Janelle Nelson, portfolio analyst at RBC Wealth, is bullish on the stock market, but said it is still due for a breather. In this interview with NBR, she answers viewer questions and reveals her own stock pick.
Please give your opinion on whether or not to purchase the stock Facebook, now.
– W. Burroughs
NELSON: The quarter was clean, active users increased 21 percent. Mobile revenues grew over the last five quarters from 0 to $2.6 billion.
But the stock is pricey at almost 50 times earnings. We think it will take a breather. But like a lot of upstarts, we think it`s got room to go.
What are your thoughts on CSCO for the long term?
– David B., Mexico, Mo.
NELSON: Well, this is a company that has made $65 billion in acquisitions in the life history of the company. Some very good. Some not quite so good. But bottom line, it`s a cash machine. They will generate $11.2 billion in cash this year, half of that will be returned to shareholders in the form of dividends, as well as repurchases.
But bottom line, they begin to dominate the sector again. It`s trading in a range. It`s at the top end of that range. We buy it on a pull back.
Kraft Foods recently spun off Mondelez, I would like to sell the weaker part and invest in more of the stronger. But, which is the stronger, or is it too soon to know?
– Charlotte V., Grosse Pointe Farms, Mich.
NELSON: Oh, wow, that`s a tough question. If you told me that Velveeta Cheese, Kraft (NYSE:KFT) Mac and Cheese, Oscar Mayer wieners would be hitting the ball out of the park, I would not have believed you.
GHARIB: All right. Let`s make the switch from food to oil. David I. wants to know about TransCanada, the big pipeline company.
NELSON: You know, it`s one of our Canadian companies. We like the stock long term, they are one of the kind — they`re the company that controls the Keystone XL pipeline, and there is still controversy if that will get approved or not.
But what we`ve believed is by 70 percent chance of it getting approved, a 3.8 percent yield. They have grown the dividend every year for 12 years in a row and they`re converting a pipeline to move oil east instead of natural gas. We like the stock here, would be a buyer.
MATHISEN: Our viewers have asked about some of their favorite stocks. Now, you tell us about one of yours. It`s Weyerhaeuser (NYSE:WY). You like the trees, do you?
NELSON: I`m liking the trees. What I like about Weyerhaeuser , it`s very simple. It`s a real estate investment trust. It gives you a dividend of 2.8 percent. It increased 18 percent this year.
We think that dividend will increase 14 percent next year.
It trades 25 percent below its net asset value and the housing recovery has legs. We think, because of their exposure to lumber or its strand board, we think this stock is going to work and I think it`s well-positioned in the current environment.
Disclosures: Nelson does not personally hold any securities discussed. RBC Wealth makes the market in all of the securities discussed. The company has an investment banking relationship with TransCanada and owned at least 1 percent of the outstanding and it has an investment banking relationship with Kraft Foods.