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Tiziano Frateschi
Tiziano Frateschi
Articles (2569)  | Author's Website |

Steven Romick's Undervalued Stocks Trading With Low P/E Ratio

August 03, 2015 | About:

Steven Romick (Trades, Portfolio) is the portfolio manager of FPA Crescent Fund. As of Jan. 31, the fund has delivered more than 11% a year in average over the past 10 years. His fund has about $10 billion under management and the following are the stocks he owns that are trading with a very low P/E ratio and that are undervalued according to the DCF calculator.


He owns 3,371,800 shares of Joy Global Inc. (JOY) and since the 2014 Q2 the investment is returning him a total loss of 54%. The company is a manufacturer and servicer of high productivity mining equipment for the extraction of coal and other minerals and ores. It manufactures and markets original equipment and parts and performs services for both underground and surface mining, as well as certain industrial applications.

The stock is trading with a P/E ratio of 9.70 that is ranked higher than 80% of other companies in the Global Farm & Construction Equipment industry which has an average P/E ratio of 17.50. The price has dropped by 55% during the last 12 months (by 44% since the beginning of the year) and is now -59.12% from its 52-week high and +2.72% from its 52-week low.

The company looks undervalued at the current price of $26: the DCF calculator gives a fair value of $76.19 that means the current margin of safety is 65%. Even GuruFocus users confirm the same evaluation, giving to the company a fair value of $70.47 (average price after 5 votes).

The company is paying its shareholders a dividend yield of 3.03% with a payout ratio of 29%. The yield has a growth rate of 2.30% over the last 3 years and 14.40% over the last 10 years.

The main hedge fund holding shares of the company is James Barrow (Trades, Portfolio) with 8.71% of outstanding shares (the investment amounts to 0.45% of his total assets), followed by Manning & Napier Advisors, Inc with 6.67% of shares outstanding and First Pacific Advisors (Trades, Portfolio) with 3.81%.


He owns 7,580,800 shares of American International Group Inc. (AIG) and, since the 2012 Q2, the investment is returning him a total gain of 67%. It is a holding company which, through its subsidiaries, is engaged in insurance and insurance-related activities in the United States and abroad. It provides property casualty insurance, life insurance, retirement products, mortgage insurance and other financial services to customers in more than 130 countries and jurisdictions.

The stock is trading with a P/E ratio of 10.90 that is ranked higher than 60% of other companies in the Global Insurance - Diversified industry which has an average P/E ratio of 13.60. The price has risen by 22% during the last 12 months (by 14% since the beginning of the year) and is now -1.25% from its 52-week high and +32.04% from its 52-week low.

The company looks undervalued at the current price of $64: the DCF calculator gives a fair value of $86.59 that means the current margin of safety is 26%. GuruFocus users confirm the same evaluation even if they give to the company a lower fair value of $75.42 (average price after 10 votes).

The company is paying its shareholders a low dividend yield of 0.78% with a payout ratio of 9%. The yield has grown by 53.80% since the last year.

The main hedge fund holding shares of the company is Bruce Berkowitz (Trades, Portfolio) with 1.79% of outstanding shares (the investment amounts to 24.47% of his total assets), followed by HOTCHKIS & WILEY with 1.51% of shares outstanding and Fairholme Fund (Trades, Portfolio) with 1.40%.


He owns 2,870,999 shares of Vodafone Group PLC (VOD) and since the 2013 Q4 the investment is returning him a total loss of 14%. It is a telecommunications provider. Its services include voice, data and fixed broadband. The geographic regions covered by the Company include Europe and Africa, Middle East and Asia Pacific. The company's operating companies are generally subject to regulation governing the operation of their business activities.

The stock is trading with a P/E ratio of 11.20 that is ranked higher than 80% of other companies in the Global Telecom Services industry which has an average P/E ratio of 20.20. The price has risen by 14% during the last 12 months (by 11% since the beginning of the year) and is now -4.26% from its 52-week high and +31.96% from its 52-week low.

The company looks undervalued at the current price of $38: the DCF calculator gives a fair value of $51.44 that means the current margin of safety is 27%. GuruFocus users don’t confirm this evaluation: they give to the company a lower fair value of $36.69 (average price after 3 votes) that put the stock as fairly priced at current prices.

The company is paying its shareholders a high dividend yield of 4.59% with a payout ratio of 50%. The yield has grown by 7.70% since the last 10 years but has declined by 13.80% over the last 3 years and 46.10% since 12 months back.

The main hedge fund holding shares of the company is HOTCHKIS & WILEY with 0.67% of outstanding shares (the investment amounts to 2.02% of his total assets), followed by First Pacific Advisors (Trades, Portfolio) with 0.12% of shares outstanding and Steven Romick (Trades, Portfolio) who holds an easy stake of 0.11% of outstanding shares of VOD.


He owns 269,435 shares of Alleghany Corpodafone Group PLC (Y) and, since the 2012 Q2, the investment is returning him a total gain of 41%. The company is engaged, through Alleghany Insurance Holdings LLC or "AIHL" and its subsidiaries in the property and casualty and surety insurance business. The company is also engaged in private capital investments in oil exploration and production, remanufacturer/retrofitter of precision machine tools and supplier of replacement parts¸ manufacturer of custom trailers and truck bodies. The company operates its business into two reportable segments, reinsurance and insurance.

The stock is trading with a P/E ratio of 13.30 that is ranked higher than 55% of other companies in the Global Insurance – Property & Casual industry which has an average P/E ratio of 12.60. The price has risen by 16% during the last 12 months (by 5% since the beginning of the year) and is now -4.11% from its 52-week high and +19.82% from its 52-week low.

The company looks undervalued at the current price of $486: the DCF calculator gives a fair value of $825.59 that means the current margin of safety is 41%.

The company doesn’t pay dividend yield.

The main hedge fund holding shares of the company is First Eagle Investment (Trades, Portfolio) with 3.30% of outstanding shares (the investment amounts to 0.61% of his total assets), followed by Chuck Royce (Trades, Portfolio) with 2.76% of shares outstanding and First Pacific Advisors (Trades, Portfolio) with 1.79%.


Summary

Ticker

Margin of Safety (DCF calculator)

P/E ratio

JOY

65%

9.70

AIG

26%

10.90

VOD

27%

11.20

Y

41%

13.30

About the author:

Tiziano Frateschi
You can read about me on www.theextraincome.info, which gives suggestions on position trading.

Visit Tiziano Frateschi's Website


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