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Ronnie Moas Upgrades Fedex, Also Likes Ralph Lauren, Emerson Electric, Sothebys And Eaton

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  • Ronnie Moas, founder and director of research at Standpoint Research, recommended buying five stocks on Wednesday.
  • The analyst initiated coverage of Sothebys (NYSE: BID), Ralph Lauren Corp(NYSE: RL) and Eaton Corporation, PLC Ordinary Shares (NYSE: ETN) with Buy ratings.
  • In addition, he upgraded shares of FedEx Corporation (NYSE: FDX) and Emerson Electric Co. (NYSE: EMR) from Hold to Buy.

Ronnie Moas sees several opportunities as markets continue to fall this week. While the analyst believes the S&P 500 index could hit 2500 by the end of the decade, he pointed out that the market may see 1500-1750 before that.

"The market remains overvalued – the market multiple may come down to 15X or 14X if we see a capitulation panic," he wrote in an email to clients. In this context, he thinks the names above offer limited downside risk.

FedEx now trades at 10x 33 percent off its 52-week high, after underperforming the S&P by 1500 bps over the past six months. This creates an attractive entry point for investors.

Emerson trades 13x, and offers a 4.4 percent dividend yield. Similar is the case of Eaton, which is at 11x, with a 4.6 percent dividend yield. All these stocks trade where they were more than a decade ago, adjusted for inflation.

On the other hand, Moas recommended shorting overvalued General Electric Company (NYSE: GE), which trades at 18x.

Next up was Ralph Lauren, a stock for which the expert is willing to pay a premium. "There are names that rarely come down to where I want them as a value guy (closer to 10X). RL is one of those,” he explained. However, with the stock down from $172 and a new CEO running the company, "$100 looks like a good (but not perfect) entry point."

Sotheby's is now trading at 10x and "may bottom intraday on market weakness and disappointing news" from Tiffany & Co. (NYSE: TIF).

"Hard to pick bottoms. Earnings and growth estimates, share prices and multiples may come down for any or all of these. I am looking out 18-36 months and expect this basket to jump by 20%-40% while outperforming the S&P by at least 1000 bps," adding, however, that Moas is aware of all the concerns related to each of these companies.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Latest Ratings for FDX

DateFirmActionFromTo
Apr 2017Loop CapitalInitiates Coverage OnBuy
Mar 2017BMO CapitalUpgradesMarket PerformOutperform
Feb 2017Raymond JamesUpgradesMarket PerformOutperform

View More Analyst Ratings for FDX
View the Latest Analyst Ratings

Posted-In: Ronnie Moas Standpoint ResearchAnalyst Color Long Ideas Upgrades Initiation Analyst Ratings Trading Ideas

 

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