%, WELLS FARGO & CO is still growing at a significantly lower rate than the industry average of 301.19%.
The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 92.60%. Regardless of WFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 25.35% trails the industry average.
You can view the full analysis from the report here: WFC

WY data by YCharts

30. Weyerhaeuser Co.(WY )
Industry: Financial Services/Specialized REITs
Dividend Yield: 4%
Year-to-date return: -16.4%

JPMorgan Rating/Price Target: Neutral/$34
JPMorgan Analysts Said: We think WY's underperformance in 2015 and an attractive dividend yield of 3.9% makes it a good way to play a further recovery in housing. Its pending acquisition of Plum Creek (PCL) should generate free cash flow accretion in year one, increase the company's exposure to timber, and allow the company to use its strong balance sheet and free cash flow to continue to return cash to shareholders.

We rate WEYERHAEUSER CO as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

WEYERHAEUSER CO reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WEYERHAEUSER CO increased its bottom line by earning $1.38 versus $0.83 in the prior year. For the next year, the market is expecting a contraction of 25.4% in earnings ($1.03 versus $1.38).
WY, with its decline in revenue, underperformed when compared the industry average of 6.1%. Since the same quarter one year prior, revenues slightly dropped by 5.0%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, WEYERHAEUSER CO's return on equity is below that of both the industry average and the S&P 500.
WY has underperformed the S&P 500 Index, declining 14.21% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
You can view the full analysis from the report here: WY

By Laurie Kulikowski

Source:http://www.thestreet.com/story/13398412/1/j-p-morgan-s-top-30-dividend-stocks-for-2016.html?kval=dontmiss

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Wednesday, December 16, 2015

J.P. Morgan's Top 30 Dividend Stocks for 2016

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