With the S&P 500 having slumped 12% so far this year, you may be thinking now is a good time to dive back into the market.
If so, you might consider stocks from J.P. Morgan’s monthly top ideas stock list. Its equity analysts provide one to three of their top picks related to one of the following strategies: near-term factors, growth, value or potential as a short.
Here are some of the selections, with the strategy in parentheses.
· Honeywell (HON) (growth), which manufactures an array of industrial products;
· McDonald’s (MCD) (value), the giant fast-food restaurant chain;
· Entergy (ETR) (value), a utility;
· Bank of America (BAC) (near-term), the bank titan;
· Eli Lilly (LLY) (growth), the big pharmaceutical company;
· Celanese (CE) (value), a chemical company;
· Amazon (AMZN) (growth), the online retail/technology company;
· Microsoft (MSFT) (growth), the software stalwart.
Morningstar’s Take on Honeywell
Morningstar analyst Joshua Aguilar assigns the company a wide moat and puts fair value for the stock at $231, compared to a recent quote of $196.
“Honeywell had a solid first quarter,” he wrote in a May commentary.
“It’s one of the strongest multi-industry firms in operation today. We think the firm has successfully pivoted to capture multiple ESG [environmental, social, governance] trends, including the need to drive energy efficiency, reduce emissions, and e-commerce.”
“Over the next five years, we think Honeywell is capable of mid-single-digit-plus top-line growth … [and] low-double-digit adjusted earnings per share growth,” Aguilar said.
Honeywell can accomplish that through “a combination of portfolio refreshes, powerful new product introductions, breakthrough initiatives and strategic partnerships in areas where the firm has domain expertise,” among other factors, he said.
Morningstar’s Take on Entergy
Morningstar analyst Travis Miller gives the company a narrow moat and puts fair value for the stock at $112, compared to a recent quote of $120.
“We expect earnings for the rest of 2022 to show year-over-year growth,” he wrote in an April commentary.
In its first-quarter earnings report, management reaffirmed its 5% to 7% annual earnings growth target and its 2022 earnings per share guidance, “in line with our forecast,” Miller said. “We expect dividend growth to follow earnings growth.”
“Entergy has nearly completed its transformation into a fully regulated utility like many of its peers,” he said. “Now we think it can benefit from several advantages it has relative to other U.S. utilities.”
That includes “a growing, energy-hungry Southeast U.S. service territory, constructive state regulatory frameworks and a long runway of clean energy growth opportunities,” Miller said.
The author of this story owns shares of Honeywell, McDonald’s, Eli Lilly, Amazon and Microsoft.
