LONDON -- I love a stock-market panic.
Crashing confidence in the eurozone is providing the bargain opportunities blue-chip investors often have to wait years for.
I trawled the market looking for the shares that are trading near their lowest price for a year. Following is a list of 15 FTSE 100 and mid-cap stocks from a broad range of sectors that are currently on sale at depressed prices.
I've removed a large number of mining companies from my trawl results, as so many are at historically low prices, a number of which fellow Fool Cliff D'Arcy recently looked at.
Here is my pick of 15 stocks trading at low prices today.
|
Name |
Market |
Share |
52-Week |
% |
P/E |
Yield (%) |
|---|---|---|---|---|---|---|
|
Royal Dutch Shell |
131,194 | 2,007.5 | 1,942 | 3.4% | 7.20 | 5.1 |
| Anglo American | 28,545 | 2,044 | 2,040 | 0.2% | 7.01 | 2.2 |
|
WM Morrison Supermarkets |
6,951 | 272 | 272 | 0.0% | 10.6 | 3.9 |
| Kazakhmys | 3,881 | 709 | 707 | 0.3% | 4.40 | 2.4 |
| RSA Insurance | 3,591 | 100 | 99.5 | 0.5% | 7.28 | 9.0 |
| Investec | 3,100 | 326 | 321 | 1.6% | 8.17 | 5.2 |
| Man Group | 1,518 | 81 | 80 | 1.3% | 20.5 | 12.6 |
| National Express | 1,063 | 200 | 200 | 0.0% | 12.1 | 4.7 |
| Cable & Wireless Communications | 779.4 | 30.1 | 30.1 | 0.0% | 12.9 | 16.3 |
| JD Wetherspoon | 473.2 | 377 | 371 | 1.6% | 9.21 | 3.2 |
| Synergy Health | 450 | 803 | 793.5 | 1.2% | 17.3 | 2.0 |
| Guinness Peat | 383.2 | 23 | 23 | 0.0% | 20.9 | 5.2 |
| Interserve | 354 | 277 | 270 | 2.6% | 8.78 | 6.9 |
| Shanks | 341.8 | 84 | 84 | 0.0% | 20.7 | 3.8 |
| Workspace | 309.2 | 223 | 213 | 4.7% | 8.3 | 3.6 |
It is important when researching shares to determine whether a company's earnings and dividend are sustainable. Larger companies are often the dominant, established participants in their industries. While that provides some help, it doesn't make the shares immune from management shortcomings (such as a disastrous acquisition) or industry decline.
From the list, I've picked three shares that I think stand out.
1. Royal Dutch Shell
How brave do you have to be to buy Shell? At today's price, you don't need to be brave at all.
Shell is a king of the dividend payers -- the titan oil company has not cut its dividend to shareholders since the end of World War II. In fact, in 2011, dividends from Shell alone accounted for nearly 10% of all dividends paid out by U.K.-listed companies.
Concerns about economic growth in the eurozone have recently hit the oil price. Today, Shell shares are cheap, having rarely traded for any less during the past 18 months.
An investor buying Shell today gets a dividend yield over 5% that is forecasted to continue rising during the next two years.
The quality of Shell's earnings demonstrates the company's bargain credentials. Despite the near economic depression the world has recently suffered, Shell delivered an average 225 pence of annual profit per share between 2008 and 2011. How profitable will Shell be going forward? Considering Shell's profits held up well during the banking crisis, I am confident of the company's long-term future regardless of developments in the eurozone.
2. JD Wetherspoon
JD Wetherspoon is the company behind some of the biggest pubs in the U.K. In a Wetherspoon's, you can still find a decent pint on sale for less than 2 pounds and a traditional breakfast for just 2 pounds 99 pence.
Despite the doom and gloom around the pub industry, JD Wetherspoon has enjoyed reasonable growth in the past five years. Sales for 2011 were 25% higher than in 2006. Earnings per share reached 40.3 pence, versus just 24 pence five years previously.
The current price suggests the market may be worrying about debt levels at the company. JD Wetherspoon has debts almost equal to its entire market capitalization. In 2009, the dividend was sacrificed to pay down borrowings when they stood at a similar level to today's.
Fortunately for the bargain-hunters, the market is not demanding a champagne-like markup for JD Wetherspoon shares. The company trades at 9.9 times forecasted earnings for 2012, falling to just 9.2 times the consensus 2013 forecast. The dividend was restored for 2010 and is expected to rise modestly in the next couple of years, giving a reasonable yield.
The debt worries me, however, and I expect the current market falls to offer better value elsewhere, such as JD's rival chain Greene King, which currently trades on both a higher yield and lower earnings multiple.
3. WM Morrison Supermarkets
Recent troubles at Tesco have drawn investors' attention away from the value elsewhere in the U.K. supermarket sector.
If you like to shop around for bargains, Morrison's shares are currently trading close to their lowest since January 2011. Better still, the supermarket chain is trading at its lowest rating in the past five years at just 9.85 times 2013 earnings and is expected to yield 4.4% in dividends.
Of the supermarkets available, Morrison has the best growth prospects. Consensus forecasts suggest EPS will grow at an average rate of 8.1% for the next two years. The dividend is expected to rise, on average, 11.4% per year in that time.
Morrison's looks to be a low-priced growth share that investors may have overlooked. While its most recent dividend payout of 3.9% is much less than the 5.1% on offer from J Sainsbury and its historic P/E of 11.1 is well ahead of Tesco's cut-price rating of 9.5, today's price might represent the best opportunity to pick up shares in the company since the problematic Safeway takeover of 2004.
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