NEW YORK (CNN/Money) -
With the U.S. markets listless in recent weeks after the strong rally in the third quarter, two money managers appeared on CNNfn to suggest some stocks with healthy dividends and a few that may be undervalued.
Douglas C. Lane, president of Douglas C. Lane & Associates, likes Verizon for its exposure to the wireless sector and its strong dividend.
"Verizon Wireless with a yield of 4.7 percent is, by far, the best wireless company in the country and they're going to gain, not lose, from local number portability, so I think that's worth at least half the value of Verizon," Lane said. "I wouldn't buy it for the local business, but I'd buy it for the wireless."
| Douglas C. Lane's picks
|
|
|
|
|
Lane's second selection is Dow Chemical.
"The economic recovery in chemicals is in 2004 and 2005. So it's just the time to get into them right now. Besides, China's just gobbling up resources, from reserves of chemicals, metals, everything from all the world, as their economy continues to expand," Lane said. "So you could have an combination of the U.S. company coming back, the dollar being weak causing commodity prices to rise, and China absorbing tremendous demand."
H.J. Heinz rounds out Lane's picks
"Management is trying to refocus on a select number of brands and get their costs under control. If they do a decent job, the stock will wander into the $40s," he noted. "There's no new use for ketchup. It's up to these guys to run their business better."
Funds under Lane's management own stakes in the companies mentioned.
Shares of Verizon (VZ: down $0.23 to $32.51, Research, Estimates) are in a 52-week range of $27.20 to $36.92.
Dow Chemical (DOW: down $0.55 to $36.67, Research, Estimates) shares have been between $24.83 and $38.25.
H.J. Heinz (HNZ: down $0.19 to $35.92, Research, Estimates) shares are in a 52-week range of $28.90 to $36.15.
Vince Farrell, chairman of Victory Capital Management, sees some upside to shares of Pfizer.
"When you find that the drug companies get down to a market multiple or below, that's been a pretty good time to buy them. And the industry is below a market multiple right now. The reason is, you have a lack of new products, you have patent expirations, you've had some uncertainty, whether that would be a Medicare drug beneficiary, whether there that be drug reimportation from Canada," Farrell noted. "There's always reasons. But when they get down to that level, all the bad news [for Pfizer] is fully discounted."
Comerica is Farrell's second selection.
| Vince Farrell's picks
|
|
|
| Burlington Northern (BNI)
|
|
|
|
"If you round up a little bit, Comerica is going to earn close to $4 next year. So it's trading about 13 times. It has almost a 4 percent dividend yield and it's in the way of this industrial pickup headquartered in Detroit, like it is," he added. "So I think the earnings comparisons will be pretty good for the next six quarters."
Railroad firm Burlington Northern closes out Farrell's picks.
"The cycle of capital spending is behind them. They spent a whole lot of money the past couple of years buying or refitting their locomotives, which is a very expensive proposition," Farrell said. "So you're going to find free cash flow in these companies, rising earning because the economy does well and they're trading at only about 12 times earnings."
Funds under Farrell's management own stakes on the companies mentioned.
Shares of Pfizer (PFE: up $0.11 to $34.18, Research, Estimates) are in a 52-week range of $27.90 to $36.92.
Comerica (CMA: down $0.75 to $51.15, Research, Estimates) shares have been between $37.10 and $53.58 in the last year.
Burlington Northern (BNI: down $0.09 to $29.50, Research, Estimates) shares are in a 52-week range of $23.29 to $30.08.
|
