John Rogers (Trades, Portfolio) is the founder of Ariel Investment, LLC, which he started in 1983. He began as a small and mid-cap value manager, and evolved strategically to offer three approaches - all of which seek out attractive intrinsic value through relatively concentrated portfolios. The firm uses the market's short-term focus to uncover mispriced companies whose true value will be realized over time.
His portfolio is composed of 187 stocks, four of which were bought during the last quarter. The total value of the portfolio is $8,922 million with 9% Q/Q turnover.
The following are the most undervalued (according to either the Peter Lynch earnings line or the DCF calculator) stocks in his portfolio that are trading at a very cheap P/E ratio.
National Oilwell Varco Inc (NOV)
He bought NOV in 2012Q4 for the first time, and at the end of the 2015Q1, he held 1,322,575 shares at an average price of $62.20/share that is giving him a loss of 26%.
NOVÂ designs, manufactures and sells equipment and components used in oil and gas drilling, completion and production operations, and the provision of oilfield services to the upstream oil and gas industry and has a market cap of $17.43B.
NOV is trading with a trailing 12-month P/E multiple of 8.74 and an estimated forward P/E multiple of 17.06. Over the last 10 years, the stock rose by 118%, and during the last 52 weeks has been as high as $45.78 and as low as $44.83. Its 200-day moving average is $58.40.
The DCF model gives a fair value of $147.47 that put the stock as undervalued and with a margin of safety of 70% at current prices. The Peter Lynch earnings line fair value is $81.6 that puts the stock as undervalued but with a smaller margin of safety.
First Eagle Investments is the main guru holding NOV with 16,949,281 shares, accounting for 4.37% of shares outstanding, or 2.02% of total assets of the portfolio. John Rogers (Trades, Portfolio) is the ninth-largest holder of the stock with 0.34% of shares outstanding.
Baxter International Inc (BAX)
The investor has traded in BAX since 2010Q1 and now he is holding 62,951 shares at an average price of $29.25/share that is giving him a gain of 1%.
BAX is a healthcare company engaged in the development, manufacture and sale of products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. It has a market cap of $20.47B.
BAX is trading with a trailing 12-month P/E multiple of 8.70 and an estimated forward P/E multiple of 10.79. The stock rose by 80% over the last 10 years, and during the last 52 weeks has been as high as $37.73 and as low as $37.29. Its 200-day moving average is $68.85.
The DCF model gives a fair value of $68.64 that put the stock as undervalued and with a margin of safety of 45% at current prices. The Peter Lynch earnings line fair value is $53.5 that put the stock still undervalued but with a smaller margin of safety.
Richard Pzena (Trades, Portfolio) (Trades, Portfolio) is the main guru holding BAX with 5,028,418 shares, ammounting to 0.92% of shares outstanding, or 1.91% of total assets of his portfolio. John Rogers (Trades, Portfolio) holds an easy stake that is just the 0.01% of shares outstanding of the company.
Aflac Inc (AFL)
The investor started to tradeAFL in 2010Q1, and now he is holding 1,931,904 shares at an average price of $51.08/share that is giving him a gain of 11%.
AFL is a general business holding company and acts as a management company, overseeing the operations of its subsidiaries by providing management services and making capital available and has a market cap of $26.78B.
AFL is trading with a trailing 12-month P/E multiple of 9.60 and an estimated forward P/E multiple of 9.76. The stock rose by 38% over the last 10 years, and during the last 52 weeks has been as high as $61.68 and as low as $60.58. Its 200-day moving average is $61.07.
The DCF model gives a fair value of $101.07 that put the stock as undervalued and with a margin of safety of 39% at current prices. The Peter Lynch earnings line fair value is $97.0 that put the stock still undervalued but with a smaller margin of safety.
Bill Nygren (Trades, Portfolio)Â is the main guru holding AFL with 5,070,000 shares (1.17% of shares outstanding, or 1.93% of total assets of his portfolio). John Rogers (Trades, Portfolio) is the second-largest holder of the stock with 0.45% of shares outstanding held.
Exxon Mobil Corporation (XOM)
The investor has traded inXOM since 2010Q1, and now he is holding 85,510 shares at an average price of $72.15/share that is giving him a gain of 15%.
XOM's main business is energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. It is also a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products and has a market cap of $344.11B.
XOM is trading with a trailing 12-month P/E multiple of 12.31 and an estimated forward P/E multiple of 15.46. The stock rose by 40% over the past 10 years, and during the last 52 weeks has been as high as $82.56 and as low as $82.07. It has a 200-day moving average of $89.15.
The DCF model gives a fair value of $71.62 that put the stock as overpriced by 15% at current prices. The Peter Lynch earnings line fair value is $106.7 and it offers a margin of safety since the stock is trading at about $83.
Donald Yacktman (Trades, Portfolio) (Trades, Portfolio) is the main guru holding XOM with 6,918,557 shares accounting for 1.17% of shares outstanding, or 2.71% of total assets of his portfolio. Brian Rogers (Trades, Portfolio) is the second-largest holder of the company with 0.13% of outstanding shares.
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