David Tepper (Trades, Portfolio) doesn’t have a wide variety of low-hitting stocks in his $10 billion portfolio of 52 stocks. But these, at a cost of under $30 a share, are worth a look by investors.
The stocks at market close on Monday traded near their lows and below their historical values based on GuruFocus' median price-sales chart, suggesting a minimized risk. These companies are slow growers. So, if you’re interested, buckle up. Both stocks reported average annual gains of 1.1% a year, according to GuruFocus.
However, there are other attributes to consider that make them attractive. At least one, UBS Group AG (UBS, Financial), representing one of Switzerland’s largest banks, pays a better dividend than 71% of more than 2,400 of its competitors in the Global Banks, Global Industry sector.
MGM Resorts International (MGM, Financial) traded far below its historical value based on median price-sales data. GuruFocus' data tracker suggests these are attractive situations for investors and where they are less likely to lose money.
Tepper had at least one other stock that was kissing its 52-week low. California-based hard drive manufacturer Western Digital Corp. (WDC, Financial) traded up 2% to $79.60 a share, the lower end of a 52-week range of $75.96 to $106.96 a share. But the stock was priced well above historical value on GuruFocus’ median price-sales chart, suggesting greater risk.
UBS Group
The financial services company is trading below its historical value, according to GuruFocus’ price-sales chart.
At $15.38 a share, it traded up 0.07% to $15.38 a share. The 52-week range is $15.03 to $20.89 a share. While it is trading at 47.99 times its price-earnings, it is also trading at 11.42 forward price-earnings. Its forward price-earnings metric is about 56% higher than its peers.
The financial institution has a price-book of 1.15, which is lower than 51% of its peers. In tangible book value per share, it has made improvements since the economic crisis wiped out bank shares in 2008. The ratio, which stands at about 12, has been on the rise since 2009. GuruFocus found the bank had a large amount of debt, however. Over the past three years, it has issued $32 billion in debt. In interest income and net interest income, it has seen an increase.
Tepper opened a position in the stock in the first quarter of the year. He purchased 6.95 million shares for an average price of $19 a share. The investment has produced an estimated 19% loss since the purchase. The investment sits in 1.27% of the portfolio.
The investment is worth about $122 million.
MGM Resorts International
Casino and hotel resort operator MGM Resorts International’s stock has dropped slightly below its historical value.
It closed at $29.46 a share, up 1.69%. It is trading at 8.73 times price-earnings and 22.47 times forward price-earnings. Its price-earnings ratio is higher than 83% of its peers in the global resorts and casino industry.
The company’s dividend yield is 1.56%. Analysts predict revenues will climb to $14 billion in two years, compared to $12 billion in December 2018. GuruFocus showed operating margins have been expanding over a number of years, although revenue per share has been in decline over the last five years.
Tepper reported a loss of 12% since he bought shares in the fourth quarter of last year.
The guru has bought and sold shares on and off over the last six years.
Back in 2012, when he first bought shares, they were priced at under $12 a share. But he sold out in the fourth quarter of 2014, when they were priced at an average of $21 a share.
In the early months of the year, he held 4 million shares at an average price of $35.13. Shares sit in about 1.48% of his portfolio. The investment is worth about $142 million.
Disclosure: No positions.
