BondsOnline Advisor –October 2010
By Stephen Taub
The BondsOnline Advisor strives to present you with income investment insights from analysts throughout the United States. Bonds, preferred stocks, real estate investment trusts, or master limited partnerships can be a part of a successful income portfolio – and BondsOnline and PreferredsOnline provide the “Income Investor Tools” to keep you informed.
For a list of securities, target prices, and detailed comments, get the current issue of Yield and Income Newsletter through PreferredsOnline.
Equity Strategies
With equities trading 70% above their March 2009 lows and Treasury yields having plummeted to near record lows, the big question is, are they pricing in very different outcomes? Are equities too optimistic on growth? Ignoring deflation risks? Deutsche Bank addresses this issue in its most recent report to clients, arguing there is no disconnect. The bank lists 10 stocks have the potential to pay a high total yield to investors, shown in Yield and Income Newsletter.
Bank of America Merrill Lynch believes that the setback from Congress being unwilling to pass any tax package before the Bush tax cuts expire at the beginning of next year will prevent the S&P 500 from reaching its previous 2010 year-end target of 1300. However, it did reiterate its 1350 12-month target. It recently put together a screen of 10 high income equities, shown in Yield and Income Newsletter.
Citigroup insists in a recent report to clients that sentiment readings strongly support impressive upside opportunity. It points out that its Panic/Euphoria Model remains mired in panic territory, which means there is a 97% chance that stock prices are higher in a year.
Wells Fargo warns that for its 2011 target to be achieved, the financial sector must play an important part in the second leg of the bull market.
JPMorgan Chase still sees cyclicals and high-beta stocks outperforming in the fall as investors shift from worrying about a double-dip recession to worrying about growth.
Energy Master Limited Partnerships
Credit Suisse currently has outperform ratings on five energy MLPs and one general partner.
REITs
Stifel Nicolaus stresses in a recent report that its investment outlook continues to favor safety and yield at reasonable prices. With this in mind, it told clients that agency REITs appear particularly attractive.
Barclays recently singled out at least three REITs that are rated Overweight, its highest. One of them is a very high yielding financier of real estate deals.
Preferreds and Fixed Income
UBS looks for preferreds to primarily be an income generating vehicle in the near term: focus on lower duration traditional TruPS. Also, UBS states that the concern of a “bond bubble” is off the mark.
© 2010, BondsOnline and BondsOnline Group, Inc.
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