Finance
Emerson Electric Co. (EMR): Strengthening Market Position with Financial Confidence
We recently published a list of 10 Wonderful Stocks to Buy Now at a Fair Price. In this article, we are going to take a look at where Emerson Electric Co. (NYSE:EMR) stands against other wonderful stocks to buy now at a fair price.
In H2 of the year so far, there are signs that the S&P 500 index has been broadening beyond technology leadership and the index is reverting to a more normalized state. This means that there are several high-quality stocks outside of the popular names and investors are required to be diversified. This diversification should not be limited to the style level, but also to the stock level. Market experts opine that the AI theme has largely fuelled the narrow market. This concentration, along with an increase in passive investments, resulted in a significant cycle of consensus positioning and stretched valuations. This led to the vulnerability in the market, which resulted in a sharp correction in July and early August.
As per Fidelity International, when it comes to passive investing in the S&P 500, it demonstrates nearly a third of holdings in only 7 stocks. Considering their dominance, a stumble in performance means the index will see a significant impact, and the investors have already seen some mega-cap technology names that are unable to deliver on strong expectations.
S&P 500 Index – Transition and Concentration
The US equities saw an outstanding performance in H1 2024, with the S&P 500 Index rising 15.3%, as per ClearBridge Investments (A Franklin Templeton Company). The investment firm believes that solid earnings results and fiscal stimulus mitigated the influence of higher interest rates. However, the headline performance numbers, aided by a ramp-up in mega-cap stocks and, more specifically, semiconductor leadership, eclipsed the recent signs of deterioration below the surface.
Since the Mag 7 stocks have disproportionately driven earnings growth over the previous 2 years, ClearBridge Investments expects a rebound in earnings among small-cap stocks in the upcoming 12– 18 months. The investment firm believes that small-cap companies have seen the impacts of higher rates. In 2023, profits for Russell 2000 companies declined ~12%. This year, they are up ~13.6%, and for 2025, the projections hover at around ~31%. If this happens, there might be a broadening of the market which should provide an opportunity for active managers.
Opportunities Apart from Magnificent Seven
Companies that are unable to meet hefty expectations might see a disproportionate sell-off, and the stocks riding the wave of AI might be significantly exposed considering the amount of capital deployed versus the uncertain future environment. Given such trends, Fidelity International believes it is unsurprising that so far in H2 2024, there have been signs that the S&P 500 is broadening beyond tech leadership, with some non-tech sectors surpassing the broader market.
There are abundant high-quality stocks apart from the popular names. This means that dozens of companies in the S&P 500 continue to offer a return on invested capital (ROIC) and earnings growth of more than 30%. This is true for several other quality metrics, reflecting an underappreciated depth of opportunity in the broader US equities.
While diversification remains critical, even looking beyond the Magnificent Seven might not necessarily offer the required diversification considering that the US market remains heavily weighted towards growth sectors like IT. As per Fidelity International, diversified portfolios need negative correlations between assets, but few styles provide consistent negative correlations to quality growth companies. That being said, cyclical value and defensive value remain 2 key exceptions.
To get a negative correlation, the investors are required to avoid an overlap at the stock level. As of now, the US market provides a range of attractive stock opportunities that offer this valuable diversification.
As per ClearBridge Investments, the top 5 stocks now constitute ~27% of the S&P 500 and the top 10 make up ~37%. As per the investment firm, this concentration might stagnate near current levels, with mega caps delivering solid, but slower, earnings growth in comparison to the recent past. The investment firm expects that diversified portfolios should outperform in the upcoming 12–18 months.
With this in mind, we will now have a look at 10 Wonderful Stocks to Buy Now at a Fair Price.
Our methodology
We first sifted through multiple online rankings and ETFs to identify quality stocks with wide moats. Next, we selected stocks that were trading at a forward P/E of less than ~23.65x (since the broader market trades at a forward multiple of ~23.65, as per WSJ). The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Engineers analyzing a complex network of process control software and systems.
Emerson Electric Co. (NYSE:EMR)
Expected Earnings Growth: 23.4%
Number of Hedge Fund Holders: 51
Forward P/E Multiple (As of September 30): 18.45x
Emerson Electric Co. (NYSE:EMR) is a technology and software company, which provides various solutions for customers in industrial, commercial, and consumer markets.
Emerson Electric Co. (NYSE:EMR) has a wide economic moat, which is mainly based on switching costs, and on brand intangible assets. Moreover, the company’s strong geographic presence and diversified customer base further solidify its moat. Emerson Electric Co. (NYSE:EMR) remains confident in its financial health and strategic initiatives. The company continues to focus on integrating National Instruments and potential share buybacks.
The company expects its backlog to increase YoY as it enters FY 2025. Emerson Electric Co. (NYSE:EMR) has been adjusting its strategy to focus on growth areas like innovation and renewable energy investments while, at the same time, managing softer segments. Therefore, Wall Street analysts are optimistic about the company’s future performance and its strategic positioning in the global automation market.
The company sold its remaining interest in the Copeland joint venture, hinting at the fact that Emerson Electric Co. (NYSE:EMR) is focusing on simplifying its portfolio. It highlighted that demand in process and hybrid markets, which is being led by a constructive capex cycle, has been meeting expectations. In Q3 2024, its operating leverage performance exhibited the benefits of its highly differentiated technology. For 2024, Emerson Electric Co. (NYSE:EMR) anticipates net sales growth of ~15% and operating cash flow of ~$3.2 billion.
Redburn Atlantic initiated coverage on 8th July on the shares of the company. It gave a “Buy” rating and a $135.00 price target. Insider Monkey’s Q2 2024 data revealed that Emerson Electric Co. (NYSE:EMR) was part of 51 hedge funds.
Overall, EMR ranks 7th on our list of Wonderful Stocks to Buy Now at a Fair Price. While we acknowledge the potential of EMR as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than EMR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’
Disclosure: None. This article is originally published at Insider Monkey.
Finance
How gas prices, oil imports could be hit by Trump tariffs
President Donald Trump is set to impose tariffs on oil (CL=F, BZ=F) imports from Canada and Mexico starting February 1, potentially raising US gasoline (RB=F) prices by $0.40 to $0.70 per gallon.
Yahoo Finance senior business reporter Ines Ferré explains that analysts are closely watching whether oil will be exempt from the tariffs, underlining that energy giants Exxon Mobil (XOM) and Chevron (CVX) are already struggling with low refining profits.
Independent refiner Valero (VLO) predicts a 10% drop in oil refinery throughput capacity if tariffs are enacted.
To watch more expert insights and analysis on the latest market action, check out more Wealth here.
This post was written by Josh Lynch
Finance
Raymond James Financial Inc (RJF) Q1 2025 Earnings Call Highlights: Record Revenues and …
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Net Revenue: Record $3.54 billion for the first fiscal quarter.
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Net Income: $599 million available to common shareholders.
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Earnings Per Share (EPS): Record $2.86 per diluted share.
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Adjusted Net Income: $614 million or $2.93 per diluted share, excluding acquisition-related expenses.
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Return on Common Equity: Annualized 20.4%.
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Adjusted Return on Tangible Common Equity: Annualized 24.6%.
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Client Assets Under Administration: Increased 14% year over year to $1.56 trillion.
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Private Client Group Assets: Record $877 billion.
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Financial Assets Under Management: Nearly unchanged at $244 billion.
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Domestic Net New Assets: $14 billion, representing a 4% annualized growth rate.
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Recruitment: Financial advisers with $318 million of trailing 12-month production and $51 billion of client assets recruited over the past 12 months.
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Cash Sweep and Enhanced Savings Balances: $59.7 billion, a 3% increase over the previous quarter.
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Bank Loans: Grew 3% to a record $47.2 billion.
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Private Client Group Pretax Income: $462 million on record net revenue of $2.55 billion.
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Capital Markets Net Revenue: $480 million with a pretax income of $74 million.
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Asset Management Pretax Income: Record $125 million on record net revenues of $294 million.
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Bank Segment Net Revenue: $425 million with a pretax income of $118 million.
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Compensation Expense: $2.27 billion with a total compensation ratio of 64.2%.
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Non-Compensation Expenses: $516 million, a 5% sequential decrease.
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Pretax Margin: 21.2% with an adjusted pretax margin of 21.7%.
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Total Assets: $82.3 billion, a 1% sequential decline.
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Effective Tax Rate: 19.9% for the quarter.
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Dividend Increase: 11% to $0.50 per share.
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Stock Repurchase Authorization: Up to $1.5 billion.
Release Date: January 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Raymond James Financial Inc (NYSE:RJF) achieved record net revenues of $3.54 billion for the first fiscal quarter, showcasing the strength of its diverse and complementary businesses.
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The firm reported a strong annualized return on common equity of 20.4% and an annualized adjusted return on tangible common equity of 24.6%.
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Total client assets under administration increased 14% year over year to $1.56 trillion, indicating robust growth in client assets.
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The Private Client Group generated pretax income of $462 million on record quarterly net revenue of $2.55 billion, driven by higher PCG assets under administration.
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Raymond James Financial Inc (NYSE:RJF) has a strong recruiting pipeline, with financial advisers bringing approximately $318 million of trailing 12-month production and $51 billion of client assets to the firm over the past year.
Finance
Voya Financial declares common and preferred stock dividends
NEW YORK, January 30, 2025–(BUSINESS WIRE)–Voya Financial, Inc. (NYSE: VOYA) announced today that its board of directors has declared a common stock dividend of $0.45 per share for the first quarter of 2025. The common stock dividend is payable on March 27, 2025, to shareholders of record as of Feb. 25, 2025.
Additionally, Voya’s board declared a semi-annual dividend of $38.79 per share on the company’s Series A 7.758% fixed-rate reset non-cumulative preferred stock (the “Series A Preferred Stock”). The board also declared a quarterly dividend of $13.3750 per share on the company’s Series B 5.35% fixed-rate reset non-cumulative preferred stock (the “Series B Preferred Stock”), equivalent to $0.334375 per depositary share, each of which represents a 1/40th ownership interest in a share of Series B Preferred Stock. The first quarter preferred stock dividends are payable on March 17, 2025, to shareholders of record as of Feb. 25, 2025.
About Voya Financial®
Voya Financial, Inc. (NYSE: VOYA) is a leading health, wealth and investment company with approximately 9,000 employees who are focused on achieving Voya’s aspirational vision: “Clearing your path to financial confidence and a more fulfilling life.” Through products, solutions and technologies, Voya helps its 15.2 million individual, workplace and institutional clients become well planned, well invested and well protected. Benefitfocus, a Voya company and a leading benefits administration provider, extends the reach of Voya’s workplace benefits and savings offerings by engaging directly with over 12 million employees in the U.S. Certified as a “Great Place to Work” by the Great Place to Work® Institute, Voya is purpose-driven and committed to conducting business in a way that is economically, ethically, socially and environmentally responsible. Voya has earned recognition as: one of the World’s Most Ethical Companies® by Ethisphere; a member of the Bloomberg Gender-Equality Index; and a “Best Place to Work for Disability Inclusion” on the Disability Equality Index. For more information, visit voya.com. Follow Voya Financial on Facebook, LinkedIn and Instagram.
VOYA-IR VOYA-CF
View source version on businesswire.com: https://www.businesswire.com/news/home/20250130274359/en/
Contacts
Media Contact:
Donna Sullivan
(860) 580-2980
Donna.Sullivan@voya.com
Investor Contact:
Mei Ni Chu
(212) 309-8999
IR@voya.com
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