Although 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
|
|---|---|---|---|
|
National Oilwell Varco |
1.0 |
(52.5%) |
***** |
|
Pulte Homes |
1.0 |
(21.0%) |
* |
|
FedEx |
1.1 |
(44.1%) |
**** |
|
Wells Fargo |
1.2 |
(37.1%) |
*** |
|
Barrick Gold |
1.7 |
(22.4%) |
*** |
Source: Capital IQ, a division of Standard & Poor's, Yahoo! Finance, and CAPS as of May 1.
As you can see, although these stocks all carry value-like multiples, the CAPS community obviously doesn't think that all are worthy of your investment dollars.
No twinkle in these stars
Look wherever you want in the homebuilding industry, but you're going to have a tough time finding a stock that CAPS members favor. KB Home, Toll Brothers
If you want to find an industry under as much fire as homebuilding, finance might be a good place to look. Investors are waiting on the government's stress test results to find out just how much capital industry giants Bank of America
Joining Wells Fargo with a three-star rating is Barrick Gold. A great number of CAPS members think gold and gold-producing companies like Barrick are the way to go now that the Federal Reserve is printing money like ink is going out of style. But there are enough CAPS members putting their thumbs down on Barrick that its stock is still stuck in the minor leagues for now.
A five-star is born!
FedEx delivers the world on time and CAPS members seem to really dig that. The company has taken its lumps from the recession, but has maintained a solid balance sheet and continues to produce healthy cash flow. Analysts predict that the results at FedEx will get worse before they get better, but most of the stock's fans on CAPS seem to be looking to long-term success of the company rather than the immediate future.
Four stars is an enviable rating on CAPS, but FedEx couldn't quite top this week's king of the hill, National Oilwell Varco. Why have CAPS members slapped the community's highest rating on National Oilwell's stock? For that, let's turn to PsychoDr and see what this CAPS All-Star has to share:
Another company that will profit from a gradual improvement in the economy worldwide. They make what the drillers need to run, train the employees of the companies that buy their equipment, and they service what they sell, making it very diffficult for a company to move to a competitor after making the initial investments. Good entry price at this time, lots of share appreciation as things improve. Lots of contracts to help carry them through the slow time. A very strong company with good positioning for growth going forward.
Make your vote count!
Do you agree that National Oilwell Varco 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.
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