Market Overview

Five Chicago Stocks to Watch When Rahm Emanuel Becomes Mayor (BA, CME, EXC, NTRS, UAL)

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On May 16, Rahm Emanuel will take up the reins of the city of Chicago, ending the six-term administration of Mayor Richard M. Daley. Emanuel , a former White House chief of staff and Democratic member of the U.S. House of Representatives, is well known for his blunt, take-no-prisoners style. But both Emanuel and Daley are said to run in the same political and financial circles, so the new mayor may very well continue many of Daley's policies and his management style. Yet Emanuel has proven time and again that he is his own man. So what will be different in Chicago under the new administration? Time will tell.

In the meanwhile, here are five Chicago-based companies whose stocks could benefit from the Windy City's change in leadership.

Boeing

Headquartered in downtown Chicago, Boeing (NYSE: BA) is the world's largest aerospace company and one of the biggest defense contractors in the United States. CEO Jim McNerney said during the company's most recent earnings conference call that Boeing plans to increase commercial airplane output by more than 40% during the next three years. Boeing delivered a larger-than-expected first-quarter profit, and it has a long-term EPS growth forecast of 10%. It also has a 2.1% dividend yield. The share price hit a 52-week high of $80.65 on Monday. The stock has outperformed competitors Lockheed Martin (NYSE: LMT) and Northrop Grumman (NYSE: NOC), as well as the broader market, since the beginning of the year.

CME Group

The world's biggest derivatives exchange operator can be found in Chicago's Loop. The CME Group (NYSE: CME) operates the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, as well as having strategic partnerships with exchanges all over the world. CME Group topped earnings and revenue estimates when it posted first-quarter results last week. It also boosted its quarterly dividend by 22% back in February. Analysts on average have recommended buying CME for more than 90 days. The company's long-term EPS growth forecast is 12.8%, and the ongoing economic recovery should continue to drive healthy revenue growth.

Exelon

Exelon (NYSE: EXC) generates and distributes electricity to customers in northern Illinois and in southeastern Pennsylvania. The utility company announced last week that it intends to acquire Constellation Energy Group (NYSE: CEG) in a transaction that is expected to close in the first quarter of 2012. Constellation Energy provides electricity and natural gas in central Maryland and will bring Exelon's customer base to more than 6.5 million. Exelon has a dividend yield of 4.9% and a return on equity of 19.5%. The stock has traded mostly between $40 and $43 per share since the beginning of the year.

Northern Trust

Founded in 1889, Northern Trust (NASDAQ: NTRS) is based in Chicago's LaSalle Street financial district. Its balance sheet remains “exceptionally strong,” said the CEO in the most recent earnings call, despite disappointing first-quarter results. But the bank's provision for loan losses was down 63% year-over-year. And a Goldman Sachs analyst thinks the bad news about regional banks such as Northern Trust has been taken into account and investors should watch for a possible sharp rebound in sentiment. Note that Northern Trust announced back in February a management shakeup designed to foster growth, as well as an agreement to acquire Bank of Ireland Securities Services.

United Airlines

United Continental Holdings (NYSE: UAL) is the parent company of United Air Lines and Continental Airlines, which merged in 2010. United Continental saw a narrower-than-expected loss for the first quarter as higher fuel costs offset higher revenues. The company said it would cut capacity and raise prices to combat rising fuel prices. Note that even with the reported loss in the first quarter, United Continental's earnings results have been better than expected in recent quarters. The stock has managed to outperform rivals AMR (NYSE: AMR) and Delta (NYSE: DAL) year-to-date. Analysts on average recommend buying UAL, and their mean price target is $32.42 per share. That gives it plenty of room to run from the $23.56 at today's opening bell.

Posted-In: American Airlines Bank of Ireland Securities Services Chicago Chicago Board Of Trade Chicago Mercantile Exchange Continental AirlinesLong Ideas Trading Ideas Best of Benzinga

 

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