Low PS for Caterpillar, L-3, Advanced Auto Parts

These are stocks gurus are buying that are trading with low PS

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May 16, 2016
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According to GuruFocus' All-in-One Screener, the following are companies with market caps above $5 billion that are trading with low P/S ratios.

Caterpillar Inc. (CAT) is trading at about $72 with a P/S ratio of 1.01 and an estimated P/E multiple of 34.66. The company has a market cap of $42.29 billion; over the last 10 years, the stock has dropped by 7%. During the last 52 weeks, the price has been as high as $89.62 and as low as $56.36.

The company is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives.

The DCF model gives a fair value of $22.37, making the stock overpriced by 224%.The Peter Lynch earnings line suggests the stock is less overpriced, giving a fair price of $31.4.

The company’s largest shareholder among the gurus is Bill Gates (Trades, Portfolio) with 1.93% of outstanding shares followed by PRIMECAP Management (Trades, Portfolio) with 1.04%, Bill Nygren (Trades, Portfolio) with 0.75%, Tom Gayner (Trades, Portfolio) with 0.05%, Steven Cohen (Trades, Portfolio) with 0.02% and Joel Greenblatt (Trades, Portfolio) with 0.02%.

National Oilwell Varco Inc. (NOV) is trading at about $32 with a P/S ratio of 1.02 and an estimated P/B multiple 0.74. The company has a market cap of $12.2 billion and over the last 10 years, the stock has risen by 10%. During the last 52 weeks, the price has been as high as $52.47 and as low as $25.72.

The company is a provider in the design, manufacture and sale of equipment and components used in oil and gas drilling, completion and production operations and the provision of oilfield services to the upstream oil and gas industry.

The company’s largest shareholder among the gurus is First Eagle Investment (Trades, Portfolio) with 5.85% of outstanding shares followed by Dodge & Cox with 5.64%, Mason Hawkins (Trades, Portfolio) with 2.87%, Nygren with 0.95%, Sarah Ketterer (Trades, Portfolio) with 0.49% and John Rogers (Trades, Portfolio) with 0.44%.

JD.com Inc. (JD) is trading at about $23 with a P/S ratio of 1.0 and an estimated forward P/B multiple of 6.92. The company has a market cap of $32.31 billion; over the last 10 years, the stock has risen by 11%. During the last 52 weeks, the price has been as high as $38 and as low as $21.55.

The company is an online direct sales company in China. It provides consumers an online retail experience. Through its website www.jd.com and mobile applications, it offers a various authentic products.

The company’s largest shareholder among the gurus is Chase Coleman (Trades, Portfolio) with 4.27% of outstanding shares followed by Steve Mandel (Trades, Portfolio) with 1.93%, Jeremy Grantham (Trades, Portfolio) with 1.5%, Dodge & Cox with 0.53%, Spiros Segalas (Trades, Portfolio) with 0.38% and Ken Fisher (Trades, Portfolio) with 0.16%.

China Life Insurance Co. Ltd. (LFC) is trading at about $10.72 with a P/S ratio of 1.1 and an estimated P/E multiple of 20.20. The company has a market cap of $60.6 billion; over the last 10 years, the stock has risen by 37%. During the last 52 weeks, the price has been as high as $25.99 and as low as $10.18.

The company is a life insurance company in China. Its products and services include individual life insurance, group life insurance and accident and health insurance.

The DCF model gives a fair value of $8.37 putting the stock overpriced by 28%. The Peter Lynch earnings line suggests the stock is a few undervalued, giving a fair price of $11.7.

L-3 Communications Holdings Inc. (LLL) is trading at about $136 with a P/S ratio of 1.09 and an estimated P/B multiple of 2.40. The company has a market cap of $10.46 billion; over the last 10 years, the stock has risen by 70%. During the last 52 weeks, the price has been as high as $137.84 and as low as $101.11.

The company is a prime contractor in Command, Control, Communications, Intelligence, Surveillance and Reconnaissance systems, aircraft modernization and maintenance, and government services. L-3 is also a provider of electronic systems used on military and commercial platforms.

Richard Pzena (Trades, Portfolio) is the largest shareholder among the gurus with 0.28% of outstanding sharing followed by Jim Simons (Trades, Portfolio) with 0.14% and Cohen with 0.03%.

Advance Auto Parts Inc. (AAP) is trading at about $148 with a P/S ratio of 1.09 and an estimated P/E multiple of 23.14. The company has a market cap of $10.86 billion; over the last 10 years, the stock has risen by 275%. During the last 52 weeks, the price has been as high as $201.4 and as low as $131.59.

The company is a specialty retailer of automotive aftermarket parts, accessories, batteries and maintenance items operating within the U.S. Its stores carry a product line for cars, vans, sport utility vehicles and light trucks.

The DCF model gives a fair value of $131.16 making the stock overpriced by 13%. The Peter Lynch earnings line suggests the stock is more overpriced giving a fair price of $96.2.

Cohen is the company's largest shareholder among the gurus with 1.98% of outstanding shares followed by Chris Davis (Trades, Portfolio) with 1.03%, Jana Partners (Trades, Portfolio) with 0.77%, First Eagle Investment (Trades, Portfolio) with 0.73%, John Burbank (Trades, Portfolio) with 0.72%, Ketterer with 0.71%, Pioneer Investments (Trades, Portfolio) with 0.55% and Manning & Napier Advisors Inc. with 0.26%.

Credit Suisse Group AG. (CS) is trading at about $13.37 with a P/S ratio of 1.1 and an estimated P/B multiple of 0.60. The company has a market cap of $26.02 billion; over the last 10 years, the stock has dropped by 78%. During the last 52 weeks, the price has been as high as $29.99 and as low as $12.56.

The company holds direct or indirect interests in all types of businesses in Switzerland and abroad, in particular in the areas of banking, finance, asset management and insurance.

The company’s largest shareholder among the gurus is Fisher with 0.52% of outstanding shares followed by Charles Brandes (Trades, Portfolio) with 0.15%, Dodge & Cox with 0.04% and Jeff Auxier (Trades, Portfolio) with 0.01%.

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