Sell Johnson Controls
The company is a good source of cash for emerging market opportunities.
I’m selling Johnson Controls (JCI) out of my to raise cash in the current market, because 1) I think I can do better than the 12.9% return to my target price, and
2) because I think the uncertainty in that target has gotten higher recently.
Getting to my $42.40 target price was contingent on fairly decent second half 2013 auto sales from European automakers -- and that looks less likely with the most optimistic projections now putting off economic growth in the eurozone into 2014 -- and a pick up in orders in the company’s building energy unit. That too seems less likely as interest rates start to tick up, creating a drag on commercial construction.
I don’t think that either of these doubts rises to the level of major headwind, but I think the sell off in emerging markets will give me a better opportunity to put cash to work sometime in the next three to six months. In other words, at the moment I think Johnson Controls is a good source of cash. For more on this logic, see my post, What stock picks to sell to raise cash for an emerging markets rally?
I have a 48.97% gain in this position since I added to the portfolio in September 2009.
Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund did own shares of Johnson Controls as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio.
MSN Money on Twitter and Facebook
Copyright © 2014 Microsoft. All rights reserved.
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.