The Wall Street Journal-20080117-SmartMoney Stock Screen - Not Just Income
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SmartMoney Stock Screen / Not Just Income
Jones Lang LaSalle is a real-estate company, and so the stock market hasn't treated it kindly of late. In July, its shares briefly rose above $120. Now they fetch well less than $70.
That might be too low a price. Jones doesn't own lots of pricey real estate. In fact, relative to the money it makes, the company owns little of anything. It is mostly an advisory and service firm with offices in 50 countries. Jones gets paid to manage properties, represent corporate renters and property owners and manage real-estate investment funds. Its business is poised to slow, but perhaps not as much as the stock price suggests.
Wall Street reckons the company generated sales of $2.6 billion in 2007, a 29% increase. This year, sales are seen climbing 5%. The company's business is spread fairly evenly around the world, so that a pickup in one market helps offset a slowdown in another. That isn't to say Jones will flourish through a slowdown. Some of its most lucrative markets are tied closely to the financial sector, which is struggling.
Even with the projected sales increase, profits for Jones are seen dipping 12 cents a share to $7.13 in 2008. But that number puts the stock at just nine times forward earnings, a discount of about 40% to the broad market. Perhaps earnings forecasts are too ambitious, but Jones has beaten them four times in its past four quarters, by an average of 13%. The company also generates a decent amount of cash. During the first three quarters of 2007 it cleared $153 million from operations and spent $66 million to retire shares -- five times what it spent on dividends.
The share price puts the stock's dividend yield at a nearly respectable 1.5%. That, along with the modest valuation, earned the company a spot on our Not Just Income screen. It looks for companies with at least so-so dividends, but also with plenty of potential for share-price gains.
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Growth and Dividends
These eight stocks offer both reasonable dividends and significant growth
prospects. Company (Ticker) Industry
Price Yield Forward P/E Return on
(Current Year) Equity
American Eagle Outfitters (AEO) Apparel Stores
$17.70 2.3 % 10 29%
BlackRock (BLK) Investment Brokerage
204.06 1.3 22 8
Fastenal (FAST) Building Materials
34.69 1.3 19 22
Garmin (GRMN) Scientific/Tech Instruments
71.40 1.1 16 37
Jones Lang LaSalle (JLL) Property Management
65.10 1.5 9 26
LAN Airlines (LFL) Regional Airlines
12.32 7.0 12 30
Lincoln Electric (LECO) Small Tools & Access.
61.74 1.6 12 20
Regal-Beloit (RBC) Industrial Electrical Equip.
36.75 1.6 9 14
Note: All data as of Jan. 14, 2008
Source: Hemscott
