However hard the market slams a stock, there's always the chance it'll come bouncing back. We'll consult Motley Fool CAPS, our community of 135,000 members, to find shares on the rebound, examining one sector of the economy in search of companies with rising CAPS ratings.
Among the 14 stocks listed under conglomerates in CAPS' screener, we've unearthed a couple with high four-star ratings, meaning that in general CAPS members are confident that these stocks will beat the market. Let's see what some members are saying about these stocks and a few others in the sector:
|
Company |
CAPS Rating Today (out of five) |
Recent Price |
52-Week Price Change |
Estimated Long-Term Growth Rate |
|---|---|---|---|---|
|
Cooper Industries (NYSE:CBE) |
*** |
$33.41 |
(20%) |
11% |
|
Crane (NYSE:CR) |
**** |
$23.57 |
(32%) |
11% |
|
Danaher (NYSE:DHR) |
**** |
$61.84 |
(23%) |
10% |
|
GenCorp (NYSE:GY) |
** |
$2.30 |
(73%) |
NA |
|
PPG Industries (NYSE:PPG) |
*** |
$52.81 |
(11%) |
5% |
Sources: Motley Fool CAPS and Yahoo! Finance.
Conglomerates are supposed to ease the impact of a recession because of their diverse holdings. The market has fallen 20% over the past year; the sector is off 21%.
Some spring in its step
With the housing market the way it is, you won't put your home up for sale unless you really have to because you wouldn't get top dollar. So it goes with businesses, too. With weak sales and profits amid a recession, they're not going to get top bids for their operations, so they don't actively market them.
Illinois Tool Works (NYSE:ITW) is an otherwise acquisitive company that is said to be lowering the bar for its mergers, but Danaher has a different outlook, saying it has a number of deals in the works. It made 17 acquisitions last year and is looking to spend another $6.5 billion over the next three years. As credit markets thaw but prospects for a recovery are drawn out, management says price targets for acquisitions are becoming more realistic.
Like some homeowners, some companies may be realizing that their asking price is too high. That may lead Danaher to scoop up more prime businesses to add to its operations that already include tools, medical devices, and water-quality equipment. CAPS member JRProtrader says:
This conglom is loaded with top brands across many industries. If you want diversity, this one's for you
And maybe it's just the dismal outlook from analysts that leads to companies like PPG Industries and rival Sherwin-Williams (NYSE:SHW) posting better than expected earnings. The paint and coatings specialist reported profits of $148 million, or $0.91 per share, for the latest quarter last week, beating the Street's expectation of $0.74 per share. Yet the company is still cutting costs to the bone. Revenues are still falling, as at PPG Industries, whose sales dropped 30%. You can only cut costs so much before operations suffer. Either sales will need to turn the corner or investors can expect profits to tumble.
PPG Industries has still been able to outpace the other 114 companies with the CAPS' Chemicals tag. Its share price jumped 20% over the past month while the industry average was up just 14%. While the company's stock is off 8% for the year, that's better than the 18% decline for companies with that tag.
The ball's in your court
There are many factors that go into whether a stock is a buy or a 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 about whether you think these stocks are ready to rebound.
