Though value investors have been some of the most successful investors out there, finding good stocks at bargain prices is far from easy. Though markets aren't as efficient as some university professors may want to tell you, they generally do a pretty good job pricing stocks. So while there are good deals out there, you're going to have to break a bit of a mental sweat if you want to make sure that you're investing in the stock equivalent of Brad Pitt, not Kato Kaelin.
Fortunately for us, in the search for stock market values, we have the 130,000 members of The Motley Fool's CAPS community voting on which stocks are true stars and which are just posers. To gather some ideas, I've dug up a handful of companies valued at less than twice their book value -- a measure often used by value investors. Below is a selection from the array of companies that fall into this category, but you can also run the same screen that I did on the CAPS screener.
|
Company
|
Book Value Multiple
|
1-Year Stock Performance
|
CAPS Rating (out of 5)
|
|
Morgan Stanley (NYSE: MS )
|
0.8
|
(46.1%)
|
**
|
|
UBS
|
1.1
|
(65.4%)
|
**
|
|
UnitedHealth Group (NYSE: UNH )
|
1.4
|
(34.2%)
|
*****
|
|
Lowe's Companies
|
1.6
|
(15.5%)
|
***
|
|
EMC (NYSE: EMC )
|
2.0
|
(13.6%)
|
****
|
Source: Capital IQ, a division of Standard & Poor's; Yahoo! Finance; and CAPS as of April 17.
As you can see, though these stocks all carry value-like multiples, the CAPS community obviously doesn’t think all of them are worthy of your investment dollars.
No twinkle in these stars
Surprises abounded in the financial world last week. After Wells Fargo (NYSE: WFC ) provided the spark, a cadre of other financial companies -- including Goldman Sachs (NYSE: GS ) and Citigroup -- followed with better-than-expected earnings. Euphoria ensued.
The apparent good news out of the financial industry has yet to turn the tide on CAPS, however, and most of the major financials are still limping along with low ratings. Both UBS and Morgan Stanley are currently two-star stocks -- much too low for them to be in the running for the top-value-stock crown.
Turning to Lowe's, we find one more star than UBS and Morgan Stanley, but a mediocre rating nonetheless. While many CAPS members believe Lowe's is a better-run company than archrival Home Depot (NYSE: HD ) , concerns over the state of the economy mean that many members have a lackluster outlook on both retailers in the near term.
A five-star stock is born!
Investors' reactions to earnings from tech-industry giants like Google (Nasdaq: GOOG ) have shown that there is some concern over the outlook for the industry. Some tech titans have found their way into the good graces of CAPS members, and EMC is among that group. Though concerns over the economy do impact EMC, CAPS members like the long-term prospects for storage and retrieval technology, a sector that EMC dominates.
But EMC's four-star rating wasn't quite enough to put it in the top spot this week, as UnitedHealth edged it out. Why UnitedHealth? We may be better off asking why not. The company is one of the leaders in the health insurance industry -- an industry that should weather the recession better than most. And while there is little known for sure about President Obama's impending health-care reform, many CAPS members see UnitedHealth as a potential beneficiary of the changes.
Earlier this month, CAPS All-Star Shibbles gave the stock a thumbs-up, saying: "Another stock expected to boom with Obama's health care plan." A day later, fellow All-Star Dylan67 tacked on: "Long term buy. Baby boomers aging and working longer."
Make your vote count!
Do you agree that UnitedHealth could be America's next top value stock? Click over to CAPS and let the rest of the community know what you think. And while you're there, you can log your vote for the other stocks that you think should be in the running.
More CAPS-lovin' Foolishness:
RSS Headlines
Fool UK