Chasing a Bounce
Although JPMorgan Chase (JPM) beat expectations on Jan. 15, reporting net income of $3.28 billion, up from $702 million a year earlier, its shares dropped 2.3%, to 44. CEO Jamie Dimon called the bank's fourth-quarter performance "a little disappointing" as fixed-income trading revenue fell from the previous three months and the bank's retail unit posted its first quarterly loss in nearly two years. Still, among 30 analysts who follow the stock, the average estimate for where shares will trade 12 months from now is nearly 55. In a report, analysts at independent firm Collins Stewart described JPMorgan's results as weaker than anticipated but said they expect the stock to reach 53 by yearend, given the bank's capital and competitive position. "The strength of the balance sheet is evident," stated the report.
Russian Stocks Rocket
Russia's MICEX Index hit a 17-month high on Jan. 18. The index of 30 large stocks is up about 8% in 2010 after rising 121% in 2009. Moscow-based UBS (UBS) analyst Dmitry Vinogradov is among many Russia bulls betting the rally will continue. "Russia is the least expensive market in the global emerging-market universe despite having one of the highest earnings growth [rates]," he wrote in a Jan. 18 report. UBS estimates 2010 earnings per share for the index will grow 38%.
A low-cost way into Russian stocks is the $1.7 billion Market Vectors Russia Exchange-Traded Fund (RSX). With 42% of assets in energy as of Dec. 31, according to Morningstar (MORN), it's a commodity bet. And the new $13 million iShares MSCI Emerging Markets Eastern Europe Index (ESR) has about 60% in Russia.
It Pays to Be Good
Who says nice guys finish last? The ING Socially Responsible Investments Index, which tracks the stocks of 50 companies, returned 47.4% in 2009. That handily beat the 26.5% gain of the Standard & Poor's 500-stock index. A review of the 145 socially responsible equity mutual and exchange-traded funds tracked by Morningstar (MORN) shows that 65% outperformed the S&P 500 last year.
Many socially responsible investing (SRI) funds shun alcohol, tobacco, gaming, and defense companies and embrace tech. So they have benefited from the 2009 returns of popular SRI holdings including Cisco (CSCO) (+46.9%), Microsoft (MSFT) (+60.5%), Google (GOOG) (+101.5%), and Intel (INTC) (+43.9%). Among the SRI funds that are highly rated by Morningstar, Parnassus Workplace Fund (PARWX) topped the list with a 62% return last year. Over 10 years, two funds, Parnassus Equity Income (PRBLX) and New Alternatives (NALFX), gained nearly 7% a year, on average, vs. a 9% cumulative loss for the S&P 500 over the same period.