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BlackRock Financial Management, Inc. is an investment advisory and hedge fund firm managing over $150 bn in assets. Following is a brief snapshot stock market performance of its top 15 quarterly buys (as per 13F filing ).



Shares Held - 12/31/2010

Shares Held - 03/31/2011

% Price Change Mar. 31- June 24, 2011

Pfizer Inc.





The Goldman Sachs Group Inc.





American International Group Inc.





Texas Instruments Inc.





Philip Morris International Inc.





Alcoa Inc.





Walter Energy Inc.





Eaton Corporation





Medtronic Inc.





FirstEnergy Corp.





Microsoft Corporation





Citigroup Inc.





Tesoro Corporation





Ameriprise Financial Inc.





Dell Inc.





The five best performing stocks among BlackRock’s top buys are Dell, First Energy, Medtronics, Pfizer and Philip Morris. Here is a brief analysis of these stocks:

Dell Inc. (NASDAQ:DELL), based in Austin, Texas, is one of the world’s leading manufacturers of PCs, with worldwide PC market share of approx. 13%. It offers customers a full range of IT products and services like PCs, notebooks, storage systems, printers and other peripherals, which it sells primarily through a direct selling model.

Recommendation: Buy

Dell continues to face challenges in its core PC business with stiff competition from HPQ and Asian companies like Asus, Acer and Lenovo. Displacement of notebooks by tablets (where Dell does not have a strong market) is a key change being seen in consumer preferences. It has however made good progress in its Enterprise Solutions and Services (ESS) revenue which is now contributing to approximately 30% of its overall revenues. Note that in the past 12 months, Dell has added over 2500 employees, of which 1000 are in Storage, indicating the focus being placed by the management on this segment. According to consensus estimates, Dell carries a median price target of $18.58 with an EPS of $1.89 for Jan 12 and $1.91 for Jan 13.

First Energy (NYSE:FE) is a conglomerate of 10 electric utility companies, whose service territory encompasses approx. 20,000 square transmission miles and services approximately 6 million utility customers. It also owns merchant generating power plants totalling over 23,000 MW capacity and operates as a provider of last resort in several regulatory jurisdictions and supplies residual power to wholesale market.

Recommendation: Buy

First Energy has completed its merger with Allegheny, and is now focussed on optimizing its power generation sales mix through wholesale and retail sales. May ‘11 capacity auction for 2014/15 PJM area provided much stronger than expected results. FE’s area of operation, the PJM (Pennsylvania, New Jersey, Maryland) region, is one of the most attractive regions to own base load nuclear and coal generation given the region’s liquid power market, an established capacity auction process and relatively high barriers to entry for new generation. The company’s low marginal cost nuclear and super-critical coal generation fleet is well positioned to benefit from improving market fundamentals driven by increasing stringent environmental standards. From a long term perspective, we recommend a Buy on the stock.

Medtronic, Inc. (NYSE:MDT), incorporated in 1957, is a medical technology company. The company is engaged in research, design, manufacture and sale of device based medical therapies.

Recommendation: Neutral

Over 50% of Medtronic’s revenues come from Spine and ICD – two segments where markets are flat or declining. Due to JAMA/DOJ issues, there has been a clear impact on the SU ICD sales, which is expected to move further downwards. The company also lost some bulk orders on ICD sales probably related to the ending of the Novation relationship. A number of growth prospects - Ardian, MRI safe pacers, Protecta ICD, an entirely new spine product line, CoreValve, new InFuse labels, and new Afib models should all help to accelerate Medtronic’s growth. Unfortunately, many of these products have been delayed or launched more slowly than expected. On the positive end, new CEO Omar Ishrak from GE Healthcare brings with him a rich large company experience in process improvements and expansion of markets in developing countries.

Pfizer (NYSE:PFE) is a global pharma company organized into two commercial segments: Biopharmaceutical and Diversified. The Biopharmaceutical segment is focused on discovering, delivering and marketing drugs for cardiovascular, metabolic, central nervous system, immunology, pain, infectious diseases, respiratory, oncology, and other indications. The Diversified segment includes animal health, consumer products, and nutrition divisions.

Recommendation: Buy

Pfizer is a defensive stock and has a strong pipeline for new drugs. Pfizer’s oral Crizotinib has been designed for NSCLC patients with AK mutation, which is approximately 4-5% of all lung cancer patients or 54,000 treatment eligible patients worldwide. Given the medicine’s signals of strong benefit, it is expected to be a candidate for FDA’s accelerated approval in 4Q2011. Top line data for Eliquis is also awaited, expected by end of June. Eliquis, is an anti thrombotic drug being developed by Bristol/PFE for several indications, most meaningful being one for atrialfibrillation/stroke prevention. It is a possible alternative to Warfarin, an effective but onerous drug that both physicians and patients are seeking an alternative to. If trials underway can show that Eliquis is non inferior to Warfarin, it can translate into a possible $1bn market in US and $2-3 bn market worldwide for Pfizer. In addition, the company is also expecting double digit growth from Asia, and it has made a concerted effort in growing here by investing in marketing and sales force. Note however that though a court trial began in June11 whether PFE would be able to extend exclusivity on Viagra till 2019, consensus expectations have been that Viagra would go generic in 2012.

Philip Morris International, Inc. (NYSE:PM) was spun off from Altria (NYSE:MO) in 2008 and represents one of the single largest tobacco companies in the world. It holds a 16% market share outside the US with 7 of its brands appearing in the top 15 in the world. Based in New York, It operates primarily in the European Union, Eastern Europe, the Middle East, Africa, Asia, Canada, and Latin America.

Recommendation: Buy

Given the recent price reductions across the industry in Spain, Philip Morris too has cut Marlboro’s prices that are expected to erode PM’s profits in Spain. Fortunately though, the relative market size nullifies any impact on EPS of the company. A positive potential offset to the loss of profits in Spain exists in better than expected results in Japan, due to PM’s activities to increase product supply resulting in higher distribution sales in April-May. Philip Morris’ consensus expected EPS of $4.6 for current year and $5.8 for Dec12.

Source: BlackRock's Best Performing Top Buys