CHICAGO, June 24, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Johnson & Johnson (NYSE: JNJ), Altria Group (NYSE: MO), AT&T (NYSE: T), Kimberly Clark (NYSE: KMB) and Campbell Soup (NYSE: CPB).
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Here are highlights from Thursday's Analyst Blog:
Bernanke Worried = Rotate Defensive
What was it in Federal Reserve Chairman Ben Bernanke's comments Wednesday that seems to have spooked markets? Lower growth and inflation forecasts to be sure. But more than that was a mood that seemed to say, "I'm worried that the economy faces more risks than I can fully fathom right now."
From Transitory to Enduring
If the economy's headwinds are more structural, then we can raise the odds in favor of a "QE3" around the corner in the second half. Another thing bothering the Chairman of the most important bank in the world is what I pointed out on FOX Business Network right after he ended his press conference Wednesday. Liz Clayman asked me why the stock market suddenly reversed the day's gains and exactly what it was, if anything, in his remarks that surprised or spooked investors.
The one thing that stood out to me, as I only caught bits and pieces of the press conference in the ten minutes prior to my interview, was Bernanke's comments on the country's deficit and debt problems and how they might be resolved in Washington. I read the 3-page report of FED Economic Projections beforehand and that all seemed in line with what markets expected. The key takeaways from that were milder growth estimates and declining inflation forecasts, which only feeds the QE3 expectation since we know deflation is the worse of two evils in Bernanke's mind.
Balance Your Portfolio
The way to play the "more than transitory" soft patch in the second half is by getting a little defensive. If you think running into a few dividend-paying defensive stocks in consumer staples or healthcare or even telecom is a move for the frightened, think again.
Are institutional investors going to run to cash? Of course not. Cash is trash for their mandates and benchmarks. They will rotate into non-cyclical names that add income and stability to their portfolios. A 2.5% to 3% dividend yield with appreciation potential from a solid business, while the 10-year Treasury sits below 3%, isn't a bad way to get defensive.
Below are some names to think about adding or rotating money to. Consider selling some of your high-beta, higher-growth names and putting that money to work in these areas. Yes, some have already run higher as the defensive rotation began in April. But if the slowdown gets entrenched in investors' minds, whether or not the data justifies it, they will only attract more institutional money flow.
Johnson & Johnson (NYSE: JNJ): Dividend of $2.28 is yield of 3.45%. Zacks #2 Rank (buy).
Altria Group (NYSE: MO): Dividend of $1.52 is yield of 5.59%. Zacks #2 Rank (buy).
AT&T (NYSE: T): Dividend of $1.72 is yield of 5.57%. Zacks #3 Rank (hold).
Kimberly Clark (NYSE: KMB): Dividend of $2.80 is yield of 4.22%. Zacks #3 Rank (hold).
Campbell Soup (NYSE: CPB): Dividend of $1.16 is yield of 3.41%. Zack #3 Rank (hold). I wanted to include a foods stock and it was hard to find one that was a Zacks #2 Rank or higher but that also paid a healthy dividend.
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