Adobe (NASDAQ: ADBE)

Reliable shares of companies with stable cash flow

The stock market often behaves unpredictably and puts some investors in a difficult position, making it difficult for them to make the right decision. But to simplify the situation helps the so-called rating of “dairy cows” from Morningstar (Information-analytical company and rating agency in the USA).

These are reliable shares of companies that over the past five years have increased their cash flow by no less than 5% of the total assets. Such enterprises are easier to cope with changes in the stock market. They make a profit, not paying attention to the general volatility of the sector.
[Note: Stock prices and indicators in the article are indicated at the time of publication. You can see the current stock prices in a special widget at the end of the text. Before buying stocks, always do your own analysis. Investing money carries the risk of losing it. This article was published for review, not a call to purchase.]

1. Adobe [NASDAQ: ADBE]

Morningstar analysts say that Adobe has a lot of competition in its current niche, so the solid fourth-quarter results exceeded their expectations. Experts are impressed by the company’s organic revenue growth and healthy demand for both consumer and corporate products.

Adobe has remained the gold standard in creative software and has confidently taken the lead in cloud software. Even after the expensive acquisitions of Magento ($ 1.68 billion) and Marketo ($ 4.75 billion), the company still has a lot of money “on hand”.

Morningstar ADBE valuation: buy with a target price of $ 300.

2. Comcast Corp. [NASDAQ: CMCSA]

Comcast is an American telecommunications conglomerate headquartered in Philadelphia. Although CMCSA recently overpaid for acquired Sky assets, it remains the leader in the US telecommunications segment. High-quality Internet is in demand among American families, and the company’s share in this niche is constantly growing. It also feeds cash flow..

The financial results of the corporation for the third quarter of 2018 exceeded experts’ expectations. Adjusted net profit on paper was $ 0.65, while analysts had forecast $ 0.61. In addition, revenue increased by 5%..

Morningstar score for CMCSA: fly with a target price of $ 42.

3. Salesforce.com [NYSE: CRM]

Salesforce.com is a pioneer in cloud software. And the company’s growth and profit growth in the last quarter is a sign of good strategic management. According to Morningstar experts, Salesforce has great prospects for growth in enterprise cloud applications and instant updates. Moreover, the company reduces the cost of products.

Morningstar CRM score: fly with a target price of $ 180.

4. Honeywell International [NYSE: HON]

Honeywell is an American corporation manufacturing electronic control and automation systems. Its main area is aerospace equipment, technologies for the operation of buildings and industrial structures, automotive equipment, turbocompressors. This is one of the most diversified stocks in the manufacturing sector. Analysts say the operating system is modeled on Toyota Motor Corp. [TM], will help the company increase profits in the next five years.

Honeywell has improved its asset portfolio with the recent acquisition of Intelligrated. HONs are currently traded at a price-to-cash-flow ratio of 14.1 (P / FCF). An indicator of less than 15 is considered a sign of a healthy business. This means that the company earns on its core business, and it still has money that can be used to pay dividends (2.42%) or buy back shares.

Morningstar score for HON: fly with a target price of $ 150.

5. Altria Group [NYSE: MO]

Morningstar analyst Philip Gorham says tobacco giant Altria has taken the right strategic step by acquiring vaping market leader Juul. But the price of $ 12.8 billion still seems high to him. Nevertheless, MO is well adapted to current demand, given the decline in cigarette sales..

The expert suggests that the company compensates for the annual decrease in the share of tobacco products in the business with the help of price leverage. Now MO’s P / CFC ratio is 13.6, which indicates stable support for cash flow from core activities.

Morningstar score for MO: fly with a target price of $ 62.

6. Philip Morris International [NYSE: PM]

This is another giant in the tobacco market that Gorham recommends paying attention to. He notes that reliable PM stocks are trading at a good discount on intrinsic value given the impressive cash flow. Also, do not forget that shareholders receive 6.8% of dividend income..

Morningstar PM rating: fly with a target price of $ 102.

7. State Street Corp. [NYSE: STT]

Last year was a disaster for stocks of American banks, given strong expectations from rising interest rates, tax cuts and deregulation. State Street had to fight for revenue growth, while customers were worried about commissions. Institutional investors were inactive, and the company set historically high rates in the face of growing competition. Despite these obstacles, reliable STT stocks are trading at a P / FCF of 5.2.

Morningstar Evaluation for STT: Buy with a Target Price of $ 90.

8. Texas Instruments, Incorporated [TXN]

Texas Instruments is an American company, a manufacturer of semiconductor elements, microcircuits, electronics and products based on them. Analysts believe that in the future the situation on the company’s market will soften, and TXN sales activity will provide good opportunities for long-term investors. The emphasis on high-performance analog and embedded circuits speaks of a solid strategic vision. It should lead to an increase in gross profit. The company also has all the resources to extract the maximum income from the growing trend of the “Internet of things”, because it creates a steady demand for TI chips.

Morningstar TXN Score: Buy with a Target Price of $ 106.

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