The Zacks Analyst Blog Highlights: Exxon Mobil, General Electric, Johnson &
Johnson, Wells Fargo and Verizon Communications
CHICAGO, Feb. 26, 2013
CHICAGO, Feb. 26, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Exxon Mobil (NYSE:XOM), General
Electric Company (NYSE:GE), Johnson & Johnson (NYSE:JNJ), Wells Fargo
(NYSE:WFC) and Verizon Communications Inc. (NYSE:VZ).
Get the most recent insight from Zacks Equity Research with the free Profit
from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Monday's Analyst Blog:
Demystifying the 'Great Rotation'
It has been reported that there were very large net inflows into equity mutual
funds in January, which reversed a nearly two-year trend. As a result, equity
inflows surpassed purchases of bonds by a wide margin last month.
However, for there to be a meaningful rotation, funds need to flow from bonds
to stocks. Bond funds still garnered tens of billions of dollars in January,
which (though less than before) is counterintuitive to the notion of a Great
The 'dash from cash' theory is also plausible but similarly weakened by
continued accumulation in money market funds. Instead, investors appear to be
allocating more for stocks, less for bonds and trimming their cash reserves.
The economy-wide allocation for equity in December 2012 was not terribly shy
of normal levels, thereby stifling theories that investors have been keeping
away from equities (and are therefore now more likely to embrace stocks).
For those still seeking shelter in bonds, expecting the generous returns from
the past three decades would not be wise. Investors who consider the current
government bond yield of lower than 2% a bad deal wouldn't like it a bit to
see interest rates pick up again. Financial markets were temporarily roiled
last week on rumors that the Fed would gradually reduce its
multi-billion-dollar monthly bond buybacks which have kept rates rock bottom
The chase for yield is therefore increasingly pushing investors to embrace
higher levels of risk, be it in the form of junk bonds or emerging market
bonds. Even the most bearish of equity pundits are re-evaluating their 'wait
and see' position, as they are concerned about missing out on reasonable
domestic stock valuations.
The S&P 500 is trading at a P/E of about 14x, which is well within its
historical range. Equities, therefore, still offer compelling value despite
the run-up in prices since the Great Recession. Not only are equity valuations
favorable, but many offer a better yield than government bonds.
Exxon Mobil (NYSE:XOM) provides a dividend yield of about 2.58%. General
Electric Company (NYSE:GE) offers a yield of 3.45%. Johnson & Johnson
(NYSE:JNJ) and Wells Fargo (NYSE:WFC) stand at approximately 3.36% and 2.51%,
respectively. We are not even considering share buyback programs of some of
these income-oriented stocks, which may drive up their composite yield by as
much as a couple more percentage points.
Using our value-oriented approach, we found gazebo stocks in other sectors as
well. Verizon Communications Inc. (NYSE:VZ), for example, offers a strong
dividend yield of 4.96%.
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