Market Update - Buy Signal JCI@12.5x PE’11

Market Update – February 2011

  • JCI has dropped by 7.5% on YTD basis and 9.4%from its peak, mainly due to
    1. profit taking – strong performance,
    2. inflation fears,
    3. tension in middle east, and
    4. stretch valuation
  • At JCI 3,447, the market is trading on 13.7x PER’11 on the back of +18% EPS growth, higher compared to average historical 5 years of 12.8x

Assuming current 8.9% bond yield, we estimate 12.5x 2011F PER as a Buy signal (spread narrows close to 1%) or equal to JCI at level 3137.
We would like to recommend stocks which trades at or below 12.5x PER’11 with strong management and balance sheet.

  1. Market Update Februari 2011 (330.2 KiB)