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Gurus Buy Stocks With Low P/E Ratios

DCF calculator reports some are highly undervalued

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Oct 12, 2016
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Gurus are buying stocks that are trading with low price-earnings (P/E) ratios. Some are greatly undervalued, according to the DCF calculator.

Polaris Industries Inc. (PII) with a market cap of $4.74 billion is trading with a P/E ratio of 12.85 and a price-sales (P/S) ratio of 1.05. According to the DCF calculator the stock has a fair value of $162.9 while it is trading at about $74.03 with a margin of safety of 55%. The price has dropped by 39% during the last 12 months and is now 40.49% below its 52-week high and 9.19% above its 52-week low.

The company designs, engineers and manufactures off-road vehicles, which includes all-terrain vehicles and side-by-side vehicles for recreational and utility use, snowmobiles and motorcycles.

Two hedge funds hold the company. The gurus with the largest holdings are

Columbia Wanger (Trades, Portfolio) with 0.98% of outstanding shares and Ken Fisher (Trades, Portfolio) with 0.34%.

Spectra Energy Partners LP (SEP) with a market cap of $13.16 billion is trading with a P/E ratio of 13.40 and a P/S ratio of 5.02. According to the DCF calculator the stock has a fair value of $34.03 while it is trading at about $42.63 with a margin of safety of 25%. The price was flat during the last 12 months and is now 15.55% below its 52-week high and 17.73% above its 52-week low.

The company is a Delaware master limited partnership, engaged in the transmission, storage and gathering of natural gas, the transportation and storage of crude oil and the transportation of natural gas liquids.

Two hedge funds hold the company. The gurus with the largest holdings are

Jim Simons (Trades, Portfolio) with 0.2% of outstanding shares and T Boone Pickens (Trades, Portfolio) with 0.01%.

Phillips 66 (PSX) with a market cap of $42.12 billion is trading with a P/E ratio of 14.11 and a P/S ratio of 0.50. According to the DCF calculator the stock has a fair value of $61.64 while it is trading at about $80.56, overpriced by 31%. The price has dropped by 4% during the last 12 months and is now 14.41% below its 52-week high and 12.29% above its 52-week low.

It is a downstream energy company whose segment includes Refining and Marketing (R&M), Midstream and Chemicals businesses. Its Chemicals business is conducted through its 50% interest in Chevron Phillips Chemical Company LLC.

Two hedge funds hold Phillips 66. The gurus with the largest holdings are

Warren Buffett (Trades, Portfolio) with 15.43% of outstanding shares and Barrow, Hanley, Mewhinney & Strauss with 2.79%.

Tanger Factory Outlet Centers Inc. (SKT) with a market cap of $3.51 billion is trading with a P/E ratio of 13.92 and a P/S ratio of 7.76. According to the DCF calculator the stock has a fair value of $74.59 while it is trading at about $36.5 with a margin of safety of 51%. The price has risen by 5% during the last 12 months and is now 13.51% below its 52-week high and 23.94% above its 52-week low.

The company along with its subsidiaries owns and operates outlet centers in the U.S. and Canada. It is a self-administered and self-managed REIT. It also develops, acquires, owns and manages outlet shopping centers.

Two hedge funds hold the company, and the gurus with the largest numbers of outstanding shares are Simons with 1.63% and

Diamond Hill Capital (Trades, Portfolio) with 0.38%.

Taylor Morrison Home Corp. Class A (TMHC) with a market cap of $2.08 billion is trading with a P/E ratio of 11.52 and a P/S ratio of 0.65. According to the DCF calculator the stock has a fair value of $15.84 while it is trading at about $17.43 and is overpriced by 10%. The price has dropped by 12% during the last 12 months and is now 15.55% below its 52-week high and 68.73% above its 52-week low.

The company is a public homebuilder in North America. It builds single-family detached and attached homes and develops land, which includes lifestyle and master-planned communities.

Two hedge funds hold the company, and the gurus with the largest numbers of outstanding shares are

NWQ Managers (Trades, Portfolio) with 3.07% and Alan Fournier (Trades, Portfolio) with 0.3%.

Principal Financial Group Inc. (PFG) with a market cap of $15.1 billion is trading with a P/E ratio of 12.47 and a P/S ratio of 1.27. According to the DCF calculator the stock has a fair value of $45.16 while it is trading at about $52.5 and is overpriced by 16%. The price has risen by 6% during the last 12 months and is now 0.81% below its 52-week high and 58.66% above its 52-week low.

The company offers retirement services, insurance solutions and asset management services. It provides financial products and services through the financial services companies to businesses, individuals and institutional clients.

Two hedge funds hold the company, and the gurus with the largest numbers of outstanding shares are

Bill Nygren (Trades, Portfolio) with 1.91% and Mairs and Power (Trades, Portfolio) with 1.01%.

Disclosure: I do not own any shares of any stocks mentioned in this article.

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