Three Stocks to Watch in 2015

After extensive research and looking into many different companies I have compiled a list of three companies that should be good long term investments in 2015.

U.S. banking giant JP Morgan (JPM: NYSE) has been operating under trying circumstances since the global recession as many large U.S. banks were bailed out by the Federal Government so they would not fail bringing about a banking collapse. With the advent of new banking regulations, banks will not produce the stellar returns they were capable of before the crisis ensued. With that said, fundamentals in this industry should improve throughout the year. This has not yet been factored into valuations for their stocks. The U.S. housing market is on the mend, foreclosures are declining, as are their expense on balance sheets, unemployment is improving and regulatory concerns are becoming clearer. There are also good capital ratios and as interest rates increase, margins will get better.

There are some headwinds to get through as you should as you should look at banks that are top tier and have good valuations. At the very least they should have a 1.35x book value and at least ten times EPS. These negatives are more than expected by long term investors.

United Technologies

United Technologies (UTX: NYSE) is a diversified industrial company. They provide products and services to buildings systems. They also provide services to global aerospace industries. There sales are well diversified, with 60 percent of their sales outside of the United States in 2014. Their end market sales were solid, as 53 percent were in aerospace, 47 percent in commercial and industrial for 2013. Aerospace sales target both commercial and government, including the defense industry.

UTX has a good long term track record of financial growth. They have solid double digit EPS growth, good cash generation and a stock price that has outperformed industry peers over the last decade.

What are the risks? There are slower growth trends in economies not the U.S. We see an aging aerospace cycle and the company is breaking in a new CEO after Louis Chenvert left in a hurry. The stock price is at a good discount in the overall market which means patient investors will be rewarded in the long term.

Google

Google (GOOG: Nasdaq) did very well in 2013, but had some challenges in 2014. These issues continue to weigh on the stock price. The European Union (EU) is investigating the search engine, but this will not have a big price impact. However, there is a separate investigation into their Android division and other general tax risks that have brought a degree of uncertainty into the price of their stock.

Google has good exposure to the broader picture when it comes to industry growth. These include the internet, mobile internet, online video (YouTube), travel, payments, automobiles, digital content and the next big trend emerging, home automation to help the company perceive. Google has done a good job of moving advertising money from traditional media to internet and mobile internet platforms.  However, this move is still young and there is a lot more play there.

Those are the negatives, now let’s look at the positives. Google’s stock is trading at 16.5x earnings per share (EPS). This makes it undervalued in the industry. There is a good possibility of the company seeing solid growth over the next three years, solid as in double digit. This puts the price/earnings to growth ratio near one. This make Google a solid value in the internet and technology industry.