Economics
fiscal profligacy (Government spending as a percent of GDP is too high and the looming explosion in entitlement expenditures will make it worse. There is no good solution save spending discipline.)
http://www.townhall.com/columnists/PaulWeyrich/2007/10/04/earmarks_and_congressional_corruption
protectionism (Free trade is a major positive for world and
Politics
Domestic
International War Against Radical Islam
The Market
Technical
Fundamental
I focused most of my attention last week on Citigroup as the poster child for financial institutions that has ‘come clean’ on their exposure to the sub prime problem; but Merrill Lynch deserved as much attention. And like Citigroup, its stock price has lagged the recovery of others in its industry. MER is on the Dividend Growth Buy List.
Merrill Lynch is a leading financial services firm providing underwriting, investment advisory, securities brokerage and trading and investment management. The company has grown profits and dividends 18-20% over the last five years, earning a return on equity in the 14-15% range. Recent results have benefited from increasing stock prices, rising IPO’s and healthy merger/acquisition activity. While the credit problems may curtail some parts of MER’s business, the likelihood of a ‘soft’ economic landing in the US, the global economic strength and the current reasonable valuation of US equities should insure that any shortfall will be modest and short lived; and the recent decline in Merrill’s stock more than reflects any near term slow down in earnings growth. Furthermore, the company’s $6 billion stock back program provides evidence of management’s confidence in the future growth.
EPS: 2006 $6.64, 2007 $8.75, 2008 $8.70; DVD: $1.40 YLD 1.9%
http://finance.yahoo.com/q?s=MER
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