Value gurus, who seek good companies temporarily mispriced by the market, have gravitated toward certain stocks in the current market environment, characterized by increased volatility and higher valuation.
The All-In-One Screener helps identify these viable stocks worth further research. Performing a screen of stocks priced within 15% of their historical low P/B ratio that have grown dividends for at least 10 years and have had at minimum four gurus purchase them in the last three months reveals a batch of opportunities. Organized by number of guru holders, the following companies head the list: Exxon Mobil Corp (XOM, Financial), Wal-Mart Stores Inc. (WMT, Financial), Qualcomm Inc. (QCOM, Financial).
Exxon Mobil Corp (XOM, Financial)
The most-held guru stock on the list, energy giant Exxon Mobil has 35 guru investors – almost a quarter of all those that GuruFocus tracks. Some holding highlights include Richard Pzena (Trades, Portfolio) with the most shares (6,109,850, or 0.15% of shares outstanding), and Mark Hillman (Trades, Portfolio) with the largest share of his assets invested (3.6% of his portfolio, with 24,023 shares). In the third quarter, Steven Cohen (Trades, Portfolio) made the biggest increase to his position at 89%, one new position was started and three gurus sold out.
Exxon Mobil, the world’s second-largest oil company, has grown its dividend payments at an average annual rate of 6.4% for the past 33 years. Its dividend payout ratio stands at 60%, with a trailing dividend yield of 3.67%. Exxon’s three-year dividend growth rate of 13.4% places it higher than 73% of the companies in its industry.
Shares of Exxon Mobile have traded down almost 15% year to date, underperforming the S&P 500 Index’s 4% decline, and closed at $78.84 on Friday. Its P/B ratio of 1.94 falls 11.5% above its historical low, but the stock appears pricey by other measures. Its  P/E ratio, at 17.2, has soared to almost a 10-year high, and its P/S ratio, at 1.15, has also pushed to a five-year high.
Like most energy companies, Exxon struggled with low commodity prices in the third quarter. Its total revenues fell to $67.3 billion from $107.1 billion for the comparable quarter last year. It also remained profitable, with a net earnings decrease of 47% year over year to $4.2 billion, or $1.01 per diluted share. While the company focused on cost management, its results were also helped by a strong downstream business, which nearly doubled earnings, and chemicals segment, which increased profit by $27 million.
Wal-Mart Stores Inc. (WMT, Financial)
Wal-Mart Stores Inc. has attracted 34 guru shareholders, the most invested of which is Warren Buffett (Trades, Portfolio) (56,185,283 shares, or 1.75% of those outstanding). Bill Gates (Trades, Portfolio) had the most of his fund invested, at 4.36%, or 11,603,000 shares. Only the T Rowe Price Equity Income Fund (Trades, Portfolio) started a position in the company, and three funds sold out.
The world’s biggest retailer, Wal-Mart has paid uninterrupted dividend increases since 1984. It has a dividend payout ratio of 42% and five-year growth rate of 12.9%. The company’s dividend yield, at 3.27%, is higher than 79% of its peers in its industry.
Shares of Wal-Mart have become increasingly inexpensive this year. Wal-Mart Stores stock fell by 30% year to date to close at $59.66 per share on Friday. Its P/B ratio also slipped to within 4.4% of its historical low, at 2.4. The company can be purchased at a respective 10-year low P/E ratio of 12.45 and P/S of 0.4.
In its third quarter operations, Wal-Mart’s revenue declined 1.3% from the same quarter a year ago to $117.4 billion, touting a fifth consecutive quarter of positive comparable stores sales. Net income of $3.3 billion, was also down 11% from $3.7 billion a year earlier, and diluted net income per common share declined 10.4% to $1.03 from $1.15. The retailer saw 3.8% growth in sales in its Wal-Mart U.S. stores, but faced 11.4% declines in sales at its international locations, as well as 2.2% lower Sam’s Club sales.
Qualcomm Inc. (QCOM, Financial)
Qualcomm Inc. positions are found in the portfolios of 25 gurus, or approximately 17% of those GuruFocus tracks. As the price ticked down almost 30% year to date, five gurus exited their positions, and one, Richard Pzena (Trades, Portfolio), started a new position. Jana Partners (Trades, Portfolio) at third quarter end held the most outstanding shares (1.9% of them, or 28,550,816) and the greatest positioning in their portfolio (17.29% of disclosed assets managed).
A global semiconductor company designing products for wireless telecom, Qualcomm has continuously increased its dividend payments since 2003. The company has a dividend ratio of 56% and a five-year dividend growth rate of 20.6%. Qualcomm’s current dividend yield, at 3.55%, is higher than 76% of the other companies in its industry and near a 10-year peak.
Qualcomm stock is valued at a P/B ratio of 2.35, near a 10-year low, and its P/S ratio, at 3.15, also hovers near a 10-year low point. Its P/E ratio is 16.27.
Qualcomm experienced a fiscal fourth quarter decline in revenue of 18%, to $5.5 billion, and decline in earnings of 44%, to $1.1 billion. Its cash balance of $30.9 billion was also lower than the $32.0 billion it reported a year ago. Results in 2015 were primarily drained by continued weakness in the company’s chipset franchise, which posted a 25% drop in revenues from the prior year, compared to 1% for its other segment.
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