Randall Eley Suggests Four Attractive Stocks
As the Nightly Business Report’s guest market monitor, Randall Eley, President of the Edgar Lomax Company, says he’s just facing reality when he says there will be a bear market in the next two to three years. Eley said the government needs appropriate fiscal policies to take some of the load off the Fed. The U. S. will not be able to, nor should it, run annual deficits on the order of $1.25 to $1.5 trillion, he added.
Eley proceeded to discuss stocks he finds attractive. He first mentioned Chevron (CVX), which has oil, a product which will always be bought and used. CVX has a very strong balance sheet, a history of running profitably, while yielding over three percent. Eley pointed out the 10-year Treasury is yielding just a little under 1.9 percent.
Eley finds Travelers (TRV) attractive. Eley indicated concern about leverage with banks and investment banks, however, TRV has a strong balance sheet. TRV has been repeatedly profitable and they’re selling at a P/E ratio of 12. Eley said with no growth, you’re looking at earnings on your investment over the next five to 10 years of 8 or 8.5 percent a year and he believes TRV’s earnings can grow.
3M (MMM) is a stock whose valuation Eley finds somewhat higher than they normally focus on (PE of 15), but should do well as a diversified manufacturer. MMM yields 2.5 percent.
Eley’s final recommendation was Wal-Mart (WMT). According to Eley, WMT does well in a good economy and has shown the ability to continue to grow revenues in a poor economy, such as in 2008 and 2009. Eley finds this comforting along with WMT’s strong balance sheet.
Eley said they own the four stocks he mentioned.
Back in March, Eley correctly saw a market which would be undisturbed by the bear given election year dynamics and an active Federal Reserve (link).