With the S&P 500 in the midst of its longest winning
streak since 2004 and both that index and the Dow Jones
Industrial Average sitting at their highest levels since 2007,
some investors may be inclined to think there is little value
left in this market. After all, the S&P 500 has more than
doubled since the March 2009 market bottom.
Still, it pays to remember that there are more elements to a
stock's value than just broader market ascent. In his famed book,
"The Intelligent Investor," Benjamin Graham highlighted several
value criteria including a moderate price-to-earnings ratio,
earnings growth, a solid financial condition and a strong
dividend track record.
With those principles in mind, here are three blue chips that
still look attractively value even with today's elevated broader
Occidental Petroleum (NYSE:
) The U.S. Oil Fund (NYSE:
) has surged almost five percent in the past month, but investors
have done better with less risky mega-cap oil fare such as Dow
components Exxon Mobil (NYSE:
) and Chevron (NYSE:
). Investors have done even better with Occidental, which has
soared 9.3 percent in the past 30 days, indicating that
Occidental is again living up to its reputation of often being
more correlated to rising oil prices than its larger rivals.
Occidental's reserve replacement ratio is expected to average
140 percent over the next several years. Not to mention, the
company's debt is highly rated (debt/equity ratio of just 0.19),
so it can tap the capital markets at favorable rates if need
Then there is the fact that the company's costs are lower than
rivals such as Exxon because Occidental only drills onshore in
places such as California's Monterey Shale,
which may hold 15 billion barrels of recoverable
Speaking of costs, Occidental is in the middle of a major
cost-cutting program that CEO Stephen Chazen said will be
fourth-quarter 2012 earnings and throughout 2013
Regarding the dividend, it has more than quadrupled since
2002, increases have become the norm so it is reasonable to
expect to another
and the payout is safe because the company has
$3.7 billion in cash
) It might be hard to view the French pharmaceuticals giant as
attractively after a 42.3 percent gain in the past year, it is
also hard to view this as a pricey stock. With a forward P/E
ratio of 7.1 and a price-to-book
ratio of 1.78
, Sanofi is less expensive by those metrics than GlaxoSmithKline
) and Johnson & Johnson (NYSE:
). Sanofi also has a higher dividend yield than J&J.
On the basis of price-to-sales,
Sanofi is again superior to Glaxo
. The recent FDA approval for Sanofi's Aubagio puts the company
into an intense, but potentially rewarding competition in the
Multiple Sclerosis market, which could lead to sales of $10
billion annually for pharmaceuticals firms.
Additionally, Sanofi is regarded as well-run and adept at
dealing with patent cliff issues. For those that like anecdotal
evidence of well-known investors endorsing a stock, Warren
Buffett's Berkshire Hathaway (NYSE: BRK-A)
owns both Sanofi and J&J
. However, Berkshire sold a massive chunk of its stake in one of
those companies in the third quarter of 2012 and it was not
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