Rebound Ideas: The Most Undervalued, Profitable S&P 500 Stocks

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(List compiled by Andrew Dominguez. Data sourced from Finviz and Fidelity.)

Although the global investors experienced an unprecedented downgrade of US government debt, last week’s market sell-off was nothing special, according to Goldman Sachs (via Business Insider). 

The Goldman note points to the fact that this is “The 15th S&P 500 correction of at least 10% since 1975,” which indicates that steep corrections occur once ever two-and-a-half years, on average.

Further: “The current correction is 12% below the April high and modestly smaller than the 18% average of past corrections… At 97 days, the current episode is in-line with the average duration of past corrections.”

Maybe things aren’t so bad after all. US corporations are reporting strong earnings. And GDP growth, however slight, is still positive. 

Of course, not everything is coming up roses. The latest Federal Reserve press release highlights a number of weaknesses in the economy: 

“Indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed.”

Fortunately, energy and commodity prices have declined, easing price inflation pressures in the near term. “Longer-term inflation expectations have remained stable.” 

Unfortunately, the Fed expects to maintain “exceptionally low levels for the federal funds rate at least through mid-2013,” an indication that some of the country’s top economists believe the US is in for an extended “rough patch”.

Consequently, Goldman Sachs views the near future as a mixed bag:

“We see support in strong earnings and past valuation bottoms but lower our 2011 year-end price target to 1400 and 2012 EPS estimate to $102 due to slower global GDP estimates from our global Economists.”

So, are there value opportunities out there? To help you sniff ‘em out, here is a list of S&P 500 companies we consider both undervalued and profitable.

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

List sorted by market cap.

1. Wal-Mart Stores Inc. (WMT): Discount Variety Stores industry with a market cap of $176.48B. TTM P/E at 11.35 versus industry average at 14.74. PEG Ratio at 1.09 versus industry average at 1.26. TTM Price/Cashflow at 7.49 versus industry average at 9.70. TTM Gross Margin at 27.03% versus industry average at 24.97%. TTM Operating Margin at 6.03% versus industry average at 5.50%. TTM Pretax Margin at 5.55% versus industry average at 5.12%.

2. Procter & Gamble Co. (PG): Personal Products industry with a market cap of $168.09B. TTM P/E at 15.09 versus industry average at 15.97. PEG Ratio at 1.54 versus industry average at 1.69. TTM Price/Cashflow at 11.33 versus industry average at 11.89. TTM Gross Margin at 54.06% versus industry average at 52.80%. TTM Operating Margin at 19.16% versus industry average at 19.10%. TTM Pretax Margin at 18.40% versus industry average at 17.90%.

3. The Coca-Cola Company (KO): Soft Drinks industry with a market cap of $153.1B. TTM P/E at 12.15 versus industry average at 12.83. PEG Ratio at 1.32 versus industry average at 1.41. TTM Price/Cashflow at 10.45 versus industry average at 12.11. TTM Gross Margin at 66.67% versus industry average at 59.76%. TTM Operating Margin at 24.48% versus industry average at 22.97%. TTM Pretax Margin at 36.13% versus industry average at 25.26%.

4. Intel Corporation (INTC): Broad Line Semiconductor industry with a market cap of $109.22B. TTM P/E at 9.10 versus industry average at 14.13. PEG Ratio at 0.82 versus industry average at 0.97. TTM Price/Cashflow at 6.24 versus industry average at 13.22. TTM Gross Margin at 74.42% versus industry average at 60.77%. TTM Operating Margin at 34.39% versus industry average at 26.79%. TTM Pretax Margin at 34.43% versus industry average at 26.61%.

5. Cisco Systems, Inc. (CSCO): Networking & Communication Devices industry with a market cap of $77.33B. TTM P/E at 10.98 versus industry average at 22.08. PEG Ratio at 1.09 versus industry average at 1.31. TTM Price/Cashflow at 8.07 versus industry average at 11.32. TTM Gross Margin at 66.42% versus industry average at 60.53%. TTM Operating Margin at 20.32% versus industry average at 18.74%. TTM Pretax Margin at 20.48% versus industry average at 20.06%.

6. Unitedhealth Group, Inc. (UNH): Health Care Plans industry with a market cap of $48.14B. TTM P/E at 9.40 versus industry average at 14.47. PEG Ratio at 0.82 versus industry average at 1.03. TTM Price/Cashflow at 7.52 versus industry average at 9.36. TTM Gross Margin at 24.76% versus industry average at 21.04%. TTM Operating Margin at 8.61% versus industry average at 8.52%. TTM Pretax Margin at 7.92% versus industry average at 6.96%.

7. Walgreen Co. (WAG): Drug Stores industry with a market cap of $32.86B. TTM P/E at 13.76 versus industry average at 14.74. PEG Ratio at 0.94 versus industry average at 1.26. TTM Price/Cashflow at 9.39 versus industry average at 9.70. TTM Gross Margin at 29.93% versus industry average at 24.97%. TTM Operating Margin at 5.51% versus industry average at 5.50%. TTM Pretax Margin at 5.31% versus industry average at 5.12%.

8. CSX Corp. (CSX): Railroads industry with a market cap of $24.18B. TTM P/E at 13.26 versus industry average at 15.67. PEG Ratio at 0.83 versus industry average at 1.11. TTM Price/Cashflow at 8.38 versus industry average at 8.60. TTM Gross Margin at 38.44% versus industry average at 36.43%. TTM Operating Margin at 29.79% versus industry average at 26.58%. TTM Pretax Margin at 25.05% versus industry average at 23.07%.

9. Aetna Inc. (AET): Health Care Plans industry with a market cap of $13.76B. TTM P/E at 7.49 versus industry average at 14.47. PEG Ratio at 0.61 versus industry average at 1.03. TTM Price/Cashflow at 5.80 versus industry average at 9.36. TTM Gross Margin at 28.86% versus industry average at 21.04%. TTM Operating Margin at 9.19% versus industry average at 8.52%. TTM Pretax Margin at 8.28% versus industry average at 6.96%.

10. Netflix, Inc. (NFLX): Music & Video Stores industry with a market cap of $12.49B. TTM P/E at 57.52 versus industry average at 70.61. PEG Ratio at 1.83 versus industry average at 2.32. TTM Price/Cashflow at 16.86 versus industry average at 38.67. TTM Gross Margin at 55.92% versus industry average at 38.61%. TTM Operating Margin at 13.66% versus industry average at 9.66%. TTM Pretax Margin at 13.14% versus industry average at 8.81%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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