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Alberto Abaterusso
Alberto Abaterusso
Articles (2197) 

3 Potentially Undervalued Large Caps

Micron Technology tops the list

January 05, 2020 | About:

Investors may be interested in the following large caps as they appear to be undervalued as of Friday, Jan. 3.

These publicly traded stocks have a market capitalization of more than $10 billion, a trailing 12-month price-earnings ratio of less than 20 and a price-earnings to growth ratio (PEG ratio) of less than 1.

In addition to cheap market valuations, they have robust financial conditions, which reduce the risk of falling into distressed situations to extremely low levels, and their operations are highly profitable.

Sell-side analysts on Wall Street issued an overweight recommendation rating, underpinning expectations for stocks that will reward their shareholders with large returns.

Micron Technology

The first company that meets these criteria is Micron Technology Inc. (NASDAQ:MU).

Shares of the Boise, Idaho-based semiconductor company closed at $54.53 on Friday for a market capitalization of $60.58 billion.

The stock has a price-earnings ratio of 17.7 compared to the industry median of 24.71 and a PEG ratio of 0.59 versus the industry median of 1.87.

The share price has climbed 62.6% over the past five years through Jan. 3 to levels that, according to Peter Lynch, are not expensive.

Micron Technology has received a high rating of 8 out of 10 for its financial strength and a very high rating of 9 out of 10 for its profitability from GuruFocus.

Wall Street established an average target price of $63.50, reflecting 16.4% upside from Friday’s closing price.

Vanguard Group Inc. is the company's largest shareholder with 7.81% of outstanding shares, followed by PRIMECAP Management with 5.11% and State Street Corp. with 4.27%.

Nucor

The second company is Nucor Corp. (NYSE:NUE).

Shares of the Charlotte, North Carolina-based manufacturer and seller of steel products closed at $54.39 per unit on Friday, determining a market capitalization of $16.49 billion.

The stock has a price-earnings ratio of 9.28 versus the industry median of 10.23 and a PEG ratio of 0.47 compared to the industry median of 0.68.

Despite a 17% share price growth over the past five years through Jan. 3, the stock is below the Peter Lynch earnings line, corroborating the thesis that Nucor is a cheap investment opportunity.

GuruFocus assigned a very positive financial strength rating of 7 out of 10 and a positive profitability rating to the company.

Wall Street issued an average price target of $59.38 per share, mirroring 9.3% upside to hit within 52 weeks.

With 12.35% of outstanding shares, Vanguard Group is the company's largest institutional shareholder, followed by State Farm Mutual Automobile Insurance Co. with 10.04% and State Streetwith 6.15%.

CRH 

The third company is CRH PLC (NYSE:CRH), an Irish manufacturer and distributor of building materials to construction companies that operate in the Americas and Europe.

Shares of CRH closed at $39.84 per unit on Friday with a market capitalization of $31.46 billion.

The stock has a price-earnings ratio of 17.44 versus the industry median of 14.99 and a PEG ratio of 0.69 versus the industry median of 1.59.

Over the last five years of trading through Jan. 3, the share price of CRH rose 77%. Nevertheless, the stock appears to be priced fairly by the market, at least until June 30, 2019, the date of the release of the most recent quarterly financial results.

CRH has received an acceptable rating of 5 out of 10 for its financial strength and a very positive rating of 9 out of 10 for its profitability from GuruFocus.

Wall street set an average target price of $41.08 to reach within 52 weeks.

FMR LLC is the company's largest shareholder with 1.29% of outstanding shares, followed by Boston Partners with 1.22% and Dimensional Fund Advisors LP with 0.31%.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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