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Federico Flom
Federico Flom
Articles (110) 

Top Low-P/E Stocks I Like from Eveillard's Portfolio

January 10, 2012 | About:

Eveillard is a financial investor who was born in 1940 and has always been recognized for his great financial career. He studied at the École des Hautes Études Commerciales and entered the finance world with a position at the Société Générale. Since then he started gaining experience. After two years working for Société, he was relocated to the U.S. Once there, he gained a position at SoGen International Fund where he worked as analyst. In 1978 he started managing the SoGen International Fund.

He remained in the position, managing the First Eagle Global, Overseas, Gold and U.S. Value Funds, until Dec. 31, 2004, when according to Fortune magazine he became "one of Wall Street's best value investors." In 2001 he became Morningstar's International "Stock Manager of the Year” laureate. In 2003, Morningstar bestowed on Eveillard a "Fund Manager Lifetime Achievement Award."

Eveillard is not only a senior adviser. He is also member of First Eagle Funds' Board of Trustees and a Senior Vice President of First Eagle Investment Management LLC.

I screened his portfolio to find low P/E attractive opportunities and I found the following stocks:

ITT Corporation (NYSE:ITT): Eveillard INCREASED his position in the stock in last quarter

Current P/E: 2.2

ITT is a corporation involved in the manufacturing of a diverse collection of highly engineered industrial products and provides high-tech solutions from its four segments: industrial process (37% of revenue), motion technologies (28%), interconnect solutions (21%), and control technologies (14%). Europe and emerging markets constitute about 37% and 25% of sales, respectively.

The company is very well managed and is characterized by high-quality business. Furthermore, its brands are well established and since its foundation, it has been able to build solid customer relationships. All these, jointly with its ability to switch costs, have let the company achieve an important economic moat.

In terms of growth prospects, ITT is expected to have between 5% and 7% of internal revenue growth and between 10% and 15% of increase in annual earnings. Apart from the growth in earnings and revenues, the company is undergoing expansion in emerging markets.

Financially speaking, ITT has acquired companies with 15 million-$50 million of annual revenue. These types of acquisitions make ITT unique, posing difficulties on rivals to live up to what it does.


ING Groep (NYSE:ING): Eveillard kept his position unchanged in the last three quarters

Current P/E: 3.8

ING provides life insurance, retail and wholesale banking, and investment management services and operates in almost every continent except Antarctica.

As regards performance, ITT has made comprehensive reviews of its reserves. In terms of policyholder behavior, ING has decided to make changes in assumptions to avoid charges on future profitability.

Despite the last economic crisis, ING has made every effort to recover its financial strength and it has achieved its purpose to such extent that it has even recovered more than its peers, thus remaining highly leverage.


Leucadia (NYSE:LUK): Eveillard began reducing his position in 2009. The stock is attractive but I prefer BRK.B over LUK

Current P/E: 4

LUK investment company has holdings including lumber and plastics manufacturers, a hotel and casino, wineries, an oil and gas contract driller, energy production facilities, medical product developers, and other real estate interests.

Leucadia has a definite strategy: to invest in companies with low intrinsic value to create wealth for shareholders. Indeed, based on this strategy it has allocated capital that resulted in a double-digit compound annual growth rate in book per value share.

After difficulties related to the economic crisis, Leucadia has seen a 150% increase in book value per share. This increase has been related to the rebound in value in investments. Furthermore, it has made successful deals such as selling its remaining stake to Inmet Mining for nearly $500 million.

Regarding specific figures, LUK´s dividend yield is of 1.00% and fiscal revenue grew 129.48%. Last but not least, the company achieved a debt to equity level of 0.22.


Vale (VALE): Eveillard kept his position unchanged. I like this mining stock.

Current P/E: 5.4

Vale is the world's largest iron ore producer and second-largest nickel producer. Iron ore mine systems are operated in Brazil, while Nickel is produced in Canada, Indonesia, and New Caledonia. Vale also mines a variety of other minerals, including copper, coal and potash.

The good performance of the steel industry at global level has boosted Vale's fortunes and thus its growth and standing. In particular, the expansion of the Chinese economy has helped. Results in China are increasing.

In terms of quarterly results, EPS estimates were $4.57 for 2011 and will be $4.15 for 2012. The P/E ratio is thus five times earnings. In addition, the company is paying 6 cents per share in dividends, which is translated into a 2% yield.


MetLife (NYSE:MET): Eveillard increased his position in the last market correction.

Current P/E: 7.2

MetLife provides myriad insurance and financial services to individual and institutional customers through several distribution channels. MET is a leading insurance provider in several foreign markets, including Latin America, East Asia, and Europe.

In terms of last quarter results, the company has been doing very well. Indeed its net income increased from $286 million to $3.6 billion. On an operating basis, profits were up 23% to $1.2 billion, or $1.11 per share. A significant portion of the growth is due to the acquisition of ALICO.

As regards dividend yield, MET has achieved a 2.4% thereof surpassing the 1.8% achieved by its peers within the insurance industry. Finally, PE ratio is 6 points below the 9.2 average for its competitors.


About the author:

Federico Flom
Equity Research Analyst

Rating: 3.0/5 (7 votes)


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