Motorola Solutions Inc. (MSI, $46.55), formerly Motorola Inc., provides communication products and services for enterprise and government customers worldwide. The company separated or sold three business entities in 2010 and 2011.
"Despite the spinoff of the high-growth mobile devices division, we believe MSI offers an attractive combination of mid-single digit revenue growth and strong free cash flow growth. While the government business has lower growth potential, in our view, it carries high margins and should benefit from an analog to digital conversion for public safety networks. We view the smaller Enterprise division as having higher growth potential and significant opportunities in such areas as handheld scanners and data capture." -- Standard & Poor's Research, 01/07/12
The new Motorola Solutions (MSI) stock, after the spin-off of Motorola Mobolity (MMI), began trading on Jan. 4, 2011. The company then sold its wireless network infrastructure assets in April 2011. S&P estimates "that MSI recently had about $6.3 billion in cash and short-term investments. We estimate MSI has about $1.5 billion in long-term debt."
As reports on Jan. 5, 2012 in Forbes.com, "It’s not very surprising that Eduardo Conrado, SVP & CMO of Motorola Solutions, is bullish about the effectiveness of mobile. That being said, Conrado feels that 2012 will be the rise of the purpose driving brands. Technology will become critical in sales enablement, bringing marketing and sales even closer in developing customer relationships. 'Marketers will move from a focus on ‘product’ to a focus on ‘solutions’ – enabling key experiences for customers,' said Conrado. And mobile is a key enabler."
Wall St. projects the company to grow earnings per share (EPS) of 13% in 2012 and 14% in 2013. The 2012 price earnings ratio (PE) is 16.2 and the dividend yield is 1.89%. The latest earnings report in late October 2011 beat analysts' expectations.
MSI is a large-cap stock with a 3-Star Hold rating and a $55 12-month price target from S&P. Institutions own 86% of the stock.
S&P gives the stock a Qualitative Risk Assessment of "Medium". "Our risk assessment reflects the company's exposure to the economic health of the telecom industry and risks related to high-volume manufacturing and distribution to enterprises and governments. This is offset by our view of MSI's strong cash balance."
MSI stock traded between $37-$47 during all of 2011. The trading range has narrowed substantially since early Dec. '11, and the stock looks like it's ready for another upward move.
This stock could appeal to growth & income investors and growth investors. I would purchase the stock at the current price, rather than waiting for a pullback, because the chart looks very bullish and there's a distinct likelihood of missing the boat by waiting.
For Townhall readers we’ve published our 2012 model portfolio for Trading and Aggressive Growth. For our subscribers, we’ve created model portfolios for Growth and for Growth and Income. We just posted some preliminary numbers on the portfolios.
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