I am always on the hunt to pick up those stocks which the investment managers are betting upon aggressively. My ideology is plain and simple -- to identify who has skin in the game. This time i took into my analysis Wedbush Securities.
For the third consecutive time, Wedbush Securities made a sweeping victory in Barron's-Zacks top stock pickers. The firm grabbed the gold medal with a strong 73% return over its 36-month performance period. This news made me browse through the recent 13F filings of Wedbush Securities.
The firm has its concentration mainly on financial stocks, which constitute 31% of its portfolio, followed by the services sector with a roughly 14% share. Screening its portfolio this time, I picked up three stocks: General Electric Company (NYSE:GE), Pfizer Inc. (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ).
Both General Electric and Pfizer are among the top five holdings of this firm, whereas with a reduction in holdings of 2%, Johnson & Johnson stands at No. 12. All the three companies are known for their good dividend yields, so you will love them if you are an income investor. Also, looking at their long term growth plans, these stocks also offer an appealing opportunity to value investors.
Let's discuss these stocks in detail.
|Companies||Forward Annual Dividend Yield (~)|
|General Electric (NYSE:GE)||3.40%|
|Johnson & Johnson (NYSE:JNJ)||3.20%|
Source: Yahoo Finance
General Electric Company (NYSE:GE)
General Electric, the conglomerate, has always remained a favorite among the investors with its attractive dividend yield. The company has given a dividend yield of ~4.20% in the last five years. In December 2012, the company further increased its dividend by ~12% which was the fifth increase in the last three years. Its forward dividend yield currently stands at ~3.40%.
My confidence in the stock was further strengthened when I had a look at Q4 12 as well as FY 2012 results. The revenue of the company was up by ~4% in the quarter with its industrial segment revenue up by ~9%. Despite the mixed global environment, GE has the strongest-ever backlog for equipment and services at around $53 billion and $157 billion, respectively. With this largest ever backlog, I sense great opportunities for the company for good organic growth in 2013.
Recently, General Electric announced the sale of its remaining 49% equity stake in NBC Universal to Comcast Corporation (NASDAQ:CMCSA) for ~$16.7 billion. This followed the company's earlier step of reducing its ownership in NBC Universal from 80% to 49% in 2011. This deal is a win-win situation for GE as well as Comcast. With this deal, GE will get cash to focus more on its core business segments. On the other hand, Comcast will be benefiting by the ever increasing prices of sports and other TV programs with its majority stake in NBC.
I expect that GE will use the money from this deal to further speed up its share buyback plan for around $10 billion in 2013. This will enhance the total cash return to its shareholders to ~$18 billion in 2013. Also, via this money, GE will continue to invest in its highly profitable segments such as its industrial business. With balances capital allocation policy and better than expected results, I expend an uptrend in this stock for the rest of the year and advise it to be a buy.