The following stocks have low price-earnings ratios and have been bought by gurus. While some of them are great investments, others need to be checked again, according to the discounted cash flow calculator.
With a market cap of $118 billion, British American Tobacco PLC (BTI, Financial) is trading with a price-earnings ratio of 2.2 and a price-sales ratio of 4.1. According to the discounted cash flow calculator, the stock has a fair value of $633.52 while trading at $54. The stock price has fallen 10.8% over the last 12 months and is currently 27.4% below its 52-week high and 8.06% above its 52-week low.
GuruFocus gives the tobacco company a profitability and growth rating of 7 out of 10. The return on equity of 86.99% and return on assets of 35.29% are outperforming 88% of companies in the Global Tobacco industry. Its financial strength is rated 5 out of 10. The cash-debt ratio of 0.05 is below the industry median of 0.37.
Murray Stahl (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Sarah Ketterer (Trades, Portfolio) increased their holdings during the second quarter, while David Winters (Trades, Portfolio), Ken Fisher (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio) reduced their positions.
Southwest Airlines Co. (LUV, Financial) has a market cap of $33.8 billion and is trading with a price-earnings ratio of 9.8 and a price-sales ratio of 1.6. According to the DCF calculator, the stock has a fair value of $172.23 while trading at $59.11. The stock price has risen 9% over the last 12 months and is currently 11.76% below its 52-week high and 18.79% above its 52-week low.
GuruFocus gives the airline company a profitability and growth rating of 8 out of 10. The return on equity of 37.86% and return on assets of 14.32% are outperforming 84% of companies in the Global Airlines industry. Its financial strength is rated 7 out of 10. The cash-debt ratio of 1.05 is above the industry median of 0.54.
During the second quarter, Joel Greenblatt (Trades, Portfolio) and Tom Gayner (Trades, Portfolio) bought shares of the company for the first time, while Warren Buffett (Trades, Portfolio), Steven Cohen (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio) increased their positions.
With a market cap of $21.7 billion, Tyson Foods Inc. (TSN, Financial) is trading with a price-earnings ratio of 7.6 and a price-sales ratio of 0.6. According to the DCF calculator, the stock has a fair value of $83.37 while trading around $59.44. The stock price has declined 7.9% over the last 12 months and is currently 29.78% below its 52-week high and 4.67% above its 52-week low.
GuruFocus gives the processed foods company a profitability and growth rating of 7 out of 10. The return on equity of 25.19% and return on assets of 10.22% are outperforming 89% of companies in the Global Farm Products industry. Its financial strength is rated 6 out of 10. The cash-debt ratio of 0.02 is below the industry median of 0.5.
During the second quarter, Richard Snow (Trades, Portfolio) increased his holding with an impact of 0.92% on his portfolio, while John Hussman (Trades, Portfolio) and Cohen started new positions.
Eastman Chemical Co. (EMN, Financial) has a market cap of $13.8 billion and is trading with a price-earnings ratio of 9.8 and a price-sales ratio of 1.4. According to the DCF calculator, the stock has a fair value of $257.28 while trading at about $97.08. The stock price has risen 20.1% over the last 12 months and is currently 12.65% below its 52-week high and 19.21% above its 52-week low.
GuruFocus gives the specialty chemical company a profitability and growth rating of 8 out of 10. The return on equity of 27.34% and return on assets of 8.98% are outperforming 73% of companies in the Global Chemicals industry. Its financial strength is rated 5 out of 10 with a cash-debt ratio of 0.03.
In the second quarter, Ainslie and Cohen started a new position in the company while Greenblatt reduced his stake.
Alaska Air Group Inc. (ALK, Financial) has a market cap of $7.7 billion. It is trading with a price-earnings ratio of 9.2 and a price-sales ratio of 1.0. According to the DCF calculator, the stock has a fair value of $72.45 while trading at about $62.64. The stock price has fallen 24.8% over the last 12 months and is currently 26.98% below its 52-week high and 8.78% above its 52-week low.
GuruFocus gives the airline a profitability and growth rating of 8 out of 10. The return on equity of 23.87% and return on assets of 7.73% are outperforming 79% of companies in the Global Airlines industry. Its financial strength is rated 6 out of 10. The cash-debt ratio of 0.68 is above the industry median of 0.54.
John Buckingham (Trades, Portfolio) and Diamond Hill Capital (Trades, Portfolio) increased their stakes during the second quarter while Greenblatt exited his position.
YPF SA (YPF, Financial) has a market cap of $5.9 billion. It is trading with a price-earnings ratio of 8.3 and a price-sales ratio of 0.6. According to the DCF calculator, the stock has a fair value of $19.35 while trading at about $15.08. The stock price has fallen 26.7% over the last 12 months and is currently 43.52% below its 52-week high and 14.76% above its 52-week low.
GuruFocus gives the oil company a profitability and growth rating of 8 out of 10. The return on equity of 12.27% and return on assets of 3.71% are outperforming 57% of companies in the Global Oil and Gas Integrated industry. Its financial strength is rated 4 out of 10. The cash-debt ratio of 0.21 is below the industry median of 0.34.
In the second quarter, Caxton Associates (Trades, Portfolio) started a new position in the company, while Ron Baron (Trades, Portfolio) and Charles Brandes (Trades, Portfolio) increased their holdings.
Disclosure: I do not own any stocks mentioned in this article.
