At its worst yesterday, October 15, the S&P 500 just missed official correction territory when it bounced back up from 1820, a 9.9 percent drop from the recent high of 2019. In an effort to find stocks that might withstand any further beatings, I used the GuruFocus All-In-One Screener to discover which stocks have held their ground. I simply searched for S&P 500 stocks that were within 5 percent of their 52-week highs. From there, I used the Valuation Map that gives me the ability to quickly view the results based on sectors.
This feature on the screener allowed me to quickly see that utilities and real estate investment trusts (REITs) have held up during the market’s downturn, as the right half of the grid is completely made up of the two sectors. This makes plenty of sense since these stocks tend to have low volatility and offer higher dividend yields. The red color in the grid above indicates a beta below one, meaning that the stock is less volatile than the S&P 500. Utilities are one of the classic non-cyclical stocks. People are not going to stop using electricity if the economy is down. Plus, utilities often pay higher dividends. The Utilities Select Sector SPDR ETF (XLU) is currently yielding 3.54 percent, almost double the average yield of the S&P 500 at 1.87 percent. The dividend yield is also why REITs have remained extremely buoyant during the 9.9 percent drop of the S&P 500. As the yields in treasuries drop, investors are turning to REITs for the extra income. The 10-year treasury yield is at 2.16 percent and briefly dipped below 2 percent on Wednesday. The SPDR Dow Jones REIT ETF (RWR) currently has a dividend yield of 3.22 percent. Looking to the investing gurus for guidance, I sorted the results by the number of guru holders. Here are some of the most widely held REITs and utilities that are maintaining their strength during the recent turbulence:
Excel Energy Inc (XEL) is an electric and natural gas utility servicing customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. The stock is held by five gurus we follow, with Brian Rogers of the T. Rowe Price Equity Income Fund holding the largest position of 5.87 million shares, representing 1.16 percent of the shares outstanding. The stock has a beta of 0.3 and dividend yield of 3.8 percent. It is slightly overvalued in terms of its Graham Number of $29.33. The price at the close of 10/16/2014 was $31.89.
Entergy Corp (ETR) is an integrated energy company engaged primarily in electric power production and retail electric distribution distributions serving customers in Arkansas, Louisiana, Mississippi and Texas. The stock is held by nine gurus we follow, with James Barrow of Barrow, Hanley, Mewhinney & Strauss holding the largest position of 10.5 million shares, representing 5.83 percent of the shares outstanding. The stock has a beta of 0.35 and a dividend yield of 4.2 percent. It is near fair value with a Graham Number of $79.17. The price at the close of 10/16/2014 was $79.40.
Edison International (EIX) is an electric utility company primarily servicing customers in southern California. The stock is held by 11 gurus we follow, with Hotchkis & Wiley holding the largest position of 1.82 million shares, representing 0.56 percent of the shares outstanding. The stock has a beta of 0.50 and a dividend yield of 2.4 percent. It is near fair value with a Graham Number of $55.16. The price at the close of 10/16/2014 was $58.39.
Duke Energy Corp (DUK) conducts its operations in three business segments; Regulated Utilities, International Energy and Commercial Power. It primarily serves customers in the Carolinas, Florida, Indiana, Ohio, and Kentucky. The stock is held by nine gurus we follow, with Brian Rogers of the T. Rowe Price Equity Income Fund holding the largest position of 4.68 million shares, representing 0.66 percent of the shares outstanding. The stock has a beta of 0.24 and dividend yield of 4.1 percent. It is overvalued based on its Graham Number of $49.21. Duke has more growth than most utilities with a 5-year annual EPS growth of 8.8 percent. The price at the close of 10/16/2014 was $78.17.
Essex Property Trust Inc (ESS) acquires, develops, redevelops and manages multifamily apartment communities primarily in Southern California, the San Francisco Bay Area, and the Seattle metropolitan area. The stock is held by six gurus we follow with Chris Davis of Davis Selected Advisors holding the largest position of 132,244 shares, representing 0.21 percent of the shares outstanding. The stock has a beta of 0.76 and dividend yield of 2.77 percent. It is overvalued based on its 10-year median P/S ratio of 7.93 compared with its current ratio of 11.10. The price at the close of 10/16/2014 was $187.53.
HCP Inc (HCP) has one of the largest and most diversified portfolios of any healthcare REIT. The company holds properties related to senior housing, post-acute/skilled nursing, life sciences, medical offices, and hospitals across the United States. The stock is held by five gurus we follow with Manning & Napier Advisors holding the largest position of 258,030 shares, representing 0.06 percent of the shares outstanding. The stock has a beta of 0.44 and dividend yield of 5.2 percent. It is trading at fair value with a P/S ratio of 9.00, just below its 10-year median of 9.12. The price at the close of 10/16/2014 was $42.61.
Simon Property Group Inc (SPG) is America’s largest retail real estate companies and also has stakes in properties outside of the U.S. The stock is held by seven gurus we follow with Chris Davis of Davis Selected Advisors holding the largest position of 260,619 shares, representing 0.08 percent of the shares outstanding. The stock has a beta of 0.8 and dividend yield of 3.13 percent. It is overvalued with a P/S ratio of 9.90 compared with its 10-year median of 6.20. The price at the close of 10/16/2014 was $166.27.
Ventas Inc (VTR) is a REIT that has a portfolio largely consisting of senior housing. It also owns skilled nursing facilities, medical office buildings, and hospitals. The stock is held by six gurus we follow with Jim Simons of Renaissance Technologies holding the largest position of 336,754 shares, representing 0.11 percent of the shares outstanding. The stock has a beta of 0.39 and dividend yield of 4.4 percent. It is now undervalued with a P/S ratio of 6.8 compared to its 10-year median ratio of 7.84. The price at the close of 10/16/2014 was $66.15.
American Electric Power Co Inc (AEP) is an electric utility company that serves customers in 11 different states. The stock is held by seven gurus we follow with Pioneer Investments holding the largest position of 1.85 million shares, representing 0.38 percent of the shares outstanding. The stock has a bets of 0.43 and dividend yield of 3.7 percent. The stock is trading near fair value with a Graham Number of $53.94. The price at the close of 10/16/2014 was $53.94.
Finding stocks that have held up in the recent drop in the markets is just one way to use the All-In-One Screener at GuruFocus. It is likely the most complete fundamental screener available. Give it a try to see what investment opportunities you can find.
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