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Weekly Bargain Bin Emerging Blue Chips Update Q3 Week 12

249 views  2012-09-22 14:52   Tagsblue  chip  bargain  bin  below  book  value 

Emerging Blue Chip Stock = minimum market cap 100M + minimum 2/10 continuous years of dividends.
Market Price = book value + premium for future growth.

Bargain Bin Emerging Blue Chips

Out of 225 stocks in my emerging blue chip watchlist, 19 trade at or below half of price-to-book-value: 4 from Americas, 4 from Asia and 11 from Europe.

Woori Finance Holdings Co. moved up from 0.50 P/B to 0.52 P/B in the last week, lowering the total bargain bin emerging blue chips to 19 from 20.


Near Bargain Bin Emerging Blue Chips

The following 44 stocks from my emerging blue chip stocks watchlist trade below 0.8X book value: 10 from Americas, 17 from Asia and 17 from Europe.

Americas

New addition from last week: Rona Inc. (TSE:RON).

RONA is a Canadian distributor and retailer of hardware, home renovation and gardening products. The company's major operating challenges have left its fundamentals only 1/4 decent. Since 2007, revenue is flat, net income has declined steadily, dividends were only instituted in 2010, cash-flow negative 3/5 years and cash falling the past 3 years. The only half-decent spot in the financials are rising assets and falling debt the past 5 years.

Lowe's Companies (NYSE:LOW) recently initiated a (failed) takeover bid for RONA. Lowe's C$14.50 offer for Rona hit a wall of opposition from numerous stakeholders, including RONA board of directors, franchisees and Quebec politicians.

RONA's share price had climbed from $8.70 in late 2011 to $14.00 in early August (+60.9%). Stock has dropped off -21.7% from there and price-to-book value has dipped to 0.79.

Asia

Woori Finance Holdings Co. moved up from 0.50 P/B to 0.52 P/B in the last week.

Europe

Since last week, UBS price-to-book went up from 0.78 to 0.81 and out of my near-bargain bin list of emerging blue chips.

My view on banks in general is that their books cannot be trusted. The Western world is going through a crisis in banking that is nowhere near resolving itself as political forces choose to cover things over rather than dig them up and fix them. By the way, what is up with google finance pages not showing financials for any banks? Go ahead and try it yourself... punch up any bank using google finance and all financials are missing. Very spooky.

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