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Cornelius Chan Blog

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Bargain Bin Blue Chips Update Q2 Week 8

244 views  2012-05-26 10:34   Tagsblue  chip  dividend  bargain  bin 

Bue chip stock (my def.) = minimum market cap 1B + minimum 10 years continuous dividends.

The DJI closed at 12,454.83 today, up +0.69% from last Friday's close. The Dow is up +87.94% from its 5-year low.

This week I have completed filling in price-to-book and price-to-earnings ratios for the rest of the blue chip stocks in my watchlist. During this data entry task I discovered a few more first-class stocks that are trading at less than half of book value. Unsurprisingly, some are bank stocks from Europe. LOL

I also have a correction to make from last week. Denso Corp., Sharp and Sony had incorrect price/book ratios in last week's list. This week Sharp (0.65X book value) and Sony (0.54X book value) appear in the 'honorable mention' list below. I apologize for the incorrect math.

In this week's list of bargain bin blue chips, we can see the appearance of a Hong Kong company and four European banks.  Having done no fundamental analysis on any of these companies, none of them really appeal to me as investments.  No HK real estate conglomerate, Japanese tech companies, or European banks for me, thanks anyways.

The following blue chip stocks deserve honorable mention for their proximity to 0.5X book value.

There are quite a few desirable companies in this list. I already own shares of Nokia and am buying a little bit more here and there as the price falls further. Again off the top of my head with no prior analysis, I would really like to own Guangshen Railway of China, OMV of Austria, Delhaize of Belgium and STMicroelectronics of Netherlands.

If there is a major stock market crash and shares become universally cheap, I will probably invest in Hong Kong through ETF and the same goes for Japan. The Western banks are completely off my radar as the risk of bankruptcy due to insolvency is too high. Lukoil and Repsol look like good companies from afar. If there is a -30%+ Dow event these may be good candidates for the oil & gas portion of my portfolio.

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