8 Undervalued Stocks With Low P/E Ratios

Gurus are investing in these companies

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Jan 12, 2017
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Here are eight stocks gurus are buying that are trading with low price-earnings (P/E) ratios. Most of them are greatly undervalued, according to the DCF calculator.

Versum Materials Inc. (VSM) with a market cap of $3.13 billion is trading with a P/E ratio of 1.46 and a price-sales (P/S) ratio of 4.24. According to the DCF calculator the stock has a fair value of $211.68 while trading at about $28.79 with a margin of safety of 86%. The price has risen by 15% during the last 12 months and is now 1.20% below its 52-week high and 29.80% above its 52-week low.

Versum Materials is an agile organization relentlessly focused on building on its global technology leadership and establishing a reputation for quality, safety and reliability.

Seven hedge funds hold the company. The gurus holding the largest portions of outstanding shares are Barrow, Hanley, Mewhinney & Strauss with 4.32% followed by Andreas Halvorsen (Trades, Portfolio) with 2.22%, Bill Ackman (Trades, Portfolio) with 1.85%, Steven Cohen (Trades, Portfolio) with 0.26%, First Eagle Investment (Trades, Portfolio) with 0.24%, Paul Tudor Jones (Trades, Portfolio) with 0.22% and Jim Simons (Trades, Portfolio) with 0.17%.

USG Corp. (USG) with a market cap of $4.22 billion is trading with a P/E ratio of 4.22 and a P/S ratio of 0.99. According to the DCF calculator the stock has a fair value of $74.91 while trading at about $29.12 with a margin of safety of 61%. The price has risen by 38% during the last 12 months and is now 9.73% below its 52-week high and 83.72% above its 52-week low.

The company through its subsidiaries is engaged in manufacturing and distribution of building materials. Its products are used in new residential, new nonresidential and residential and nonresidential repair and remodel construction.

Two hedge funds hold the company. The gurus holding the largest portions of outstanding shares are Warren Buffett (Trades, Portfolio) with 26.7% and Joel Greenblatt (Trades, Portfolio) with 0.42%.

General Motors Co. (GM) with a market cap of $53.11 billion is trading with a P/E ratio of 4.38 and a P/S ratio of 0.37. According to the DCF calculator the stock has a fair value of $92.57 while trading at about $37.95 with a margin of safety of 59%. The price has risen by 25% during the last 12 months and is now 0.55% below its 52-week high and 42.19% above its 52-week low.

The company designs, builds and sells cars, trucks and automobile parts. It also provides automotive financing services through General Motors Financial Company Inc.

Five hedge funds hold the company. The gurus with the largest portions of outstanding shares are Buffett with 3.28%, David Einhorn (Trades, Portfolio) with 1.12%, HOTCHKIS & WILEY with 0.75%, Bill Nygren (Trades, Portfolio) with 0.5% and T Rowe Price Equity Income Fund (Trades, Portfolio) with 0.2%.

Assured Guaranty Ltd. (AGO) with a market cap of $5.12 billion is trading with a P/E ratio of 4.88 and a P/S ratio of 2.76. According to the DCF calculator the stock has a fair value of $86.36 while trading at about $39.29 with a margin of safety of 55%. The price has risen by 58% during the last 12 months and is now 0.56% below its 52-week high and 80.31% above its 52-week low.

The company through its operating subsidiaries provides credit protection products to the U.S. and international public finance including infrastructure and structured finance markets.

Two hedge funds hold the company. The gurus with the largest portions of outstanding shares are Jeremy Grantham (Trades, Portfolio) with 0.99% and Chuck Royce (Trades, Portfolio) with 0.52%.

Transocean Ltd. (RIG) with a market cap of $6.13 billion is trading with a P/E ratio of 4.97 and a P/S ratio of 1.13. According to the DCF calculator the stock has a fair value of $34.14 while trading at about $15.75 with a margin of safety of 54%. The price has risen by 53% during the last 12 months and is now 5.45% below its 52-week high and 105.35% above its 52-week low.

It is an international provider of offshore contract drilling services for oil and gas wells. The company has two operating segments: contract drilling services and drilling management services.

Five hedge funds hold the company. The gurus holding the largest portions of outstanding shares are PRIMECAP Management (Trades, Portfolio) with 4.12%, Simons with 0.4% and Cohen with 0.09%.

Valvoline Inc. (VVV) with a market cap of $4.48 billion is trading with a P/E ratio of 5.05 and a P/S ratio of 3.05. According to the DCF calculator the stock has a fair value of $46.12 while trading at about $21.92: the stock is undervalued with a margin of safety of 52%. The price has dropped by 5% during the last 12 months and is now 7.00% below its 52-week high and 19.78% above its 52-week low.

It is a leading worldwide producer and distributor of premium-branded automotive, commercial and industrial lubricants and automotive chemicals.

Five hedge funds hold the company. The gurus with the largest portions of outstanding shares are Jana Partners (Trades, Portfolio) with 0.51% and Leon Cooperman (Trades, Portfolio) with 0.18%.

Rowan Companies PLCĂ‚ (RDC) with a market cap of $2.52 billion is trading with a P/E ratio of 5.36 and a P/S ratio of 1.20. According to the DCF calculator the stock has a fair value of $40.02 while trading at about $20.08 with a margin of safety of 50%. The price has dropped by 11% during the last 12 months and is now 7.38% below its 52-week high and 88.19% above its 52-week low.

The company provides offshore oil and gas contract drilling services utilizing a fleet of 30 self-elevating mobile offshore "jack-up" drilling units and four ultra-deepwater drillships.

Five hedge funds hold the company. The gurus holding the largest portions of outstanding shares are First Pacific Advisors (Trades, Portfolio) with 2.24%, Greenblatt with 0.11%, Richard Pzena (Trades, Portfolio) with 0.79% and FPA Capital Fund (Trades, Portfolio) with 0.66%.

American Airlines Group Inc. (AAL) with a market cap of $25.2 billion is trading with a P/E ratio of 5.36 and a P/S ratio of 0.70. According to the DCF calculator the stock has a fair value of $97.6 while trading at about $48.64 with a margin of safety of 50%. The price has risen by 16% during the last 12 months and is now 3.95% below its 52-week high and 95.73% above its 52-week low.

The company through its subsidiaries operates in the airline industry. It has hubs in Charlotte, Chicago, Dallas-Fort Worth, Los Angeles, Miami, New York City, Philadelphia, Phoenix and Washington.

Four hedge funds hold the company. The gurus holding the largest portions of outstanding shares are PRIMECAP Management with 8.55%, Buffett with 0.42%, Pioneer Investments (Trades, Portfolio) with 0.11% and Greenblatt with 0.04%.

Disclosure: I do not own any shares of any stocks mentioned in this article.

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