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J.P. Morgan (NYSE:JPM) analysts Thomas Lee, Daniel M. McElligot, and Katherine C. Khor recently published a report entitled “US Equity Strategy FLASH” on December 9, 2011. The report isn't publicly available but you can check out a PowerPoint presentation prepared by the same analysts here. They have identified stocks which have low exposure to the European markets. All buy recommendations are cyclical in nature and are from sectors such as Materials, Industrials, Discretionary, and Technology. These stocks do not have more than 8% exposure to the European market. We thought it will be of interest to our readers to see which stocks they can buy, who are unaffected by the macro uncertainties in Euro region. Also, all these stocks have market capitalization greater than $3 billion and have been given either an overweight or a neutral rating by J.P. Morgan.

Altera (NASDAQ:ALTR) is a semiconductor company that designs, manufactures, and markets programmable logic devices, and semiconductor-based items. It has been given a neutral rating by J.P. Morgan. Altera generate around 67% of its revenue comes from emerging markets while it has absolutely no exposure to the European market. The U.S. based revenue amounts to only 17% of the total revenue. Earnings per share are expected to be $2.21 by the end of next year, with free-cash-flow yield currently at 7%. Altera is expecting a price-to-earnings ratio of 16.5x and has a current price-to-book ratio of 4.12x. Shares of the company are currently trading around $37.4.

SAIC Inc. (SAI) provides scientific, engineering, systems integration, and technical services to various defense departments in the U.S. It has been given a neutral rating by J.P. Morgan. It generates 98% of its total revenue from U.S. based sources. Only 1% of its revenue comes from Europe, indicating insignificant exposure. The company is expected to generate earnings per share of $1.38 in 2012 with a current free-cash-flow yield of 15%. J.P. Morgan expects it to have a price-to-earnings ratio of 9.4x in 2012 and it currently has a price-to-book ratio of 1.9x. Shares of SAIC are currently trading at $12.3 and are expected to go north of $14, implying an upside of 14% in share price.

L-3 Communications Holdings Inc. (NYSE:LLL) is a prime contractor for the various defense departments of the U.S. where it provides a wide range of electronic systems. J.P. Morgan has given the company a neutral rating. Roughly 90% of the total revenue comes from the U.S. whereas only 3% of it comes from Europe. J.P. Morgan expects earnings per share of $8.69 in 2012 with free-cash-flow yield currently at 16%. Expected price-to-earnings ratio is 7.7x for 2012 while the current price-to-book ratio is 1.01x. Shares of the company are currently trading at $67 and are expected to reach $68 by the end of 2012.

Apollo Group Inc. (NASDAQ:APOL) is a private education provider that offers educational programs and services to undergraduate, masters, and doctoral levels. It has been given an overweight rating by J.P. Morgan. More than 94% of its revenue comes from the U.S. whereas merely 5% of it comes from Europe. J.P. Morgan expects earnings per share of $3.39 by the end of 2012 while it currently has a free-cash-flow yield of 11%. A price-to-earnings ratio of 14.6x is expected in 2012 while its current price-to-book value stands at 5.2x. Shares of Apollo are currently trading at $54 and are expected to see an upside of 5.5% to $57 per share.

Akamai Technologies (NASDAQ:AKAM) provides services for accelerating and improving the delivery of content on the internet. J.P. Morgan has given it a neutral rating. It generates roughly 28% of its revenue from outside the U.S. which includes only 5% revenue exposure to Europe. Earnings per share of $1.67 are expected in 2012 while the free-cash-flow yield currently stands at 5%. J.P. Morgan expects the company to have a price-to-earnings ratio of 16.8x, with its price-to-book ratio currently at 2.37x. Shares of Akamai are currently trading around $32 per share.

Raytheon Co. (NYSE:RTN) is a technology company that specializes in defense, homeland security, and other government markets. J.P. Morgan has given the company an overweight rating. Raytheon generates 77% of its revenue from U.S. based sources. Out of the 23% revenue that it generates from outside the U.S., only 5% is exposed to the European market. J.P. Morgan expects earnings per share to reach $5.22 by the end of 2012. Its current free-cash-flow yield stands at 5%. The company has a current price-to-book ratio of 1.56x and an expected price-to-earnings ratio of 8.8x. Shares of Raytheon are currently trading at $49 and are expected to go north of $52, indicating an upside of 6%.

Gap Inc. (NYSE:GPS) is a global specialty retailer with stores all around the world. J.P. Morgan has given Gap a neutral rating. 5% of its total revenue comes from Europe while 7% of it comes from the emerging markets. The remaining 87% of the revenue is generated from U.S. based sources. J.P. Morgan expects earnings per share to be $1.76, by the end of next year. Currently, its free-cash-flow yield stands at 7%. Price-to-earnings are expected to be 10.8x next year while the price-to-book ratio currently stands at 3.5x. Shares of Gap are currently trading at $18.8 and are expected to see an upside of 6% to $20 per share. Eddie Lampert had nearly $600 million invested in GPS at the end of September.

Agrium Inc. (NYSE:AGU) markets and produces agricultural products globally. It has been given an overweight rating by J.P. Morgan. Despite being a global company, only 6% of its revenue comes from European market whereas 88% of the revenue is generated from the U.S. Agrium is expecting earnings per share of $9.58 by the end of next year while its free-cash-flow yield currently stands at a 1%. It has a price-to-book ratio of 1.83x and price-to-earnings ratio of 7.5x is expected in 2012. Shares of Agrium are currently trading around $66.8 and are expected to see an upside of 35% to $90 per share. Richard Chilton had $85 million invested in AGU at the end of the third quarter.

NVIDIA Corp. (NASDAQ:NVDA) is well known for producing graphics processing units. J.P. Morgan has given it a neutral rating. Due to the global nature of its business, it generates more than 83% of its revenue from outside the U.S., with roughly 7% of it coming from Europe. The rest of the 17% is generated from U.S. based sources. J.P. Morgan expects earnings per share of $1.08 by the end of 2012 while free-cash-flow yield currently stands at 9%. A price-to-earnings ratio of 14x is expected while its price-to-book ratio is at 2.33x. Shares of NVIDIA are currently trading around $14 per share and are expected to see an upside of 21% by the end of next year to $17 per share. D. E. Shaw had a $15 million position in NVDA at the end of September.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 3 Buys, 6 Holds From JP Morgan With Little European Exposure