The preferreds are way oversold at the moment. So is the common for that matter. Patient investors will be rewarded.
PFF should open higher today as indicated in the pre-market. The jobs number is being interpreted as sort of a goldilocks kind of number not too hot, not too cold. No more panic on rates hopefully.
Morgan Stanley's Cheryl M. Pate expects the loss of a co-branding relationship with Costco Wholesale Corporation (NASDAQ: COST) will reduce AmEx's earnings between 2.5 percent and 4.5 percent. Earlier this week, the company said it failed to negotiate favorable extension terms; the exclusive agreement with Costco will expire on March 31 next year. But expenses saved from the lost business can be used to cut costs, or they can be redeployed to other endeavors to recoup lost revenue, Pate explained. Also worth noting, AmEx will retain existing loans and the customer list, likely to yield a one-time gain from the sale to a competing bidder.
"We would be buyers on any dips," Pate added.
I agree it's a good buying opportunity given that they "expect improved earnings and distribution coverage in 2014."
It looks like they have solid guidance for the year ahead based on what they said after the close today.
"There are two areas that management of the Partnership would like to highlight. First, we expect improved financial performance in 2014. Second, we have made substantial progress in addressing the Partnership's long-term financing needs. In the second quarter of 2014, EEP will benefit from a large component of our Eastern Access project entering service. The cash flows from this phase of Eastern Access, the full year contribution from projects completed during 2013 and increasing volumes will improve our earnings and distribution coverage. As our distribution coverage improves we will be positioned to grow our distribution at our target growth rate of 2% to 5% per annum," said Mark Maki, president of the Partnership."
•Kinder Morgan (KMI -4.3%), Kinder Morgan Partners (KMP -2.7%) and Kinder Morgan Management (KMR -3.3%) are all down sharply after Kevin Kaiser says shorting the stocks is Hedgeye's new Best Idea.
ConocoPhillips (COP) is in the process of divesting $9.6B in assets this year, and Oppenheimer's Fadel Gheit expects it to successfully apply proceeds to help fund new projects and increased production. In raising his target price on COP to $70 from $65, Gheit says the strategy, coupled with a high dividend yield, could lead to 20% multiple expansion and boost the stock.
If they've got $5B for stock buybacks, they've got plenty of cash.
I'll try to forget the $5B in stock buybacks coming as well.
11:26 am ET ... S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF
CONOCOPHILLIPS (COP 58.21****):We lift our '13 EPS view $0.08 to $6.03 and set
'14's at $6.19 (vs. $5.58 in '12). Q4 EPS of $1.43, vs. $1.55, beats our estimate by
$0.01. Organic production was mostly flat in '12. COP sees '13 production of
1.475-1.525 MMBoe/d, below our target, but keeps a 3%-5% per year organic
growth target; we are at the low end. COP is awaiting close on $9.6B in asset
sales, which we think will help fund a $15B capex plan, pay dividends of $3.5B
and $5B in stock buybacks.We see cash flow approaching $15B.We find
valuations attractive and note a top dividend yield (4.5%) among peers. /M. Kay
February 1, 2013
11:52 am ET ... S&P REITERATES BUY OPINION ON SHARES OF MERCK (MRK
42.00****):We lower our 2013 EPS estimate $0.05 to $3.70, which at the upper end
of MRK's $3.60-$3.70 guidance range. However, we maintain our 12-month target
price of $51, applying a modest premium to peers P/E of 12.7X to our $4.00 EPS
estimate for 2014. Impacted by generic erosion in Singulair, Q4 2012 EPS fell 14%
to $0.83, in line with our estimate. Despite recent setbacks, we still see promise in
the R&D pipeline, with four major filings completed last year. Other positives
include strength in the diabetes franchise, vaccines and emerging markets. The
dividend yields 4.1%. /H. Saftlas
Assign a modest PE of 10 to this stock and you have a $40 stock price, right now. In other words it's dirt cheap, sorry ain't goin' to 22.