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Find Me Some Value: June 2008

I had a conversation today with an investing peer about where value might be found in the market with the media recently concentrating on record oil prices, credit/debt markets and expected worldwide inflation. While at this moment the sentiment appears to be bleak, there are a number of stocks I currently hold that are trading at attractive valuations which have global scale, top end brands/products/service and very attractive dividend yields. Each of these, in my assessment, could easily return 10-12% on a 12-month basis (including dividends). In an environment where risk and volatility take no prisoners, that doesn’t seem all that bad, does it?

Stocks with forward P/E less than 10x & greater than 3% Yield:
BDK
DAI
PFE

NOK


Stocks with forward P/E around 15x & greater than 2.5% Yield:
CPB
GE
KFT
KMB
LEG
JNJ
TSM
UPS

What stocks are on your list?

Note: forward P/E for each stock is determined based on my 2009 earnings estimates for each company

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{ 2 comments… add one }
  • MG (moneygardener) June 4, 2008, 7:36 am

    brad,

    Of your list:

    As you know I really like GE below $32. For a long term investor this appears to be a great time to get in or add.

    I am considered with the growth of PFE, and I’ve never really watched it because the earnings have been far too volatile.

    I like UPS, but I am waiting for a large drop in the share price, which I think we could easily see with these oil prices.

    I don’t find JNJ to be great value here.

    I want to have a closer look at KMB. You should also take a look at CLX.

  • Nurse B, 911 June 4, 2008, 9:12 am

    Interesting.

    For UPS, would you anticipate that it no longer trade at the premium over Fedex that it traditionally has been valued at? I have to be honest, I see maybe a $5/sh downside to this stock at the moment after running through the numbers. While the company is likely to internalize some of the increased costs, I think the expectation from their customers will be that its a part of “business” if prices are raised.

    GE I’m done adding to, simply fit the screen. PFE is a stock I’ve held for 3+ years, JNJ likewise and I’ll have to look into CLX, but I don’t know how much overlap I’d find when I already hold PG, CL, JNJ, KMB, etc?

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