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Motorola Inc. (MOT)
It is rare that value investors like technology stocks, but Dodge & Cox has made Motorola (MOT) one of the largest holdings. They commented over recently in their quarterly commentary: “… Motorola is now one of the Fund’s largest holdings. The stock has performed poorly over the past year, down more than 25% over the past nine months, in part due to loss of market share and lower profits in its mobile handset business. However, we believe that management is working hard to stabilize the division by reducing costs and introducing new products that should be more competitive. We have added to the position as Motorola’s valuation has declined to less than one times the company’s revenues.”
Interestingly, Motorola (MOT) has been bought by multiple gurus over the past months. 7 Gurus initiated positions with Motorola (MOT) in the first quarter, 5 others added to their positions. Among the Gurus, Carl Icahn initiated a proxy fight with Motorola management, he later lost the fight. The prices of Motorola drifted down in the recent months. This gives GuruFocus readers chances to buy at lower prices. Motorola (MOT) is now one of the most broadly owned stocks among the Gurus.
Motorola Inc. has a market cap of $41.27 billion, it was traded at around $17.95 with P/E ratio of 31.01 and P/S ratio of 1.02. Our readers have voted a fair value of more than $27 for Motorola Inc., which makes it quite a bargain.
Boston Scientific Corp. (BSX) and Home Depot (HD)
Dodge & Cox bought Boston Scientific (BSX) and Home Depot (HD) during the second quarter. “Boston Scientific (BSX) and Home Depot (HD), new purchases during the quarter, are also examples of durable franchises under near-term pressure. In our view, Boston Scientific’s valuation is depressed, partly due to concerns about its acquisition of Guidant, and Home Depot is operating in a difficult environment due to the weak housing market. With the conviction gained by our in-depth analysis of each company’s long-term opportunities and risks, in juxtaposition to current valuation, we are optimistic about the potential returns of these holdings, as well as the other holdings in the Fund’s broadly diversified portfolio.”
Boston Scientific Corp. engages in the development, manufacture, and marketing of medical devices that are used in interventional medical specialties worldwide. Brandes Investments owns more than 61 million of shares, it is one of the largest institutional holder of BSX. Brandes added 28% during the first quarter. Three other Gurus were positive with BSX, too. David Dreman had a small position in BSX, and he reduced most of it.
Boston Scientific Corp has a market cap of $21.8 billion, and was traded at around $14.79, which is lower than the prices that most of gurus have paid. Our readers have voted a fair value of $28 for BSX. If that is true, the current market prices represent a more than 50% discount.
Gurus have a more contradict view for Home Depot (HD), although there were more buys than sells. Home Depot Inc. has a market cap of $76.91 billion, it was traded at around $39.39 with P/E ratio of 14.81 and P/S ratio of 0.85.
Our readers have voted a fair value of $63 for Home Depot (HD). Home Depot (HD) is certainly one of the best retailers, although it is facing difficulties with the current housing market slowdown. Readers agree with Gurus that Home Depot (HD) is undervalued.
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BSX should make a come back. The debts are easily manageable. ICD market will come back in a big bull. The market had it all wrong. ICD market didn't slow down because of the technical issue. ICD market slowed down because cardiologists went out and tried put ICD into every single patients who agree to get an ICD (i.e. those cardiologists were thinking about $$$$ and just went ahead and implanted in everyone who is eligible and agrees to have an ICD implanted). After that initial rush, it made year-to-year comparison of ICD implantation difficult. But now that the initial rush is over and ICD has been shown UNEQUIVOCALLY to save lives, ICD should go back to at least the growth rate that baby boomers are aging. It should be a great business.