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VMware, Inc. (NYSE:VMW), Amazon.com, Inc. (NASDAQ:AMZN), and Visa Inc. (NYSE:V) may be trading at lofty multiples in this market, but these companies are historically cheap and well-positioned to emerge from the economic crisis in better shape than many investors realize.

VMware Helps Companies Save

VMware offers businesses a unique way to save money through what’s known as server virtualization. The software allows businesses to run multiple desktop environments off of a single server computer, which can lead to significant savings on hardware costs and energy bills. As a leader in this quickly growing industry, VMware is well-positioned to grow larger.

During the third quarter, VMware reported earnings of $83 million, or $0.24 per share on revenues that grew 32% to $472 million. Currently, the company is trading for 46x last year’s earnings of $0.76 per share, which may be undervalued if industry growth continues to grow at double-digit rates, and if it remains a market leader despite increased competition.

Amazon Helps Consumers Save

Amazon.com is known for its low prices and wide selection, and remains a bellwether in the e-commerce industry. Meanwhile, the popular shopping destination is also turning itself into a middleman for third party transactions, warehousing, and fulfillment going forward. Combined, these factors could equate to continued growth and substantial profits down the road.

During the second quarter, Amazon.com reported net earnings of $142 million, or $0.33 per share, on revenues that increased 14.4% to $4.65 billion. Currently, the company is trading for 53x last year’s earnings of $1.52 per share, which may be undervalued given the company’s growth potential and historical multiples of closer to 90x earnings.

Visa May Profit from Rebound in Spending

Credit card companies like Visa are already benefiting from an increase in credit card usage as consumers transition from paper to plastic spending. However, the dollar volume of transactions has decreased along with consumer spending amid the economic turmoil. A recovery in these volumes could dramatically improve the bottom line in short order.

During the second quarter, Visa reported net earnings of $729 million, or $0.61 per share, on revenues that increased 2.7% to $769 million versus a year ago. Currently, the company is trading for 39.7x last year’s earnings of $1.79 per share, which may be undervalued given the company’s growth potential and historical multiples that were much higher.

Conclusion

The economic crisis has negatively affected many consumers and companies, which will likely remain frugal even after a recovery takes effect. As a result, some large companies that offer other companies and consumers ways to save money in already fast-growing industries could be well-positioned to profit handsomely following any recovery.

Even if earnings multiples do not expand, a substantial increase in forward earnings per share could spell a sharply higher share price. VMware, Amazon.com and Visa all have favorable long-term industry trends and offer companies and consumers a way to save money – a winning combination when emerging from an economic crisis.

Disclosure: No positions.

Source: Playing the Economic Recovery with VMware, Amazon and Visa