Yield Credit Rating Notes January 3, 2018 The following table summarizes the Sector Strategy Spotlight stocks that are discussed in detail in separate sector-specific materials prepared by Janney's Investment Strategy Group. The listed securities are intended to reflect long-term investment themes of Janney's Investment Strategy Group utilizing industry leading companies that could potentially represent a well diversified portfolio. All sectors now have representative sub-industry and sector ETFs. We are Overweight Financials, Industrials, Energy and Materials (new Overweight). We are Underweight Consumer Staples and Utilities. We are favorably Neutral on Technology. Moved to Neutral on Health Care. No other changes for this month. Yield Credit Rating Notes Coverage Consumer Discretionary - 12.4% of 500 Neutral - favorable towards Homebuilders and Home Improvement, Value Retailers, and Consumer Experience - Restaurants, Hotels and Casinos. WALT DISNEY CO/THE DIS 18.01 8.73 1.45 A+ *- Strong management with diversified global operations. COSTCO WHOLESALE CORP COST 28.69 10.03 4.68 A+ Solid top-line growth and successfully growing internationally. WAL-MART STORES INC WMT 21.49 5.45 2.05 AA Dominant market share, price leadership, strong cash flow. HOME DEPOT INC HD 23.34 14.01 1.89 A World s largest home improvement retailer. LAS VEGAS SANDS CORP LVS 22.54 12.00 4.28 BBB- Operates casinos in Las Vegas, Macau, Singapore, and Bethlehem, PA. MARRIOTT INTERNATIONAL -CL A MAR 29.22 14.16 0.95 BBB Benefitting from strong fundamentals and significant US exposure. DARDEN RESTAURANTS INC DRI 20.81 9.50 2.42 BBB U.S. focused restaurant chains with significant dividend. CONSUMER DISCRETIONARY SELT XLY - - 1.18 - Broad exposure to 88 Consumer Discretionary stocks. ISHARES U.S. HOME CONSTRUCTI ITB - - 0.27 - Broad exposure to 46 home construction stocks. POWERSHARES DYN LEISURE&ENT PEJ - - 0.68 - Broad exposure to consumer leisure stocks (restaurants, hotels and casinos). Consumer Staples - 8.7% of 500 Underweight - favorable towards Drug Retailers, Household Products and Beverages. CVS HEALTH CORP CVS 11.87 12.03 2.73 BBB+ *- Largest pharmacy health care provider in U.S. WALGREENS BOOTS ALLIANCE INC WBA 13.53 10.97 2.05 BBB Largest U.S. retail drug chain based on revenues. COLGATE-PALMOLIVE CO CL 24.66 7.53 2.13 AA- Major marketer of personal care and pet nutrition in over 200 countries. PROCTER & GAMBLE CO/THE PG 21.45 7.31 3.02 AA- Expectations are low while stock has dividend support. ALTRIA GROUP INC MO 20.03 8.06 3.61 A- Largest U.S. tobacco company is leading industry price increases. PHILIP MORRIS INTERNATIONAL PM 20.07 9.39 4.06 A Largest publicly traded tobacco company with very solid capital returns. COCA-COLA CO/THE KO 22.46 5.58 3.26 AA- World s largest soft drink company. PEPSICO INC PEP 21.50 6.21 2.69 A+ Major global producer of branded beverage and snack food products. CONSUMER STAPLES SPDR XLP - - 2.63 - Significant exposure to all of the above themes and companies. Energy - 5.8% of 500 Overweight - favor select Oil Services, select Integrateds, select Exploration & Production, and select MLPs. EXXON MOBIL CORP XOM 20.65 16.27 3.52 AA+ World s largest publicly-owned integrated oil company. VALERO ENERGY CORP VLO 14.35 9.86 3.00 BBB World s largest refiner well positioned for shale oil.
Energy (continued) EQT CORP CONOCOPHILLIPS EOG RESOURCES INC HALLIBURTON CO SCHLUMBERGER LTD VANGUARD ENERGY ETF SPDR OIL & GAS EXP & PR ISHARES U.S. OIL EQUIPMENT & ETRACS ALERIAN INFRASTRUCTUR Yield Credit Rating EQT 40.32 17.50 0.20 BBB Marcellus shale play levered to natural gas prices. COP 34.64 6.00 1.88 A- One of the largest independent E&P companies in the world. EOG 53.29 (10.86) 0.60 BBB+ Large independent E&P company with Bakken Shale oil growth exposure. HAL 25.49 74.00 1.42 BBB+ Leading global oil services company. SLB 36.38 44.42 2.80 AA- Bellwether of oil services group, and hence, premium valuation. VDE - - 2.80 - Cap-weighted basket of 131 companies across entire Energy sector XOP - - 0.74 - Equal-weighted basket of 63 E&P companies. IEZ - - 3.27 - Cap-weighted basket of 39 oil & gas equipment and services companies. MLPI - - 6.63 - ETN that tracks performance of Alerian MLP Infrastructure Index. Notes Coverage Financials - 14.7% of 500 Overweight - favor Banks, Capital Markets, Insurance and Consumer Finance. PNC FINANCIAL SERVICES GROUP PNC 15.41 10.09 1.80 A- Major regional bank with focus on Pennsylvania and Ohio. AMERICAN EXPRESS CO AXP 15.43 10.17 1.32 BBB+ Leading global payments and travel and expense services company. DISCOVER FINANCIAL SERVICES DFS 11.57 6.40 1.68 BBB- Solid balance sheet, gaining share, and promising growth initiatives. ALLSTATE CORP ALL 14.50 16.27 1.45 A- Second largest U.S. personal lines property-casualty insurer. /J METLIFE INC MET 11.01 9.00 3.17 A- Largest U.S. life insurer. Well positioned in growing retirement and savings market. /J JPMORGAN CHASE & CO JPM 13.98 8.87 1.89 A- Best-in-class financial services firm with operations in over 50 countries. GOLDMAN SACHS GROUP INC GS 12.71 9.93 1.14 BBB+ Leading position in investment banking, securities, and wealth management. FINANCIAL SELECT SECTOR SPDR XLF - - 1.47 - Includes 66 stocks for broad-based financial sector exposure. SPDR REGIONAL BANKING KRE - - 1.40 - Includes 100 equally weighted regional bank stocks. ISHARES U.S. INSURANCE ETF IAK - - 1.63 - Includes 63 U.S. insurance provider stocks. ISHARES U.S. BROKER-DEALERS IAI - - 1.37 - Includes 29 U.S. investment services stocks with GS and MS largest holdings. Health Care - 13.1% of 500 Neutral - favor Medical Devices, Large-cap Biotech and Pharma. MEDTRONIC PLC MDT 16.87 5.99 2.16 A Very diverse product line, strong cash flow, valuation and dividend support. UNITEDHEALTH GROUP INC UNH 21.16 12.40 1.29 A+ Leading market position with product diversity. HCA HEALTHCARE INC HCA 12.27 11.08 - BB Leading U.S. health care services provider. JOHNSON & JOHNSON JNJ 18.20 7.10 2.37 AAA AAA rated blue chip with valuation and dividend support. MERCK & CO. INC. MRK 14.10 5.19 3.37 AA Full product pipeline with valuation and dividend support. GILEAD SCIENCES INC GILD 10.70 3.00 2.79 A Strong franchises, valuation support and returning capital to shareholders. VANGUARD HEALTH CARE ETF VHT - - 1.29 - Broad exposure from cap-weighted basket of 355 companies. ISHARES U.S. MEDICAL DEVICES IHI - - 0.43 - Cap-weighted basket of 52 manufacturers and distributors. ISHARES U.S. HEALTHCARE PROV IHF - - 0.19 - Broad-based exposure to 47 U.S. health care providers. ISHARES NASDAQ BIOTECHNOLOGY IBB - - 0.29 - Broad exposure to Biotech firms and weighted toward large-cap. ISHARES US PHARMACEUTICALS E IHE - - 1.34 - Cap-weighted basket of 42 pharmaceutical companies.
Monthly Security List January 3, 2018 Yield Credit Rating Notes Coverage Industrials - 9.9% of 500 Overweight - favor Defense, Transports and high quality companies with dividend support. HONEYWELL INTERNATIONAL INC HON 20.22 8.82 1.79 A Diversified portfolio of profitable businesses with growth opportunities. 3M CO MMM 24.72 8.67 2.00 AA- Strong balance sheet (AA-) and history of earnings and dividend growth. EMERSON ELECTRIC CO EMR 24.65 8.59 2.70 A aristocrat with diversified global businesses. INGERSOLL-RAND PLC IR 17.95 9.90 1.89 BBB 66% of revenue from North America. Participating in housing recovery. GENERAL DYNAMICS CORP GD 20.16 8.48 1.63 A+ Fourth largest military contractor and major manufacturer of corporate jets. FEDEX CORP FDX 17.93 13.67 0.73 BBB Strong balance sheet, healthy cash flow and earnings growth. UNION PACIFIC CORP UNP 21.66 12.10 1.82 A Largest U.S. railroad with oligopoly-like industry to support profit growth. INDUSTRIAL SELECT SECT SPDR XLI - - 1.75 - Broad exposure to 68 U.S. based industrials. GE is largest holding. ISHARES TRANSPORTATION AVERA IYT - - 0.91 - FDX and UNP are largest holdings of this Dow Jones Transport ETF. Technology - 25.6% of 500 Favorably Neutral - favor Software, Semiconductors and Communication Equipment. MICROSOFT CORP MSFT 25.24 10.32 1.84 AAA Fortress balance sheet with valuation support and new products. ORACLE CORP ORCL 15.67 8.28 1.51 AA- Strong balance sheet, free cash flow and valuation support. INTEL CORP INTC 13.96 8.56 2.38 A+ Strong balance sheet. Valuation and dividend support. TEXAS INSTRUMENTS INC TXN 23.28 10.74 1.96 A+ Diverse product line with exposure to many end markets and customers. CISCO SYSTEMS INC CSCO 15.70 4.80 2.89 AA- Fortress balance sheet and valuation support. Dominant market position. QUALCOMM INC QCOM 18.58 10.47 3.40 A Solid position in high growth industry with strong cash flow. APPLE INC AAPL 15.13 10.17 1.43 AA+ Leading technology innovator with favorable growth and value. ALPHABET INC-CL A GOOGL 22.04 17.97 - AA+ World's largest Internet firm with further secular growth opportunities. VISA INC-CLASS A SHARES V 28.13 16.33 0.60 A+ World s largest retail electronics payment network. VANGUARD INFO TECH ETF VGT - - 0.96 - Cap-weighted basket of 360 info tech stocks. ISHARES NORTH AMERICAN TECH- IGV - - 0.09 - Cap-weighted basket of 57 U.S.-traded software companies. VANECK VECTORS SEMICONDUCTOR SMH - - 1.37 - Cap-weighted basket of 26 U.S.-traded semiconductor companies. ISHARES NORTH AMERICAN TECH- IGN - - 0.57 - Cap-weighted basket of 27 U.S.-traded multimedia networking companies. Materials - 2.9% of 500 Overweight - favor Diversified Chemicals, and Packaging. VANECK VECTORS GOLD MINERS E GDX - - 0.75 - Liquid and diversified proxy for global gold stocks. DOWDUPONT INC DWDP 19.19 7.43 2.41 - Diversified and generating lots of free cash flow to support dividend. PPG INDUSTRIES INC PPG 18.54 7.65 1.44 A- Solid exposure to fast growing markets and shareholder friendly. SEALED AIR CORP SEE 21.65 6.12 1.29 BB+ Leading global manufacturer of a wide range of packaging materials. ISHARES MSCI GLOBAL AGRICULT VEGI - - 1.72-148 holdings provide broad-based agricultural exposure. SPDR METALS & MINING ETF XME - - 1.11-26 U.S. based holdings that provide broad-based metals & mining exposure. MATERIALS SELECT SECTOR SPDR XLB - - 1.63-28 holdings provide exposure to Materials Select Sector Index.
Yield Credit Rating Notes Coverage Real Estate - 2.8% of 500 Neutral - favor Diversified, Health Care, and Residential. EQUITY RESIDENTIAL EQR 50.58 5.30 3.16 A- Well-positioned with high quality portfolio in attractive markets. J/ DIGITAL REALTY TRUST INC DLR 66.09 7.26 3.27 BBB Focused on providing data center and colocation solutions. VENTAS INC VTR 24.15 2.58 5.18 BBB+ Health Care exposure with large, diversified portfolio that provides steady income. VANGUARD REIT ETF VNQ - - 4.26 - Includes 153 U.S. REITs for broad-based REIT exposure. Telecommunications - 2.0% of 500 Neutral - favor Traditional Carriers. AT&T INC T 12.95 5.10 5.20 BBB+ *- Strong balance sheet and has full ownership of its wireless business VERIZON COMMUNICATIONS INC VZ 13.49 2.21 4.43 BBB+ Well-positioned for wireless growth with high-quality network. VODAFONE GROUP PLC-SP ADR VOD - 10.16 5.31 BBB+ Leading global provider of international wireless telecom services. AMERICAN TOWER CORP AMT 42.26 19.71 1.85 BBB- Largest independent portfolio of wireless towers in North America. ISHARES US TELECOMMUNICATION IYZ - - 3.55 - Broad exposure to 23 Telecom Industry firms. Utilities - 2.7% of 500 Underweight - favor Integrated Electric Utilities. NEXTERA ENERGY INC NEE 21.21 7.36 2.58 A- and dividend expected to grow faster than peer group. PPL CORP PPL 13.50 (1.00) 5.17 A- & valuation should support stock until power markets recover. DOMINION ENERGY INC D 19.26 5.98 3.93 BBB+ Balanced earnings regulated gas & electric distribution and pipelines. UTILITIES SELECT SECTOR SPDR XLU - - 3.38 - Broad exposure to 29 Utilities Sector Index companies. Definitions: - Current stock price divided by EPS consensus estimate for the next four quarters. Estimate - Mean broker estimate of the compounded annual growth rate of the operating eps over the company's next full business cycle (typically 3-5 years). Yield - Trailing 12 month dividend per share divided by share price Credit Rating - Rating assigned by Standard & Poor's to the long term obligations of the issuer if repaid in the local currency of the issuer.
Important Disclosures The Sector Strategy Security List is being provided solely for informational and illustrative purposes, is not an offer to sell or a solicitation of an offer to buy the securities highlighted in the list, and does not constitute investment advice by Janney Montgomery Scott LLC or its affiliates. The Sector Strategy Security List does not refer, and should not be taken as referring, to an actual fund, portfolio or account, and should not be deemed as a model investment portfolio. Decisions to buy or sell a stock should be based on an investor s investment objectives and risk tolerance and this material should not be relied upon in substitution of independent judgment. This material does not take into account individual client circumstances, objectives or needs and is not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The information provided in the list has been obtained or derived from sources believed by Janney Montgomery Scott LLC to be reliable. Janney Montgomery Scott LLC, however, does not represent that this information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of the Investment Strategy Group of Janney Montgomery Scott LLC at this time and are subject to change without notice. The opinions and estimates do not necessarily represent the viewpoint of Janney Montgomery Scott LLC, its Research Department or any other group or employee associated with Janney Montgomery Scott LLC or its affiliates, and may differ from opinions or estimates of Janney Montgomery Scott LLC, including its Research Department, and its affiliates. Janney Montgomery Scott LLC or its affiliates may have issued, and may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented in this material. Janney Montgomery Scott LLC, its officers, directors, employees, or members of their families may have positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis. This list includes only companies that receive research analyst coverage from either Janney Montgomery Scott LLC s Research Department or a research provider whose research is available to Janney Montgomery Scott LLC Financial Advisors and that also currently pay a dividend to shareholders. Thus, the universe of potential companies that could be included in this representative list is narrower than the total universe of public companies. information is as of 12/31/2017. The opinions and estimates with respect to the overweight, neutral or underweight exposure of particular economic or market sectors represent the viewpoint of the Investment Strategy Group of Janney Montgomery Scott LLC and does not necessarily represent the viewpoint of Janney Montgomery Scott LLC or any other group or employee associated with Janney Montgomery Scott LLC or its affiliates, and may differ from opinions or estimates of Janney Montgomery Scott LLC and its affiliates. The Overweight/Neutral/Underweight referenced in this report is intended to be used as a guide for sector rankings relative to the sector make-up of the 500 Index. Currently, the 500 Index includes securities grouped into 10 economic sectors. Overweight generally refers to the Investment Strategy Group s expectation that the sector s fundamentals and/or valuation is likely to be favorable over the next 12 months. Neutral generally refers to the Investment Strategy Group s expectation that the sector s fundamentals and/or valuation is likely to be neutral over the next 12 months. Underweight generally refers to the Investment Strategy Group s expectation that the sector s fundamental and/or valuation is likely to be cautious over the next 12 months. Past performance is no guarantee of future performance and future returns are not guaranteed. There are risks associated with investing in stocks such as a loss of original capital or a decrease in the value of your investment. A company may also decide to decrease or cancel a dividend payment at any time without notice. For additional information or questions, please consult with your Financial Advisor.