However hard the market slams a stock, there's always a chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound by examining one specific sector of the economy in search of companies with rising ratings.
Among the 14 stocks in CAPS' Conglomerates sector, we've unearthed a handful with high four-star ratings. Those accolades mean that our 135,000-plus CAPS investors are confident that these stocks will beat the market in the months ahead:
|
Company
|
CAPS Rating Today (Out of 5)
|
Recent Price
|
52-Week Price Change
|
Estimated Long-Term Growth Rate
|
|
General Electric (NYSE: GE )
|
****
|
$13.40
|
(53%)
|
8%
|
|
United Technologies (NYSE: UTX )
|
****
|
$55.50
|
(19%)
|
9%
|
|
Textron (NYSE: TXT )
|
****
|
$11.43
|
(80%)
|
9%
|
|
3M (NYSE: MMM )
|
*****
|
$60.46
|
(21%)
|
10%
|
|
Mitsui & Co. (Nasdaq: MITSY )
|
*****
|
$266.27
|
(42%)
|
9%
|
Sources: Motley Fool CAPS; Yahoo! Finance.
Diversification is expected to smooth out the bumps in investing. A broad basket of stocks may limit some of the upside potential, but it's also supposed to protect you from the manic swings to the downside. Conglomerates such as GE and United Technologies operate in a similar fashion. Their broad diversification of businesses won't have you investing in any dot com-like rocket stock; rather, you'll have a steady performer on your hands.
At least that's the way it's supposed to work. In the current climate, however, there hasn't been much downside protection for any business. The average conglomerate in CAPS is down more than 39% over the past year, though year-to-date they've all done much better. As the market has inched up about 1% over the first six months, these diversified businesses have jumped by 14%.
Some spring in its step
But some businesses just aren't doing well regardless, and they have some distance to go before they see improvement. Textron's Cessna division, for example, got whacked as the market for business jets went into a tailspin. The industry suffered through some bad press as overcompensated CEOs at AIG and Detroit's automakers kept winging it cross-country during tough times, and the fallout made some companies decide that the business jet was a luxury they could forgo.
Cessna had originally expected to be able to produce 467 jets this year and deliver 535, but it scaled that figure back in April to 300 jet deliveries, when it announced that it was suspending its Citation Columbus program. Now it says the order cancellations have just not stopped coming in, so it's putting more jobs on the chopping block, and we'll probably see the number of deliveries fall further. The company delivered just 69 jets in the first quarter, compared with 95 a year ago.
While the Cessna Citation was only a very small portion of the revenue stream at Spirit AeroSystems (NYSE: SPR ) , cuts at Boeing (NYSE: BA ) -- from which Cessna derives almost all of its revenues -- make for a challenging period ahead. That's why investors are hopeful that United Airlines can help keep the assembly lines moving, following United's announcement that it will put out a bid to Boeing and Airbus to replace its entire fleet of aircraft.
Investors, though, remain surprisingly bullish on Textron's chances notwithstanding. Over at CAPS, 92% of the members rating the company think it will outperform the market, and an even greater percentage of All-Star members give it the thumbs-up.
Why? Well, maybe CAPS member healthguy is on to something. This CAPS member says companies will eventually realize that corporate jets are a necessity, not a luxury.
The end of the world is not coming. Any executive that MIGHT have considered flying commercial will soon get religion and realize that flying private is the only effective way to get somewhere if you have to do business face to face. Textron is a great target for a good management team to enhance earnings and refinance debt.
The ball's in your court
There are many factors that go into whether a stock is a buy or sell, so it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Head over to CAPS today, and share your thoughts with other investor analysts on whether you think these stocks are ready to bound higher.
RSS Headlines
Fool UK