Market Monitor: Mark Luschini on Stocks

Mark Luschini, chief investment strategist at Janney Montgomery Scott, talks about the markets and his stock picks, as well as answers viewers’ stock questions.

I bought 300 shares of Apple last year at around $600 per share. Do you think I should sell AAPL at this price, or hold for a higher price?
-Jenny, Minn.

LUSCHINI: I think … she should hold on for a higher price later. Unfortunately, that $600-plus is a sunk cost at this juncture. But the fact of the matter is, Apple (NASDAQ:AAPL) is still an iconic brand, is generating over $15 billion of free cash flow a quarter. It pays today — today`s price a 2.9 percent dividend yield and we`re in kind of a (INAUDIBLE) between their product cycle at the moment.

So, I would wait to see what they might be launching this fall, which could grab some sponsorship back in their share price and drive it higher before you`re willing to part with it.

How does the outlook of Vodafone Group look for the next year?
-Alexis B., El Paso, Texas

LUSCHINI: We think pretty good …

Vodafone, obviously, a global wireless carrier developing activity for its businesses in both emerging market countries and as well-developed markets. The stock pays a 7 percent dividend yield, which is exceedingly handsome and, obviously, gets you a long way towards realizing an impressive total return. Plus, it owns about 49 percent of the Verizon (NYSE:VZ) Wireless footprint here in the United States, which is a lucrative proposition and there`s increasing talk if, perhaps, of Verizon (NYSE:VZ) is going to either buy them out or do something in a way to pay them a huge dividend as a consequence of their ownership stakes.

So, I would hold on to Vodafone.

As a long-term holder of Intel, I would appreciate a discussion of the company’s future prospects competing in markets such as mobile, rather than PCs.
-David, Blue Hill, Maine

LUSCHINI: We think so. I mean, Intel (NASDAQ:INTC) again is an iconic franchise, a mote business, if you will, given all the industries impacted by its chip-making capacity. Obviously, it stumbled here recently, particularly being rather slow in making the transition, supporting PC — PC sales that is, to smartphones and other tablet-like devices.

But we think they`ll get it. In the meantime, you get nearly a 4 percent dividend yield at today`s price. The stock seems relatively cheap at about 11 times forward earnings so it has evaluation support. And again, it`s a cash cow.

Do, we continue to think the longer term prospects for Intel (NASDAQ:INTC) look very attractive.

MATHISEN: Let`s get to couple of your picks. Kind of bonus time now — two stocks that you like. We got about 45 seconds left. So, 20 seconds apiece on PNC, and Helmerich & Payne (NYSE:HP). Why do you like them each?

LUSCHINI: PNC is a recovery on two things. Recovery story on two things, really — the housing market and it has a big footprint in the Southeast, which is a growing populous area. In addition, obviously, a recovery in distressed sales, particularly in the Floridian marketplace, and as well as domestic recovery. So, it`s a 1-2 punch that we think is going to be profitable for PNC.

And, obviously, as it relates to Helmerich & Payne (NYSE:HP) — here`s a company in North America, has a state of the art oil rig portfolio, active in the Bakken shale and has impressive day rates. And we think again strongly about the long-term prospects for the energy in the United States, which we think HP is going to be a benefactor of.

Disclosure: Luschini owns PNC and Helmerich & Payne for clients.

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