Kiplinger: Four Cheap Berkowitz Stocks to Buy Now: Pfizer, WellPoint , Northrop Grumman, and General Dynamics

Four Cheap Berkowitz Stocks to Buy Now

Author's Avatar
Jul 16, 2009
Article's Main Image
(GuruFocus, July 15, 2009) These is a good article in www.kiplinger.com about Bruce Berkowitz entitled “ 4 Cheap Stocks to Buy Now”, written by Steven T. Goldberg . The article mentioned four stocks that are owned by Berkowitz, but the author recommend invest buy the Fairholme Fund directly insead of piggybacking on the fund. The four stocks mentioned are: Pfizer (PFE, Financial), WellPoint ( WLP), Northrop Grumman ( NOC), and General Dynamics ( GD)


1. Pfizer (PFE)


Pfizer Inc is a research-based global pharmaceutical company. Pfizer Inc has a market cap of $101.36 billion; its shares were traded at around $15.02 with a P/E ratio of 6.5 and P/S ratio of 2.1. The dividend yield of Pfizer Inc stocks is 4.3%. Pfizer Inc had an annual average earning growth of 11% over the past 10 years. GuruFocus rated Pfizer Inc the business predictability rank of 2.5-star.


Berkowitz owns 88,241,991 shares as of 03/31/2009, which accounts for 21.76% of the $5.52 billion portfolio of Fairholme Capital Management.


According to Goldberg’s article:
Pfizer ( PFE) closed July 13 at $14.76, close to a 12-year low. It trades at eight times estimated 2009 earnings of $1.96 per share and sports a 4.% yield.


Problems? Of course. Patents will expire soon for Lipitor and other big drugs, and Pfizer scientists haven't come up with any promising replacements in recent years.


But, Berkowitz says, Pfizer has evolved into the biggest merchant banker of the drug industry, acquiring and partnering with small companies that need its clout to help develop and market their drugs. He also believes cost-cutting will help Pfizer's bottom line, particularly after its merger with Wyeth closes. Berkowitz has so much confidence in the company that he's put 15% of Fairholme's assets in it.


2. WellPoint (WLP, Financial)


WellPoint Inc. is the largest publicly traded commercial health benefits company in terms of membership in the United States. WellPoint Inc. has a market cap of $24.12 billion; its shares were traded at around $49.77 with a P/E ratio of 8.3 and P/S ratio of 0.4. WellPoint Inc. had an annual average earning growth of 20.8% over the past 5 years.


Berkowitz owns 10,061,624 shares as of 03/31/2009, which accounts for 6.92% of the $5.52 billion portfolio of Fairholme Capital Management.


According to Goldberg’s article:
WellPoint ( WLP) insures 35 million people, more than any other company, and owns the Blue Cross or Blue Shield brand names or both in 14 states. At $49.78, it sells for nine times estimated '09 earnings.


3. Northrop Grumman (NOC, Financial)


Northrop Grumman Corporation is a high technology company providing innovative solutions in systems integration defense electronics and information technology for its U.S. and international military government and commercial customers as a prime contractor principal subcontractor team member or preferred supplier. Northrop Grumman Corp. has a market cap of $14.89 billion; its shares were traded at around $46.02 with a P/E ratio of 8.1 and P/S ratio of 0.4. The dividend yield of Northrop Grumman Corp. stocks is 3.7%. Northrop Grumman Corp. had an annual average earning growth of 1.3% over the past 10 years.


Berkowitz owns 7,319,676 shares as of 03/31/2009, which accounts for 5.78% of the $5.52 billion portfolio of Fairholme Capital Management.


According to Goldberg’s article:
Northrop Grumman ( NOC) is a Berkowitz favorite. Like many other companies, it lost money over the past 12 months, but, on average, the analysts who track the company expect it to earn $4.97 per share this year. The stock, at $44.26, trades at nine times that estimate and yields 3.9%. Northrop is involved in information technology, aerospace and ship construction.


4. General Dynamics (GD, Financial)


General Dynamics Corp.'s primary businesses focus is on shipbuilding and marine systems business aviation information systems and land and amphibious combat systems. General Dynamics Corp. has a market cap of $20.84 billion; its shares were traded at around $54.14 with a P/E ratio of 8.5 and P/S ratio of 0.7. The dividend yield of General Dynamics Corp. stocks is 2.8%. General Dynamics Corp. had an annual average earning growth of 13.9% over the past 10 years. GuruFocus rated General Dynamics Corp. the business predictability rank of 5-star.


Berkowitz owns 2,078,100 shares as of 03/31/2009, which accounts for 1.57% of the $5.52 billion portfolio of Fairholme Capital Management.


According to Goldberg’s article:
General Dynamics ( GD) is another underappreciated military contractor. Trading at nine times earnings with the shares at $52.29, it builds ships, armored vehicles and information-technology systems. It owns three of the six yards that make Navy ships.


Click here to read the complete Kiplinger article


Click here to see the entire portfolio of Berkowitz


GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Bruce Berkowitz for Premium Member. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available